Table 3 Studies of patent expiry, generic entry and or generic pathway

Comparative country studies

Elek et all 2017 [57]

Retrospective longitudinal study to determine whether the availability of generics improves medicine accessibility for patients and thus improves health outcomes. Focuses on clopidogrel.

Clopidogrel use increased significantly in lower income countries after generic entry but changed very little in higher income countries. Earlier generic entry has larger impact.

European Commission 2009 [58]

Retrospective study to determine the reasons for observed delays in the entry of generic medicines to the market and the apparent decline in innovation as measured by the number of new medicines coming to the market.

Behaviour and practices of the originator industry contributed to delays in generic entry as well as to the difficulties in innovation, though there are other possible causal factors, such as regulation. It takes more than 7 months for generic entry to occur once originator medicines loose exclusivity. For the highest selling medicines, it took 4 months on average before market entry. Generic products, on average, enter the market with a price 25% lower that of originator medicines before the loss of exclusivity. Two years after entry, prices of generic medicines were on average 40% below the former originator price. The prices of originator products also appear to drop following generic entry. The market share of generic companies was about 30% at the end of the first year and 45% after 2 years. In other words, any delay in generic entry will have a significant cost / revenue impact. Savings due to generic entry could have been 20% higher if entry had taken place immediately following loss of exclusivity. The aggregate expenditure amounting to about €50 billion for the period after loss of exclusivity would have been about €15 billion higher without generic entry. However, additional savings of some €3 billion could have been attained, had entry taken place immediately.

Morton 2018- [59]- EU and Australia

Prospective econometric modelling to analyse European markets, which have had biosimilar competition since 2006 and how market features and public policies predict biosimilar entry, price, and penetration.

Focuses on markets where there are tenders for the supply of medicines. Prevailing market prices fall over time at an average rate of about 3.5 percentage points per year following biosimilar entry, and this decline is even steeper in Epoetin and Filgrastim markets. Price declines are steeper when there are more biosimilar entrants and when the size of the tender population is larger. Quotas for biosimilars seem to raise their prices in some cases, as one might expect if the quota regulation reduces supply.

Berndt and DuBois 2016 – EU and North America [60]

Retrospective study to determine the effect of patent expiry on daily cost of pharmaceutical treatments, trends over time, and factors affecting variations in price indexes per day of treatment across countries, therapeutic classes, and time.

Prices have fallen over time, as generics enter average prices fall more in pharmacy-driven than in physician-driven markets. Regulatory and pricing policies – particularly those at the level of therapeutic class – have expected effects on average prices. Greatest falls in 4 of the 10 therapeutic classes: ace inhibitors (−19%), anti-ulcerants (−13%), calcium channel blockers (−12%), and lipid regulators (−11%). There is clear evidence on the downward evolution of prices for therapeutic classes experiencing patent expiration over the 2004–2010 time period.

Liu and Galarraga 2019 – Southern Africa [61]

Retrospective study to estimate the relationship between ARV drug prices and national drug policies with a focus on countries in the Southern African Development Community.

The most consistent predictor of ARV drug price is a drug’s generic/patent status. The generic versions of 8 out of 10 ARV drugs were priced lower than branded versions. There was no consistent association between ARV prices and transaction volume, national drug policies or Presidents Emergency Plan for AIDS Relief/ Clinton Health Access Initiative involvement.

Single country studies

Branstetter 2016- USA [62]

Retrospective econometric modelling to determine the welfare effects of accelerated generic entry via Paragraph IV challenges.

Consumers gain $42 billion whereas producers lose $US32.5 billion from accelerated generic entry as a result of Para-IV challenges. Overall consumption does not increase after entry—generic sales displace branded sales, shifting surplus downstream from producers to consumers, insurance companies, and retailers.

Grabowski 2016- USA [63]

Retrospective econometric modelling to determine the proportion of new drug introductions subject to patent challenges and the time to patent challenge in the wake of the 1998-2003 legal and regulatory changes to the Hatch-Waxman Act.

For small molecule drugs only: the proportion of patents challenged increased from 34% in 1995 to 79% in 2003 (69% for core patents).

Large sales small molecules: For active ingredient patents, in 45% of challenges generics win. For method of use patents, generics win 79%, and for formulation patents generics win 97%. A large proportion of challenges are settled for all patent types. Biologics: 8% of patents challenged compared to 34-69% of small molecule drug patents, depending on year.

Berndt and Aitken 2011- USA [64]

Retrospective study of the effect of the Waxman-Hatch legislation on generic market share, the generic price index, the average price per prescription and the daily cost of treatment.

Generic share grew from 18.6% in 1984 to 74.5% in 2009. Average price per prescription fell by 21.3% from 2006 to 09. Weighted mean reduction in pharmaceutical daily treatment cost across nine therapeutic areas was 35.1% at 24 months post-generic entry. Generic share has increased, and prices have declined dramatically since the Waxman- Hatch legislation.

Bokhari and Fournier 2013 – USA [65]

Retrospective econometric modelling of the potential welfare gains due to the introduction of generic psychostimulant (ADHD) drugs as well as of me-too’s and the welfare loss due to the delayed entry of generics in this market.

Both Concerta and Adderall extended release (XR) created new niche markets for their respective molecules by introducing effective new delivery mechanisms. Consumers placed a large value on these improvements, on average approximately $US137 and $US123 per child per year respectively, and consequently these two me-too drugs achieved 24 and 26% of the ADHD drug market. The introduction of generic Adderall in the MAS-IR segment extended the market and was very valuable to consumers (about $US65 per child per year). Shire holds two key patents on Adderall XR that technically prevent entry in the MAS-ER segment until 2018 and an exclusivity period until April 2005.

Castanheira 2017- USA [66]

Retrospective econometric analysis to determine the effect of generic entry on price and demand (volume) of medicines.

After generic entry, the price of the molecule drops, on average, by about 45% after 3 years. The market share of the molecule drops by around 25-30%. That is, the cumulated sale volume of the original brand plus its generic competitors drops, even though these markets are typically growing.

Frank 1997- USA [67]

Retrospective econometric modelling to estimate price responses to generic entry in the market for brand-name and generic drugs.

Brand-name prices increase after generic entry and are accompanied by large decreases in the price of generic drugs.

Huckfeldt and Knittel 2011- USA [68]

Retrospective econometric modelling to estimate the effects of generic entry on prices and utilization of blockbuster drugs in 4 therapeutic areas. Also examines how generic entry effects differ by sources of health insurance.

Generic prices fall relative to branded prices, and branded company market share falls rapidly after the entry of generics. Demand for the branded molecule begins to fall prior to generic entry and coincides with increased use of branded reformulations – a shift to a slightly different product. These patterns exist across individuals with different sources of health insurance. Case study evidence implies that marketing to physicians and patients drives these patterns of use.

Shih et al. 2007- USA [69]

Retrospective econometric modelling to explore the impact of generic drug entry on the cost-effectiveness of selective serotonin reuptake inhibitors.

There is a positive benefit from generic entry in all 4 selective serotonin reuptake inhibitors compared to paroxetine pre-generic entry (ie availability of alternatives had a positive price effect). After generic entry, price effectiveness compared to paroxetine is variable. However, the entry of a new drug - Escitalopram - had a stronger effect on market shares than the entry of generic versions of paroxetine.

Hemphill 2012- USA [70]

Retrospective econometric modelling to determine whether generic patent challenges are on the rise and whether they reduce the effective market life of new medicines. Also looks at whether patent challenges disproportionately target high-sales drugs thereby reducing market life for these “blockbusters”.

The average nominal patent term is 16 years for drugs with first generic entry between 2001 and 2010. By comparison, average effective market life for these drugs is 12 years, not much different than in the previous decade, and greater than in the decade before Hatch–Waxman. Patent challenges are the key driver of the gap between nominal patent term and effective market life. Challenges are more prominent for large sales drugs and there is an increase in early challenges.

Hemphill 2011- USA [71]

Retrospective econometric modelling of the Hatch-Waxman Act “Paragraph IV” challenges as a means to secure early market entry.

Over time, patenting has increased, measured by the number of patents per drug and the length of the nominal patent term. Meanwhile, the proportion of drugs subjected to patent challenges has increased. Drugs are also challenged sooner, relative to brand-name approval. Brand-name sales have a positive effect on the likelihood of generic challenge. The likelihood of challenge also varies with the nature of the patent portfolio. A drug with weaker patents faces a significantly higher likelihood of challenge, conditional on sales and other drug characteristics. That is not because the drug’s patent protection is weaker overall; additional patents, even weak ones, generally strengthen a brand-name firm’s ability to exclude. Rather, a weak patent, particularly if it expires later than the basic patents, disproportionately attracts a challenge to the pertinent drug. Overall, results suggest these challenges serve a useful purpose by promoting scrutiny of weaker and late-expiring patents.

Lexchin 2004– Ontario, Canada [72]

Retrospective study to examine the effects of the entry of generic competitors on the price of brand-name products in the province of Ontario.

Price changes for 81 different products in 144 separate presentations were analysed. There was no statistically significant change in brand-name prices when generic competition started. The movement of brand-name prices was not influenced by whether the generic was made by the company producing the brand-name product or price freezes imposed by the Ontario government. When generics first became available having four or more generics was associated with a rise in the price of the brand-name drugs compared to having one, two or three generic competitor(s).

Jones et al. 2001- Canada [73]

Retrospective analysis of the impact of 1987 and 1993 changes in Canadian legislation determining length of patent monopoly.

Despite evidence of significant first mover advantages which resulted in higher brand prices, competition from generics succeeded in reducing overall market prices prior to 1987; but after 1987, the efficacy of generic competition was reduced and both brand and market prices increased. First, prior to the 1987 amendments to the Patent Act, generic competition succeeded in reducing the overall (brand and generic) market price of ethical drugs in British Columbia. This was due entirely to competition among generic drug producers, because branded drug prices continued to increase demonstrating robust first mover advantages. Second, after 1987, when the period of market exclusivity was extended for branded drugs, the moderating effect of generic competition was reduced.

Gleeson et al. 2019- Australia [74]

Retrospective to estimate the potential savings to the Pharmaceutical Benefits Scheme (PBS) and the Repatriation Pharmaceutical Benefits Scheme (RPBS) in 2015–16 if biosimilar versions of selected biologic medicines had been available and listed on the PBS.

Australian Government expenditure on biologics on the PBS and RPBS was estimated at A$2.29 billion dollars in 2015–16. If biosimilar versions of these medicines had been listed on the PBS in 2015–16, at least A$367 million dollars would have been saved in PBS and RPBS subsidies. Modelling based on price decreases following listing of biosimilars on the PBS suggests that annual PBS outlays on biologics could be reduced by as much as 24% through the timely introduction of biosimilars.

Hill et al. 2017- UK [75]

Prospective modelling to estimate lowest possible treatment costs for four novel cancer drugs, hypothesising that generic manufacturing could significantly reduce treatment costs.

Generic production could allow the UK price of dasatinib to decrease by 99.6%, and the UK price of gefitinib to decrease by 99.5%. Importation of Indian generics would represent a UK price decrease of 74% for bortezomib and 71% for everolimus.

Kaier 2012- Germany [76]

Retrospective analysis to determine whether demand in Germany for specific antimicrobial agents is driven by prices that drop considerably when generic substitutes become available.

Patent expiration is followed by substantial decreases in the price of antibiotics. In the outpatient sector, all antibiotics included in the analysis showed significant negative own-price elasticities of demand. However, in the hospital settings, significant own-price elasticities were only determined for some antibiotics, although price decreases were stronger than in the outpatient sector. Price dependence of demand for antimicrobials is present both in the ambulatory and the hospital setting.

Boersma et al. 2005- The Netherlands [77]

Retrospective analysis to investigate the influence of patent expiry on the use and cost of three selected drugs in the Netherlands, for which patents expired between 1996 and 2001.

For two of the drugs, there was a significantly steeper decline in the cost per defined daily dose after patent expiry (for the third, there was too little data to estimate the trend before patent expiry). For the three drugs, the cost per DDD fell by 61, 51 and 69% after patent expiry. After patent expiry, generics accounted for 75% of the drugs dispensed. Patent expiry causes significant price competition that leads to an overall decrease in costs.

Manova et al. 2010- Bulgaria [78]

Retrospective analysis to determine the effects of the arrival of generic and/or therapeutic competitors on the market, in terms of the impact on the market share and prices.

Generic competition, in general, changes the market. These changes decrease the price of the medicines. The introduction of generics changes the market share of the originator brand medicines and contributes to the changes in the share of the therapeutic groups. Differences in prices within the same drug classes but no significant change across the years.

Asif et al. 2019- Pakistan [79]

Retrospective study to empirically evaluate the trends of induction of novel drugs (i.e. new molecular entities and generic drugs) post TRIPS in Pakistan.

The results indicate a marked and consistent decline in the entry of novel drugs after TRIPS implementation, indicating that the access to novel medicines issue is likely amplified rather than improved by giving patent rights for the pharmaceutical products.