When can a generic drug be produced?
When a pharmaceutical company first markets a drug, it is usually under a patent that allows only the pharmaceutical company that developed the drug to sell it.
Generic drugs can be legally produced for drugs where: 1) the patent has expired, 2) the generic company certifies the brand company's patents are either invalid, unenforceable or will not be infringed, 3) for drugs which have never held patents, or 4) in countries where a patent(s) is/are not in force.
The expiration of a patent removes the monopoly of the patent holder on drug sales licensing.
Patent lifetime differs from country to country, and typically there is no way to renew a patent after it expires.
A new version of the drug with significant changes to the compound could be patented, but this requires new clinical trials.
In addition, a patent on a changed compound does not prevent sales of the generic versions of the original drug unless regulators take the original drug off the market.
This allows the company to recoup the cost of developing that particular drug. After the patent on a drug expires, any pharmaceutical company can manufacture and sell that drug.
Since the drug has already been tested and approved, the cost of simply manufacturing the drug will be a fraction of the original cost of testing and developing that particular drug.
The Patient Protection and Affordable Care Act, which President Obama signed on March 23, 2010 now authorize the Food and Drug Administration to approve generic versions of biologic drugs and grant biologics manufacturers 12 years of exclusive use before generics can be developed.
Brand-name drug companies have used a number of strategies to extend the period of ''market exclusivity'' on their drugs, and prevent generic competition.
This may involve aggressive litigation to preserve or extend patent protection on their medicines, a process referred to by critics as “evergreening”.
Patents are typically issued on novel pharmacological compounds quite early in the drug development process, at which time the ‘clock’ to patent expiration begins ticking.
Later in the process, drug companies may seek new patents on the production of specific forms of these compounds, such as single enantiomers of drugs which can exist in both “left-handed” and “right-handed” forms, different inactive components in a drug salt, or a specific hydrate form of the drug salt. If granted, these patents ‘reset the clock’ on patent expiration.
These sorts of patents may later be targeted for invalidation (“paragraph IV certification”) by generic drug manufacturers.
Generic drug exclusivity
The U.S. Food and Drug Administration offers a 180 day exclusivity period to generic drug manufacturers in specific cases. During this period only one (or sometimes a few) generic manufacturers can produce the generic version of a drug.
This exclusivity period is only used when a generic manufacturer argues that a patent is invalid or is not violated in the generic production of a drug, and the period acts as a reward for the generic manufacturer who is willing to risk liability in court and the cost of patent court litigation.
There is often contention around these 180 day exclusivity periods because a generic producer does not have to produce the drug during this period and can file an application first to prevent other generic producers from selling the drug.
Recently, the purpose of the exclusivity "bonus" provided for by the Hatch-Waxman Amendments was turned on its head when the original patent holder, Cephalon, instituted patent infringement suit against all companies holding generic exclusivity rights to manufacture modafinil, the generic name for Cephalon's still-profitable stimulant drug, Provigil.
"Settlement" of this suit with Cephalon was hardly a risky endeavor for the generic manufacturers, as it was Cephalon which agreed to pay Provigil's alleged infringers in excess of a billion dollars – if they agreed ''not'' to market generics for Provigil during their period of exclusivity. In effect, Cephalon was able to extend its exclusive right to manufacture Provigil even though Cephalon's patent for Provigil had already run out.
Large pharmaceutical companies often spend millions of dollars protecting their patents from generic competition.
Apart from litigation, companies use other methods such as reformulation or licensing a subsidiary (or another company) to sell generics under the original patent.
Generics sold under license from the patent holder are known as authorized generics; they are not affected by the 180 day exclusivity period as they fall under the patent holder's original drug application.
A prime example of how this works is simvastatin (Zocor), a popular drug created and manufactured by U.S. based pharmaceutical Merck & Co., which lost its US patent protection on June 23, 2006.
India-based Ranbaxy Laboratories (at the 80 mg strength) and Israel-based Teva Pharmaceutical Industries (at all other strengths) received 180 day exclusivity periods for simvastatin; due to Zocor's popularity, both companies began marketing their products immediately after the patent expired.
However, Dr. Reddy's Laboratories also markets an authorized generic version of simvastatin under license from Zocor's manufacturer, Merck & Co.; some packages of Dr. Reddy's simvastatin even show Merck as the actual manufacturer and have Merck's logo on the bottom.
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