Patent cliff: Billions to be saved — starting now

Lipitor led the way, and other blockbusters are following

For years everyone has been anticipating the big patent cliff, when a crop of blockbuster drugs loses patent protection and goes generic and prices fall to a fraction of what they had been. Well, the reaping season has arrived. The industry newsletter FiercePharma recently examined the top 10 pharmaceuticals facing generic competition through next year and found that products worth more than $30 billion a year in revenue will be genericized.

The Biggest Losers

The big three — Plavix, Lipitor, and Actos — account for almost half of that amount. Singulair, Seroquel, Zyprexa, and Diovan bring in more than $11 billion, with Lexapro, Provigil, and TriCor each accounting for more than $1 billion in revenue apiece.

Pharmacies have already begun to advertise the arrival of Lipitor copies and every big generic drug maker on the planet has been gearing up for these new markets. Patients are in for some big savings as well, as payers shift these new drugs to the most attractive formulary tiers.

A recent report from IMS Health, commissioned by the Generic Pharmaceutical Association, notes that last year the average copayment for a generic was $6.06, compared to $23.65 and $34.77 for preferred and nonpreferred brand drugs. Together, generic drugs saved payers and consumers about $157 billion in 2010. And with these new blockbusters about to go naked on the intellectual property front, that figure will keep rising.

Pharma companies, of course, haven’t been idle as the patent cliff loomed. They’ve been developing new drugs. This year has already seen a spike in new drug approvals at the FDA compared to previous years, and many of these new therapeutics fall into the biologics sphere, where they will retain marketing exclusivity for 12 years.

Source: Generic Pharmaceutical Association. An economic analysis of generic drug usage in the U.S. September 2011 and FiercePharma. 10 largest U.S. patent losses, October 24, 2011.

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HAP, a subsidiary of Henry Ford Health System, is a nonprofit health plan providing coverage to individuals, companies and organizations. This executive develops strategies to meet membership and revenue targets through products, pricing, market segmentation and advertising.  Aligns business among Business Development, Commercial Sales, Medicare and Public Sector Programs and Product Development. Seeks to enhance and be responsible for business development and expansion through the development of an effective product portfolio, strong interpersonal relationships and service excellence.

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