Patients, health care industry to benefit as popular name brand drugs set to lose patent protection

on Friday, April 29, 2011

Patients, health care industry to benefit as popular name brand drugs set to lose patent protection  In the pharmaceutical industry, patents are granted for new drugs - but only for a limited time, usually seven years. Medco Health Solutions, a pharmacy benefits manager for employer health plans, stands to benefit mightily from the upcoming expiration of a number of patents of some popular 'blockbuster' drugs.

Medco handily beat analysts' expectations when it reported its quarterly earnings this week, but the company's shareholders are more excited about the company's future growth potential. In December, the patent expires on the hugely popular cholesterol-lowering drug Lipitor, and Medco expects to see an additional 3 cents per share in the last month of the year on projected sales of a generic version of the medication.

Lipitor, however, is one of many patented prescription drugs whose patents are set to expire. By 2015, nearly $75 billion worth of branded drugs are set to lose their patent protection, according to Towers Watson's North American pharmacy practice leader, Nadina Rosier. Companies like Medco, CVS Caremark, Express Scripts and AmerisourceBergen stand to profit from the coming onslaught of generics, analysts assert.

The switch from prescriptions to generics will also benefit consumers, who spent $307 billion on prescription drugs in 2010. Generics are chemically comprised of the same active ingredients as their name-brand counterparts and are as efficacious, doctors assert. Though pharmaceutical companies will stop profiting so handily from their prescription drug offerings once they lose their patent protection, it could help the health care industry to cut costs and boost efficiency.

Currently, generic drugs comprise 78 percent of all prescriptions, but by 2012 four of the most popular medications in the U.S. will lose their patent protection, leaving the door open for competitors to manufacture generic versions of the drugs. Pfizer's Lipitor, AstraZeneca's Seroquel, Merck's Singulair and Plavix, which is put out by Sanofi-Aventis and Bristol-Myers Squibb will all lose patent protection by 2012, Fortune Magazine reports.

Generic drugmakers routinely storm the market once patents expire. In fact, when a drug goes off patent, generic companies take over 80 percent of the prescription volume within six months. With the medications so popular, the health care industry stands to profit.

According to Express Scripts, "drug price inflation for branded products was the single most important trend driver in 2010." Branded medications actually jumped in price by nearly 10 percent last year, compared with a fall of 10.2 percent for generic drug costs. The substantial cost savings that insurance companies stand to make from the coming generic versions of popular drugs is music to the ears of industry officials.

 

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