Venue: The Fuqua School of Business, Duke University, 1 Towerview Drive, Durham, NC 27708-0120

 

Presentation

The Utilization of Medicines Beyond Patent Expiration: Evidence of Long-term Value?

Authors: Edward C Mansley (Merck & Co., Inc); Steven M. Teutsch (Merck & Co., Inc.); Dawn M White (Merck & Co., Inc.); Jamie D. Busza (Merck & Co., Inc); Steven S. Geisel (Merck & Co., Inc)

Presenter: Edward C. Mansley (Merck & Co., Inc.)

Discussant: Joel Hay (University of Southern California)

Session: Patents

Room: Geneen Auditorium

When: Tuesday 1 p.m. - 2:30 p.m.

Background The utilization of a medicine, both before and after patent expiration, is a key determinant of its long-run value to society. However, while utilization during the years of patent protection is followed fairly closely, usage after that is generally not, as multiple manufacturers are usually involved in the production and sale of generic alternatives. Since utilization beyond patent expiration is poorly understood, we selected a random sample of 60 drugs and assessed their long-term, post-patent use during the period of generic competition. Methods At five-year intervals beginning with the year generic competition began (YGCB), we estimated the U.S. utilization of each drug (including all generic and branded formulations) based the number of prescriptions dispensed as projected by the National Prescription Audit (1964 to 2006) conducted by IMS. These estimates were then compared to each medicine's baseline utilization, defined as the drug's usage during the last full year of patent protection -- one year prior to the year generic competition began (YGCB-1). The absolute utilization levels were converted into relative utilization levels, whereby a measure of 1.0 indicates that utilization in that year was equal to utilization in the baseline year. Results Many drugs continued to be prescribed long after patent protection ended. Even after excluding one medicine that had unusually high utilization 15 to 30 years after generic competition began, relative utilization averaged between 0.64 and 0.99 for the 5-year intervals starting with YGCB+5 and ending with YGCB+30 (Figure 1). This was true even though several of the medicines were available over-the-counter (OTC) during some of those years and we did not have data reflecting OTC utilization. After excluding those OTC years (to focus on medicines that had more complete data), relative utilization averaged between 0.88 and 1.15. Conclusion Many medicines continue to be used far beyond their period of patent protection, somewhat countering the perception that newer drugs quickly replace older ones. This extended, post-patent utilization likely yields additional benefits for society, helping to justify the social tradeoff inherent in the patent process.