Variations in Time of Market Exclusivity Among Top-Selling Prescription Drugs in the United States

In the United States, effective market exclusivity for a prescription drug is the time between US Food and Drug Administration (FDA) approval and the availability of the first generic version. Market exclusivity incorporates the minimum regulatory exclusivity periods granted to all FDA-approved drugs (eg, 5 years for new small-molecule drugs as set by the Hatch-Waxman Act of 1984), the remaining time on the original patent covering the active ingredient in the drug, the existence of so-called secondary patents covering peripheral aspects of drugs such as metabolites or alternative formulations,¹ and other factors that affect generic entry, such as generic manufacturers’ prospects of profit-making in the market and legal settlements between manufacturers of brand-name and generic drugs regarding disputed patents. Recent research has shown that prescription brand-name drugs that eventually face generic competition have, on average, an effective market exclusivity period of 12.4 years.² We assessed how the market exclusivity period varied among drugs for different therapeutic areas and for other characteristics of top-selling prescription medications.

This study was not submitted for institutional review board approval because it is based on publicly available data and involved no health records. We obtained annual published lists between 2000 and 2011 of the top 200 drugs by sales in the United States. We classified each agent into a primary therapeutic area. Using Medicaid prescription data compiled by the Centers for Medicare & Medicaid Services, we determined if a brand-name drug experienced generic competition from 2000 to 2012.³ We defined initiation of generic competition as the first quarter in which generic prescriptions were filled. For the subset of drugs that lost market exclusivity, we used the Drugs@FDA database⁴ to identify the approval date, chemical type (new molecular entity or new formulation), and whether the drug received a priority review. We determined whether the FDA granted each drug a special developmental designation (orphan drug, accelerated approval, or fast-track status).⁵ For all drugs that were new molecular entities and became generically available, we used a framework developed by the FDA to categorize their innovativeness and the size of the company that sponsored their FDA applications based on sales revenue.⁶ We performed Wilcoxon rank sum and Kruskal-Wallis tests to examine differences among our comparison groups of drugs.

Among the 437 top-selling drugs in our sample, 175 (40.0%) experienced generic competition by the end of 2012 (Figure). Only 7 of 50 therapeutic agents in endocrinology (14.0%) and 5 of 28 therapeutic agents in hematology and oncology (17.9%) became available as generic formulations during our study period. The median period of market exclusivity for all agents was 12.5 years, ranging from 9.5 years (interquartile range, 7.8-11.0 years) for therapeutic agents that lost market exclusivity in 2000 (n = 7) to 14.6 years (interquartile range, 12.4-15.8 years) for agents losing market exclusivity in 2012 (n = 16).

Median effective market exclusivity was longer for drugs undergoing priority review than for those undergoing standard review (14.5 vs 12.0 years, P = .005) and for therapeutic agents with special developmental designations compared with those without such designations (14.8 vs 12.5 years, P = .02). Median duration of market exclusivity also differed by therapeutic area (P = .008), ranging from 8.0 years for analgesics to 14.4 years for infectious disease drugs, 14.5 years for cardiovascular drugs, and 14.8 years for dermatologic agents (Table). Among new molecular entities, first-in-class agents had longer median periods of effective market exclusivity than drugs classified as additions to a therapeutic class (14.5 vs 12.9 years, P = .04).

For top-selling prescription brand-name drugs that faced generic competition, we found that drugs of greater clinical importance and those that received special FDA designations had longer effective market exclusivity periods. We also found a wide range of effective market exclusivity periods among brand-name drugs with the same level of innovativeness and significant variations in exclusivity length across different disease areas.

When making resource allocation decisions, pharmaceutical manufacturers consider the likely length of the market exclusivity period for the product in which they may invest. Recent legislation established a 12-year guaranteed market exclusivity period for all new biologic agents,⁷ and some economists have called for an increase in the length of guaranteed minimum regulatory exclusivity from 5 to 12 years for all drugs.² Our data suggest, however, that a uniform increase in the minimum period of regulatory exclusivity would disproportionately benefit drugs that are likely to be of less clinical importance.

The current variability in effective market exclusivities can be confusing to physicians, patients, and payers who do not know when to expect generic alternatives to higher-priced brand-name drugs. One alternative to the current system would be to provide a set period of effective market exclusivity that is prospectively determined at the time of FDA approval based on characteristics such as degree of therapeutic advancement offered by the agent, the public health importance of the condition being addressed, and the amount of public vs private contribution to the drug’s discovery.

Corresponding Author: Aaron S. Kesselheim, MD, JD, MPH, Division of Pharmacoepidemiology and Pharmacoeconomics, Department of Medicine, Brigham and Women’s Hospital and Harvard Medical School, 1620 Tremont St, Ste 3030, Boston, MA 02120 (akesselheim@partners.org).

Published Online: February 9, 2015. doi:10.1001/jamainternmed.2014.7968.

Author Contributions: Mr Wang and Dr Kesselheim had full access to all the data in the study and take responsibility for the integrity of the data and the accuracy of the data analysis.

Study concept and design: Wang, Kesselheim.

Acquisition, analysis, or interpretation of data: All authors.

Drafting of the manuscript: Wang, Kesselheim.

Critical revision of the manuscript for important intellectual content: All authors.

Statistical analysis: Liu.

Obtained funding: Kesselheim.

Administrative, technical, or material support: Wang.

Study supervision: Kesselheim.

Conflict of Interest Disclosures: None reported.

Funding/Support: Dr Kesselheim is supported by a Harvard Program in Therapeutic Science Ignition Award, and a Greenwall Faculty Scholarship in Bioethics. Dr Kesselheim also reports receiving research funding from the FDA Office of Generic Drugs.

Role of the Funder/Sponsors: The funding sources had no role in the design and conduct of the study; collection, management, analysis, and interpretation of the data; preparation, review, or approval of the manuscript; and decision to submit the manuscript for publication.