Stepped pricing to put pressure for patent challenge

Evading patent grants ‘preferential sales rights and upper limit pricing

50 out of 60 companies successfully challenged Jardiance patent, all started process after pricing regulation emerged

Patent challenge competition to be heightened, inevitability raises concern

The stepped drug pricing system, revived since last July, seems to have affected the pharmaceutical industry’s patent strategy.

 

The pricing system would create a structure to naturally diminish the drug pricing competitiveness in other companies, when 20 or more companies simultaneously and successfully challenge the patent.

 

Pharmaceutical companies’ patent strategy originally focused on winning the preferential sales right, but the revised pricing system would unfold even more competitive patent challenge scene as the success would not only bring the preferential sales right but also more favorable generic pricing.

 

Some complain now the companies are inevitably pressured to challenge the patent to defend the generic competitiveness.

 

◆Patent challenge inevitable to claim better generic pricing According to the pharmaceutical industry source on Jan.

 

14, the pharmaceutical companies are to face heated competition to nab the generic approval first as the stepped pricing system has been enforced from last July.

 

The core objective of the system is to differentiate the pricing after listing a 20th product with a same substance.

 

53.55 percent of the original’s pricing would be applied on up to first 20 drugs to be listed.

 

And other drugs listed afterwards would be applied with pricing lower by 15 percent each.

 

In other words, up to 19th generics, except for the one original drug, would be able to receive the pricing level of the upper limit.

 

Considering the reimbursement listing is decided once every month, the stepped pricing system has been technically extended to a first-come-first-served approval competition.

 

Stepped pricing system effective from July 2020

With the shift in regulation, generic makers would be pushed to challenge patent to obtain the maximum pricing.

 

The approval competition would be passed straight on to patent challenge competition.

 

As for pharmaceutical companies, the regulatory change has increased the benefit in patent challenge.

 

Previously, the benefit was limited to earning a preferential sales right, but now it can also grant the top pricing.

 

But in the same sense, a company that did not challenge the patent would have to market their generic later and cheaper than others.

 

◆49 generic makers challenged Jardiance patent when new pricing system emerged Some say the patent challenge scene has gotten saturated already due to the revised pricing system.

 

Product image of Forxiga

For instance, over 60 companies, started from Chong Kun Dang, have challenged the crystalline form patent on Boehringer Ingelheim’s sodium-glucose cotransporter-2 (SGLT2) inhibiting antidiabetic treatment Jardiance (empagliflozin).

 

Eventually, the ruling was in favor of 50 generic companies.

 

The interesting part of the proceeding was the timing of these patent challenge cases.

 

Most of the companies filed the patent litigations after April 2019, when the framework of the stepped pricing system surfaced.

 

Starting from Chong Kun Dang in March 2015, 12 companies requested for the patent nullification, in which all of them lost.

 

Three years later, Chong Kun Dang retried and requested for the negative confirmation of the scope in January 2018.

 

The Korean company was alone during the legal case, but it won in May 2019.

 

From June 2019, other generic makers tried their luck.

 

49 companies challenged the exact same patent as of August last year.

 

The industry notes the swarm of patent challenge rushed in after the stepped pricing regulation came in sight.

 

The majority of them were shooting for the ‘good pricing.’ A pharmaceutical industry insider explained, “Usually the patent challenge is filed within 14 days from the day of first case registration to win the preferential sales rights.

 

But for Jardiance patent, the tens of companies jumped into the patent challenge a year and a half after Chong Kun Dang began the patent challenge.” He added, “It could be that some tried after Chong Kun Dang’s success, and some joined the legal suit to not fall behind in the pricing competition.” ◆Patent challenge could mean nothing if generic not developed before patent expiration Regardless of increased benefit in challenging a patent, some raise the voice of concern.

 

Small and medium enterprises without the capacity to challenge the original patent argue the regulation is cutting them out of pricing competition.

 

25 companies have challenged AstraZeneca’s antiplatelets Brilinta (ticagrelor) and received the preferential sales rights before the patent expires late this year.

 

The preferential sales would be protected from November this year to August next year.

 

Assuming the 25 companies would all launch their products, other generics to be released to the market after August next year would receive already reduced pricing.

 

And there is no guarantee of the maximum pricing to all who successfully challenged the original patent overcoming all difficulties.

 

Product image of Jardiance

Currently, 19 companies have evaded product patent on AstraZeneca’s SGLT2 inhibitor Forxiga (dapagliflozin) to be expired January 2024.

 

These companies can launch their generics after April 2023.

 

But if one of them fails to finish developing their generic by April 2023, any of other 25 companies that evaded the product patent can launch their generic from January 2024.

 

Regardless of all resources put into the legal case, the company would lose the upper limit pricing when their generic is not ready to be launched when the patent is expires.

 

A pharmaceutical industry insider said, “The patent challenging competition was initially intense to begin with for the sake of preferential sales right.

 

But exclusivity in the market for nine months and receiving lower pricing are quite different story.

 

The generic makers would now have to engage in even more fierce competition centering patent challenge.”