“A patent is a monopoly right given by the Government to the owner of an invention to enable him to prevent others from using, copying or making the invention without his consent in the country in which he has obtained patent protection. Apart from using the patent to prevent others from exploiting the invention, the patent owner can exploit his patent in many ways. He can use his patent to raise funds for his business, license it to third parties for commercial returns or sell the patented invention for a sum of money.”[1] A patent shall take effect and shall continue to be in force until the end of the 20-year period beginning from the date of filing the application for the patent.
In case of a drug patent, the drug company, which owns this patent, enjoys a period of market exclusivity (or monopoly) before the patent expires. During this period, the company sets the price of the drug at the level, which maximizes profitability. This price often greatly exceeds the production costs of the drug, which can enable the drug company to make a significant profit on their investment in research and development. It has been estimated that the average cost that brand name drug companies spend in discovering and testing a new innovative drug may be as much as $800 million. Hence, a 20-year period of the patent usually gives manufacturers a chance to recoup the cost of developing a new drug.
When a drug patent expires, any pharmaceutical company can manufacture and sell the drug. A drug, which is produced and distributed without patent protection is called a generic drug. A generic drug may still have a patent on the formulation but not on the active ingredient.
A generic drug must have the same active ingredients as the branded drug. It has to be in an identical strength and dosage form (tablet, liquid, etc.), and be administered in the same manner (oral, injection, etc.), as is the branded product. The generic must also supply the same amount of the active ingredient to the human body, at the same absorption rate as the branded drug.
Consumers in Singapore are expected to be able to save millions of dollars on medicine over the next few years as several commonly used branded drugs lose their patents and cheaper generic ones come on the market. Heart and cancer patients are likely to experience the biggest savings. A spokesman from the Singapore General Hospital pointed out that savings from patients do not come just from switching to a generic drug: The price of the branded version will also fall. One example in US is the sales of a breast cancer drug paclitaxel. It used to generate annual sales of US$1 billion during its patent term. But when its patent expired in 2000, its sales went down to US$100M within two years. Doctors from public hospitals said the change from branded to generic medicines has been accepted widely presumably because of the significant savings that patients can enjoy.
The primary reason for the relatively low price of generic medicines is that competition increases among producers when drugs are no longer protected by patents. Companies also incur fewer costs in creating the generic drug, and are therefore able to maintain profitability while offering the drug at a lower cost to consumers.
Generic manufacturers do not incur the cost of drug discovery, and instead are able to reverse-engineer known drug compounds to allow them to manufacture bio-equivalent versions. Bio-equivalence is a term in pharmacokinetics, which is used to assess the expected in vivo biological equivalence of two proprietary preparations of a drug. Two pharmaceutical products are bio-equivalent if they are pharmaceutically equivalent and their bioavailabilities (rate and extent of availability) after administration in the same molar dose are similar to such a degree that their effects, with respect to both efficacy and safety, can be expected to be essentially the same. Pharmaceutical equivalence implies the same amount of the same active substance(s), in the same dosage form, for the same route of administration and meeting the same or comparable standards. A generic drug is considered to be bio-equivalent when the data obtained from it falls within the range of 80 percent to 125 percent of the original product.
Generic manufacturers also do not bear the burden of conducting clinical trials since the brand name company has already conducted these trials. Clinical trials are conducted to allow safety and efficacy data to be collected for new drugs or devices. These trials can only take place once satisfactory information has been gathered on the quality of the product and its non-clinical safety, and Health Authority/Ethics Committee approval is granted in the country where the trial is taking place.
The advantage of generic drugs to consumers comes in the introduction of competition, which prevents any single company from dictating the overall market price of the drug. Generic drugs can be legally produced for drugs where: 1) the patent has expired, 2) the generic company certifies the brand company’s patents are either invalid, unenforceable or will not be infringed, 3) for drugs which have never held patents, or 4) in countries where a patent is not in force.
Generic drugs are always less expensive and can save patients and insurance companies thousands of dollars supposedly without compromising the quality of care. Ms M K Fatimah, who is the president of the Pharmaceutical Society of Singapore, is constantly on the look out for getting the best price for an approved generic drug. She said that generic drug makers must go through the Health Sciences Authority (HSA) and get their product license. Getting a drug product license is a stringent process. HSA has to ensure that the drug complies with quality standards. About 20 percent of the generic products on register in Singapore are manufactured locally, while the remaining is imported.
While switching to generic drugs guarantees substantial amount of savings, some doctors and patients believe insistently that certain generic drugs are not as effective as the products they are meant to replace. More particularly, it is not preferable to substitute drugs with narrow therapeutic index (NTI) with generic drugs. With NTI drugs, small changes in the dosage could cause toxic results, i.e. over- or under- effect for the patient. One example is the use of Warfarin, which is an anti-coagulant used to thin the blood. Too much of it could cause bleeding while too little of it could cause clot formation, which may lead to strokes or heart attacks. Once the patient is stabilized on the use of Warfarin, most physicians would not recommend switching to generic drugs. Switching to generics, in which there is a slight variation in the drug, would require an improbable job of monitoring. In the end, savings could only play a small role.
[1] From the website of the Intellectual Property Office of Singapore (IPOS)