Patent expiry and the 'evergreening' of drugs

There are over US$10bn worth of drugs coming off-patent in the next five years, so the refocusing of old drugs with new and better enhancements and ensuring future successes is big business, as Geoffrey Tovey explained to Graham Lampard

Given that only three in ten newly marketed drugs recover their r&d costs, the current business challenges for drug development and production all aim at ensuring profitability and extending the life of those drugs which are already sucessful.

'There is a need to achieve faster and more efficient r&d and avoid bottlenecks in the process. Each day of delay can cost US$1.3m,' says Geoff Tovey, former vp of pharmaceutical r&d for SmithKline Beecham, who now consults on pharma science and technology matters.

'There is a need to maximise the commercial value of product assets and in the wider context companies need to adopt new approaches in pharmaceutical r&d. They need to make themselves aware of, understand, develop and use new technology and respond to changing business challenges. Much of the new technology is based on biotech initiatives, for example genomics, proteomics and combinatorial chemistry and it is these initiatives that are generating many more disease targets and "hits" for screening. Delivery to these targets is a key success factor.

'However, investment in such technologies is expensive and without substantial improvements in r&d efficiency it will no longer be possible to deliver double digit returns to investors.'

In the past seven years, costs have more than doubled and by 2005 the r&d cost per company is likely to be more than US$2.5bn. 'Also, with long development times, there is reduced time from "innovator" launch to "follower" competition and there is the impact of global pricing regulations,' Tovey comments. 'However, it is the high attrition rates that stand out as a major burden on r&d costs. The unadjusted costs of developing a new drug are in excess of US$500m, but if you take out the costs of attrition that figure falls, if "falls" is the right word, to US$200m. Thus, the objective should be to reduce specific compound attrition costs and to remember the adage "fail early, fail cheap." '

So, where can pharma companies make money? Tovey says, 'The middle ground between the new chemical entity (NCE) and the generic compound is still a place where you can get good returns. Of course, there are massive returns to be had on the NCE, but there are also huge risks associated with it, whereas at the generic end of the market the returns are modest, but then again the risks are very low. In the middle [fig 1], there are enormous opportunities to exploit the market, perhaps by product enhancements, new indications, new dosage forms or new drug delivery systems, and there are companies who specialise in that.

'The research-based companies would like to have most of their business coming out of their NCE pipeline because the returns are so massive, even if the risks are high. No research-based pharmaceutical company is going to survive based on the sort of returns that you get from generics. At this end everything is about saving at the pennies level.

'NCEs should always provide better treatment and, hence, you are talking about important benefits to patients — this is reflected in the appropriately high value the products containing the NCE can command and helps to maximise the returns. Ultimately, when you have launched the product and you are still well within the patent life, the returns should be high.'

The pharmaceutical companies want to see a good portfolio of products on the market, under patent and other good strong intellectual property, with some years ahead of good growth and sales.

'I think they would also like to see, as the product lifecycle levels off, new developments, which will bring in enhanced products to extend the lifetime of profitable levels of drug sales,' he commented.

Ideally, this would be towards the end of the patent life, and allow the company to boost sales of the product long after the time the primary drug substance comes off-patent. Not only should the enhanced new product create new sales, but it will regenerate interest in the original base product and extend the life of the drug.

lifecycle management

This lifecycle management, or 'evergreening' as Tovey calls it, is important in keeping a drug profile high and requires management throughout the history of the NCE, preferably starting before the dosage forms of the compound are launched.

Part of this management process is recognising when the evergreening process is finally going to tail off. Once the patient has a convenient dosage form, the point will eventually arrive where further improvements may be uneconomic.

'The prescriber could say, "this new product is all very well but it is costing more and I really don't think the added benefit is sufficient. I can provide more benefit to patients by using our limited funding in other ways." Of course, the regulatory authorities only want to give product approval that makes a contribution to improved medicine. Furthermore, in the world of HMOs cost-benefit carries weight as does risk-benefit!'

The patent expiry of drugs over the next five years is alarming. Out of the top 26 drugs, each worth in excess of US$1bn in sales, 15 have patent expiry dates within the next four years. So, the race is on to develop drug enhancements, which should mean better medicine for patients and greater returns for the drug delivery companies. There are quite a few companies in the marketplace who specialise in drug delivery systems and they are aiming to get a greater share of the market.

Big drug companies will have their own in-house capacity to investigate their own drug delivery systems as well. So, there is a huge opportunity for companies to prolong the value of the products and maintain returns.

From the drug delivery company's point of view, the prime objective is to work with the NCEs from big pharma companies because, if successful, it can generate royalty income for the period of the patent, which could be up to 20 years.

specialised delivery systems

Not surprisingly, pharma companies can be reluctant to share their r&d work on NCEs with other companies. The drug delivery company wants to get access to the NCE, while the pharma company, unless it needs to use a specialised drug delivery system (DDS), will try to avoid sharing a valuable asset. Also, the need to use a DDS for an NCE can imply a failing, which can reduce the drug's profitability.

'In the future, as there will be many ways in which the molecule put forward as an NCE can be determined, all the features, such as solubility and the ability to cross membranes and be absorbed, will be built in,' says Tovey.

He suggests that pharma companies have two options. They can wait until a compound that won't need a specialised delivery system is delivered, or they can take the compound, which may not be ideal, and using a clever and creative DDS, go forward that way. These days, it generally makes sense to take the decision on the basis of which is the quickest route to market.

'That is not to say that companies stop work on related molecules because, if it is an important area there is always a need for follow-up compounds; but speed-to-market is a big, big issue. Using the compound to hand, with a supporting DDS, is often the best way to go.'

Although there may be a reluctance to go with a DDS if the NCE has adequate patent cover, there are exceptions to the rule and the clearest is when the NCE cannot be administered at all without a DDS.

'For example, the oral delivery of protein and peptide molecules cannot at present be achieved successfully and there is a huge amount of work going on to try and find a method to deliver large molecules by the oral route, keeping them effective and potent,' Tovey adds.

patent protection

Intellectual property (IP) also plays an important part in this business. If a company has an exclusive DDS, IP can be a powerful enhancement of the drug position in the market. There are many sorts of IP, but probably the strongest is a patent on the drug substance itself.

If the drug has a patent, no-one else can do anything with it, at least nothing which will speed a product to market when the patent expires.

However, research is allowed, and not all countries are meticulous about enforcing patent rights — in this case some creative progression outside Europe/US may be tempting.

The fact that a particular synthetic or other process yields a particular purity profile can lead to a process patent. This is registered with the authorities, means that if someone has another impurity profile for that drug, the regulatory authorities may not accept it as equivalent.

Therefore, the fact that a drug with a particular profile is patented, albeit that it has impurities, at least they are known, tested and accepted by the authorities.

Someone else may try to copy the drug, but using a different process they will more than likely get a different impurity profile, which could cause them to fall foul of the need for more safety studies and have to repeat them .

Particular salts, polymorphs or different crystal forms of the drug, can have an effect on the rate of action of the drug and can be granted patents in their own right.

Formulations, manufacturing process, trademarks, know-how and design can all be patented as well

In some cases, although process know-how can give reasonably strong IP, if it is patented it may give away clues that can be more valuable to a competitor than the patent is worth as a means of retaining exclusivity. This is a judgement which may need to be made.

Overall, the various types of intellectual property tend to be additive, if a company can get some patent protection, some formulation protection, perhaps some drug delivery protection, pack design features and a little bit of know-how it can build up to a strong IP case.

Tovey says, 'One of the things that makes pharma development particularly interesting is keeping up with the latest innovations, especially as some of the underlying technologies have not necessarily been used before in the pharma industry.

'There are companies around that are using the sort of technologies used in photocopying, in order to lay down drug substances or coatings in dosage forms. That kind of electrostatic deposition is not something that would have particularly been thought of in the pharmaceutical industry. Likewise there is technology based on supercritical fluids, which has been exploited by academics, to get designer particles so that drugs in solid form can be of a particular particle size or shape to help optimise drug delivery to the patient.'

It has been estimated that 13% of drug sales are currently in presentations dependent on the DDS and this figure is likely to grow at a double digit rate for next five years. It has been estimated that delivery systems, which are currently worth about US$28bn, will reach US$78bn by 2005.

Generally, it is business needs that are driving the changes in the industry. There is a need for better in vitro screening for hits and reduced attrition costs.

The business must be understood and early application to leverage product opportunities is essential to ensure that the margins are maintained to justify the continued investment.