[BLANK_AUDIO]. Here's another act that is very
important. And it's very important for a number of
reasons. The Hatch-Waxman Act.
I always have problems saying this properly.
it legalized generic competition. And that's critical because patents are
issued for about 20 years from the date that they are basically filed.
when you file a patent, the clock is ticking.
So, if I file it, let's say I discovered a compound that was active in animal or
even worse in a test tube. Not even a cell based test, but in the
test tube. And I'm really worried with this new act
the AIE Act that I talked, that I should file my patent immediately.
And it takes me 10 years, so I filed. Okay.
I'm the first one. It takes me 10 years to get into human,
and then you just heard Doctor Trio talk about the fact that it could take me
another 10 years to maybe get on the, in the market.
By the time on the market, the patent goes off.
Oops, I just spent a billion dollar or whatever amount of money, and I don't
have anything to show for it. So, that's another thing that's really
important. Is that you have to really think about
this when you're going to file. It gives the first generic.
And this is important for small molecule. You will see how different that is for
biologic. It gives the first generics 180 days to
actually patent generic exclusivity. And what happens during that period very
often is that the generic thinks, wow, I can make some money.
So, I'm only going to discount the price about maybe 20%.
Okay. Unless the pharmaceutical companies
starts matching me, and then I'm going to, it's going to be a price erosion.
So, during that period of time, there is also some things that can happen and
we'll talk about it in a minute. and the other thing that happens is the
generic, the first generic manufacturer, drug maker as it's called here, can file
a lawsuit to challenge the IP from the originator.
Now, brand name companies are very smart, and they say, hey, you know what?
Maybe we can profit from this. Because there is only one generic
manufacturer that can enter the market. Well, what if we don't, what if we talk
to them and we tell them to stay out of the market.
Well, let's talk about that. And as I mentioned, this law does not
apply to Biologics and we will cover that later on.
And again, you can access all these into the ftc.gov.
Here is a process that's called Pay-for-delay process.
The Pay-for-delay process, and I'm going to give you an example.
Basically, has been used to maintain market monopoly.
So, let's say you are the generic manufacturer, and I'm the brand
manufacturer. And you just filed, and you got your
generic approved by the by the FDA to be able to sell.
Well, I come to you and I say hey, you know what?
Why don't we do a deal here? I'm going to write you a fat check, and
you're going to hold on that patent, and you're not going to start commercializing
for 180 days. Meanwhile, you know, I'm selling Drug X,
which generates $12 billion. And I have another 180 days, where I can
continuing going, [SOUND], okay? Well, you could ask well, that's not
really very ethical is it? Well, on December 7, 2012, very recent as
you can see. Supreme Court said it would decide
whether a pharmaceutical company should be allowed to pay a competitor millions
of dollars to keep a generic copy of a best selling drug off the market.
This is very recent. three judges of US Supreme Court of
Appeals of the third circuit. Ruled that first of all payment by
pharmaceutical companies to generic competitions to delay bringing their
drugs to the market is considered as evidence of an unreasonable restraint of
trade, okay? So, there is controversy right there.
Well, let me give you a case study. This is an old one, but there is a number
of others. these companies are both gone.
So, I mean it doesn't really matter, but still.
1995, Upsher-Smith Laboratories and Lederle, generic manufacturers, they
submitted generic approval application with FDA.
Claiming that their formulations did not infringe on patent of Schering-Plough on
a certain drug. Schering came back and sued them saying
that it was actually infringing, because that was a generic.
And so, it's counter suits. Before the FDC actually issued an
opinion, here's what happened. Schering paid Upsher $60 million for
various things, which they never really disclosed.
And they paid an agreement to drop the suit and paid Lederle another 15 mil.
That way they could have the product on the market for another 180 days.
So, that is a major case as you saw that is going to be discussed later on and was
you know, as, as of December 2012. So, this year, it will be very
interesting to see what happens. Because if they decide that this is, you
know, an unacceptable fair trade, this will go away.
And pharma companies will not be able to do that any more.
And to be honest, the government has really, really big reasons.
Because the cost of healthcare is so high that 180 days being able to have a
generic that is going to be ten times less than what the brand name is, is
going to be very important. So, the generic for small molecule, first
of all, the pricing you have to understand the pricing between Europe and
the US is very different. Depending on the countries.
I don't know specifically the uncertainties of the laws and the amount
of time. What I know though, is that in Europe,
once a generic is approved on the market once a progress on generic and there's
approved on the market, then government switch systematically to the generic.
In Germany, France is now pushing very heavily.
And I'm going to talk about this, actually, the incentives that they have.
So, it's a very good question. Hold it for a minute and you will see
through the lecture. Alright, let's talk about the biologics
market. So, what are biologics?
Well, this is the definition. You guys know all about this.
Small mole new molecules, let's talk first about new molecules entities, small
molecules. you heard about the Lipinski rule.
Chemically synthesize, simply well-defined.
it's not necessary as well as target specific.
most of the time, they are pills, even though a lot of them can be injectable as
well. But primary people go for pills.
And usually, they are not antigenic. Well, biologics, large molecules, usually
produce quite differently than a small molecules.
they are fairly complex with secondary, tertiary structures, glycosylated or not.
They have usually high target specificity, even though one could argue
some of them are very promiscuous. And they are primarily parental
administration, either IV or IM, and they can stimulate the production of antibody.
Alright. What are the top selling biologics, and
these are actually peak years. I derived that data from annual reports
from Fierce Biotech, which is another resource that I suggest you guys take a
look at. There is a lot of information there.
But what's very interesting is this year, actually Humira is going to be the
largest drug selling ever. it has now, biologics have now overtaken
small molecule. The largest small molecule was Lipitor.
Pfizer patent went off last year. Basically, now Humira is the number one
biologics. So, as you can see from this table, and
there's a number of others that beyond this.
Is that they are not becoming very interesting from the perspective of
generic perspective. Because when these patents expire, you
know there would be a lot of cost saving to the government.