Currently, the AMNOG (German Act on the Protection of the Health of Patients) and its impact on patient care with innovative medications are in the spotlight of the pharmaceutical market. However, at the end of a pharmaceutical innovation's life cycle, there are also current issues of high relevance to patient care that perhaps receive less attention. This refers to the expiration of the patent and its consequences.

> When the patents for an active ingredient expire, generic drugs typically enter the market. Generic competition can quickly shift market share in favor of copycat drugs, which in turn assume a significant role in patient care. Generic drugs are essentially available as soon as the patent expires. Within a few weeks, significant quantities are distributed to pharmacies via pharmaceutical wholesalers.

Patent expiration causes market shifts
In 2011, the patents for numerous active ingredients expired, including valsartan and olanzapine (source: SHARK, INSIGHT Health; see Table 1). This created a significant market volume for competition in patient care. Based on the six active ingredients listed in Table 1 alone, this resulted in statutory health insurance expenditures of almost €900 million in 2010, based on pharmacy sales prices (source: NVI, INSIGHT Health).

Example Valsartan (mono):
In 2010, statutory health insurance expenditures, valued at list prices, amounted to €116 million. The cost per daily therapeutic dose (DDD) was approximately 52 cents (NVI, INSIGHT Health). Patent protection expired on November 13, 2011. This immediately led to extensive wholesale deliveries of generic medications to pharmacies (see Figure 1). Overall, by December 2011, the month following the patent expiration, more than half of valsartan patients were being treated with the more cost-effective generics. This means that numerous patients experienced a corresponding switch immediately upon the generics' market entry. In March 2012, the generics quota of valsartan-treated statutory health insurance patients reached approximately 80 percent. Among new enrollments, the share of generics is even significantly higher than 90 percent (Patient Tracking, INSIGHT Health).
The average cost per daily dose has since fallen to approximately 22 cents (see Figure 2). Health insurance companies can therefore realize significant savings through the lower prices of generic drugs.

Discount agreements after patent expiration
According to figures from INSIGHT Health, discount agreements for pharmaceuticals under Section 130a (8) of the German Social Code (SGB V) are a key cost-containment component within statutory health insurance, currently accounting for 54.1 percent of prescriptions (March 2012, see Figure 3). In 2011, this resulted in savings of over €1.6 billion (see BMG, KV 45 - Preliminary Financial Results for the First-Fourth Quarters of 2011).
It is not uncommon for recently generic active ingredients to be included in a discount tender under Section 130a (8) of the German Social Code (SGB V) shortly after the patent expires. The first Europe-wide discount tender for valsartan was launched by spectrum|K on December 21, 2011, just a few weeks after generic market access. Discount agreements such as these thus intervene in the open market shortly after the patent expires. Three winners emerged from the nine applicants, who will assume the majority of valsartan supply to patients of the issuing health insurance funds starting May 1, 2012, approximately six months after the patent expires.
Six further tenders for the active ingredient have already been published, so that supply will be almost entirely regulated through tenders at the latest when the TK tender comes into effect on November 1, 2012, and thus one year after the patent expires.
For patients, this means they may have to consider switching treatments again. What may make sense from a short-term cost-oriented perspective for statutory health insurance (SHI) may be problematic in individual cases. For example, in the context of switching treatments, the potential negative impact on treatment compliance is also being discussed. However, the relevance of this topic varies from indication to indication.

Bridging contracts before patent expiration
The situation is somewhat different with regard to such discount agreements concluded immediately before patent expiration. In recent times, original equipment manufacturers have increasingly responded to the drastic market shifts they anticipated with so-called bridging agreements.
This means that before the patent expires, a discount agreement is concluded with a health insurance fund, extending beyond the patent period. This makes substitution of the original product in the supplying pharmacy no longer possible, which has led, among other things, to complaints from the generics industry. An example of this is the active ingredient candesartan, for which discount agreements were concluded with 124 statutory health insurance funds in the last quarter of 2011, shortly before the patent expired on April 29, 2012. The active ingredient accounts for approximately €214 million in statutory health insurance expenditures (AVP) in 2011 (NVI, INSIGHT Health). For the patient, this means that they will continue to be supplied with their usual medication until further notice. For competition, however, this means that market access remains at least partially restricted.
from:
Christian Bensing
Dr. André Kleinfeld*