End of an era for Viagra as rivals get ready to raid market

Harder times ahead for Pfizer as Viagra patents end. Flickr/kosare

Those for whom Viagra is indispensable might be a little surprised that the ubiquitous blue, diamond-shaped pill was a chance discovery by a group of research pharmaceutical chemists at Pfizer’s research laboratory in Sandwich, Kent.

The research scientists were investigating the properties of the “sildenafil citrate” compound for its suitability as a heart drug when they accidentally discovered that it could treat erectile dysfunction - or impotence. Pfizer promptly synthesised the compound, assigned it the trade name Viagra and applied for patents across the world to protect their new invention.

But today two of Pfizer’s Viagra patents come to an end - a process that will inevitably finish the company’s monopoly in the UK.

Pfizer’s battles over patents and fake pills

Since its commercial debut in 1998, Pfizer has made a fortune selling billions of Viagra pills - a record 2.3m men were prescribed the drug last year in the UK.

But the global popularity and commercial success of the little blue tablets also inevitably provoked the envy of competitors who challenged the validity of their patent. The European Patent (UK) 702,555 for Viagra was invalidated by Justice Hugh Laddie in 2000 on grounds that the use of sildenafil citrate - the key ingredient - was already in the public domain before the patent was granted in 1993.

In Canada, the Viagra patent was invalidated for insufficient disclosure by the Supreme Court of Canada in 2012.

Nevertheless, Pfizer still managed to preserve its monopoly on Viagra in the UK via two other patents based on its methods of manufacturing Viagra. These are the two UK patents that expire today.

It means that rival “generics” manufacturers will be legally able to produce the pills under the name sildenafil and the lack of patent cover could see a dramatic diminution in Pfizer’s Viagra sales and profits with a price drop from £10 to as little as 85p a pill.

Even before the official expiration of Pfizer’s Viagra patents in the UK and the recent weakening of Viagra patent in Canada by the Supreme Court judgement, counterfeit and illegal generic copies of Viagra were being sold online. This undermined Pfizer’s monopoly and robbed the company of billions of pounds in annual sales of Viagra.

But in light of its waning patents around the world Pfizer’s new strategy for retaining its market share is to sell Viagra directly to customers via its website, in direct competition with the expected new generic competitors and the online pharmacies which have peddled unauthorised generics and fake Viagra pills for years.

A time to recoup

Pfizer’s Viagra sums up the challenge facing drug manufacturers around the world: they need patents to secure a monopoly right (for 20 years) in order to recoup millions of investment in research and development (R&D) into new drugs.

However, not all new drugs are as serendipitous as Viagra has been for Pfizer. The R&D process for a new drug could take years and can cost about $802m, according to a 2003 study by the Tufts Centre for the Study of Drug Development, and not all R&D lead to new drugs.

Also, as amply demonstrated by Viagra, drugs patents are often challenged by competitors in courts in expensive and often lengthy litigations that can last the lifetime of the disputed patents. New drugs are also subject to mandatory and lengthy prior-market approval processes, which include clinical trials on animals and human subjects.

Pharmaceutical companies need patents as an incentive and a safeguard for their investments. Without them, it’s unlikely they would invest in unpatentable, albeit promising pharmaceutical compounds.

Patents make for more expensive drugs

Generic and out-of-patent drugs are notoriously cheaper than patented drugs. Inevitably drugs are more expensive in countries with relatively stronger pharmaceutical patents, such as the US, than in countries with weaker pharmaceutical patents such as India. In EC countries and in Canada there are official price control mechanisms in place to counter the higher drugs prices caused by patent monopolies.

National health authorities across Europe often initially reject expensive drugs as one form of control. In the UK for example, the National Institute for Health and Clinical Excellence (Nice) routinely turns down patients’ demand for expensive drugs that lack corresponding clinical benefits.

Some of these make headlines. There was Herceptin in the case of breast cancer. Nice also refused to pay for Crizotinib, a lung cancer drug that costs £4,000 a month per patient, on the grounds that it was too expensive, despite clinical benefits that doubled the ones provided by chemotherapy. There are also rules on how much Viagra the NHS can prescribe.

Drug companies bending the rules

Drugs companies also often abuse the patents system by circumventing the limited monopoly conferred by patents.

This can be done in legitimate and illegitimate ways. For example, Pfizer could legitimately use Viagra’s trademark or trade name to extend or preserve their monopoly on the drug after their patents expire in the UK. It could do this by barring generic manufacturers of the drug from using the distinctive diamond-shaped and blue colour of Viagra and the name Viagra, which are all registrable trademarks in the UK and European Union.

Out-of-patents drugs manufacturers often pay generic manufacturers to delay entering the market in order to artificially preserve the monopoly price, indirectly and illegally extend their patent monopoly, and keep drugs prices artificially high.

US pharmaceutical company Solvay, which makes prescription testosterone gel AndroGel, agreed to pay generic manufacturers $42m (£27m) a year to delay making a generic copy of AndroGel by another nine years. The legality of this “pay to delay” payment is the subject of a legal challenge by the US Federal Trade Commission in the US.

A balancing act between cost and investment

The essence of drugs patents is to incentivise innovation in new pharmaceuticals by allowing drugs makers a limited monopoly rights that lets them recoup their investments in pharmaceutical R&D.

It’s a societal quid pro quo for many life-saving drugs. However, a monopoly often leads to higher drugs prices along with affordability issues for both poor and rich countries. The main challenge for authorities around the world is how to achieve the right balance.

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