By Emily Wasserman and Tracy Staton
In the land of pharma, off-patent drugs usually translate to lost profits. But things don't always shake out that way, as this week's controversy over Turing Pharma and its massive price hike on a 62-year-old drug shows. Thanks to financial maneuvers for some--and good old-fashioned brand strength for others--companies could collect billion-dollar sales for aging drugs by 2020, according to a new report from EvaluatePharma.
The team at Evaluate sifted through a database and saw that a number of products aged 50 years or older were still going strong, well past their heyday--and are set to keep growing. And for some drugmakers, the win will come from a "straight financial maneuvering play," EP Vantage reporter Jacob Plieth told FiercePharma.
Take Mallinckrodt ($MNK), for example. The company last year shelled out $5.6 billion for Questcor Pharmaceuticals to get its hands on the company's off-patent respiratory injection, H.P. Acthar Gel. Though off patent, that drug had picked up an orphan indication, giving it added protection--and Questcor snapped up rights to a would-be head-to-head rival, Synacthen Depot, from Novartis ($NVS). And then, the company took advantage of its exclusive market access with a series of big price increases. The company hiked its price to $1,500 per vial immediately, and by 2013, those vials were selling at $28,000 each, making it one of the world's most expensive meds.
Those tactics could allow Mallinckrodt to reap $1.47 billion in additional sales for the product, with Acthar raking in $1.6 billion in 2020 sales, according to EvaluatePharma estimates. If investigations by the Federal Trade Commission and several state attorneys general don't force the company to make changes, that is.
Some of the drugs that made the list were less surprising, Plieth said. Brand awareness helped some earn a place on the list, as tried-and-true products such as Johnson & Johnson's ($JNJ) Tylenol and Pfizer's ($PFE) Advil continue to deliver standout performances. Tylenol, a 60-year-old product, will collect an additional $195 million by 2020, catapulting it to $1.86 billion in 2020 sales. Advil, a 31-year-old behemoth, will rope in $168 million in additional sales by 2020, falling just shy of the $1 billion mark with $957 million in sales, EP Vantage figures.
Companies with complex manufacturing processes for their off-patent meds could also benefit, Plieth added, as rivals without the same production know-how are less likely to develop a competing drug. AbbVie's ($ABBV) hypothyroidism med Synthroid and Grifols' infusion drug Flebogamma are two prime examples, with Synthroid expected to have $860 million in sales by 2020 and Flebogamma passing $1 billion in sales the same year.
Still, drugmakers could face a few obstacles with the advent of biosimilars. Especially for Roche ($RHHBY) and its blood clot drug Activase, things could get tricky once new competition enters the picture, Plieth pointed out.
But companies such as Retrophin ($RTRX)--Turing CEO Martin Shkreli's former company, which hiked the price of an old drug by 2000% to boost sales--and Catalyst Pharma ($CPRX) are engineering protections for their older drugs. The drugmakers will likely follow in the footsteps of Questcor/Mallinckrodt because the business model is "there for the taking," Plieth said. "If you can snatch up a drug for very little money and develop it for an indication, you can watch the money roll in."
A slate of other drugmakers have done just that, thanks to an FDA program granting exclusivity to products once sold without agency approval--because they're old enough to predate its approval processes--provided drugmakers put them through clinical trials. Abbreviated trials, in most cases; Rare Disease Therapeutics, for instance, conducted a 15-patient study on a scorpion antivenom to win exclusivity for its Anascorp brand. New price? $3,500 per dose.
But the most notorious case is perhaps KV Pharmaceuticals, which turned a $15-per-dose, centuries-old treatment for preterm labor into a $1,500 product, Makena--at least until a backlash forced a price cut. The company ended up in bankruptcy, changed its name to Lumara Health, and then sold itself to AMAG Pharmaceuticals ($AMAG).
- here's the EvaluatePharma story
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