Estimating the Value of Adding 30 Days to the 180-Day Market Exclusivity of the First-to-File Generic Drug Manufacturer

Abstract

Objectives

As an additional incentive to bringing more generic drugs to more markets sooner, our aim was to estimate the value of adding 30 days to the 180 days of market exclusivity currently granted to a qualifying first-to-file (FTF) generic drug entrant after its manufacturer successfully challenges a brand drug’s patents.

Methods

Using IQVIA’s monthly data on drug sales in the U.S. from January 2014 through June 2021, we identified 37 generic drug markets in which one or more generic companies successfully challenged the relevant brand drug patents and began commercial marketing within 75 days of receiving final approval of their Abbreviated New Drug Application (ANDA). We compared each generic drug’s sales during the last month of its 180-day exclusive market access (Month 6) with its sales during the first month after their exclusivity expired (Month 7). Our calculation of this change in sales accounted for confounding factors such as the presence of an authorized generic in the market during the exclusivity period and the number of new generic entrants in Month 7. This calculated change represents the value to the FTF manufacturer of extending the 180-day market exclusivity to 210 days.

Results

Our analysis shows that an FTF generic experiences a 13.0% reduction in sales from Month 6 to Month 7, on average. Extending the 180-day exclusivity by 30 days could lower the magnitude of this reduction to 3.1%, resulting in a 9.8% gain in sales by the FTF generic. This gain represents about $870,000 in additional sales during Month 7, on average.

Conclusions

The value of an additional month of exclusivity to a generic firm is sizable and could entice more generic companies on the margin to take on the risk of patent challenges, especially in large markets.

Supplementary Information

The online version contains supplementary material available at 10.1007/s41669-025-00607-w.

Key Points for Decision Makers

The value of extending the 180-day market exclusivity that the Hatch-Waxman Act provides to generic drugs that successfully challenge brand drug patents has not been estimated using post-marketing revenue data.

We used Month 6 sales as a proxy for sales in a hypothetical seventh month of exclusivity. Comparing these hypothetical sales to actual Month 7 sales indicated that 30 extra days of exclusivity could buttress sales by 9.8% on average.

The gain in sales revenue could attract more generic companies to challenge brand drug patents, especially in marginal cases where generic applicants may be deterred by lower profit expectations.

Introduction

Spending on prescription drugs in the United States is projected to increase from $364.8 billion in 2021 to $567.1 billion in 2030 [1]. Much of this increase is attributed to new brand name drugs with extended patent protections and increased use of existing high-price drugs [2, 3]. Prior research has shown that drug prices typically decline after generic entry into a market and continue to decline as more generics enter the market [4]. Thus, policies designed to encourage generic entry could help lower drug prices and achieve greater patient access to prescription drugs [5].

The Hatch-Waxman Act of 1984 established a way for generic companies to challenge a brand drug’s patent protection by certifying to FDA and notifying the brand manufacturer that the patent(s) on the brand drug listed in the FDA Orange Book are “invalid or will not be infringed by the manufacture, use, or sale of the new [generic] drug for which the [application] is submitted.” This is known as a paragraph IV (PIV) certification. If the brand company begins legal action against the generic company within 45 days of being notified, FDA’s final approval of the generic is delayed for 30 months to allow time to resolve the patent dispute, either through settlement or in court.

The primary incentive that the Hatch-Waxman Act established for generic drug companies to attempt market entry through a PIV certification is a 180-day period of ‘market exclusivity.’ That is, FDA would wait 180 days after the commercial launch of the first-to-file (FTF) generic before giving final approval to any potential generic competitor. Thus, an FTF generic could potentially have up to 180 days in the market with only the brand drug as competition. However, several factors can affect the value of this exclusivity. Among these is shared exclusivity, which occurs when two or more FTF generic applicants submit an ANDA and a PIV certification on the same date. Any generics that filed on the same date can enter the market once FDA approves them (assuming that patent disputes have been resolved). However, approval times can vary, and the 180-day exclusivity period begins with the initial market entry. The exclusivity period only excludes generic applicants that filed ANDAs on dates later than the FTF generics.

The presence of an authorized generic (AG) in the market can also affect the value of the 180-day exclusivity period to the FTF generic. An authorized generic is the brand drug in generic packaging. The brand company can market an AG without a lengthy approval process, as the drug itself has already been approved by FDA, and the AG is not affected by the 180-day exclusivity provided to FTF generics. If a brand company decides to enter an AG into a market, the AG usually precedes the FTF generic or enters simultaneously with the FTF generic. The AG is thus able to apply downward pressure on the FTF’s pricing and market share [6].

Brand drug companies use several other tactics to protect their market share. They can obscure price points through rebates to pharmacy benefit managers (PBMs), which can then help brand drugs to obtain preferential placement on formularies [7–9]. Brand companies frequently introduce ‘new and improved’ versions of their branded products, such as extended-release versions, or change from a tablet to a capsule, or offer a new dosing method or strength. These procedures are known as ‘product hopping’ and can reclaim or retain some of the brand’s market share that otherwise would be lost to the lower-cost generic [10, 11]. A brand company may also settle its patent litigation against an FTF generic to preserve their market share for longer than if their patents were found invalid, unenforceable, or not infringed. In its simplest form, the brand company pays the FTF generic company to delay their market entry, a negotiation outcome commonly referred to as ‘pay for delay.’ The prospect of a settlement with the brand company may be an incentive for a generic company to file a PIV certification, but it is distinct from the incentive provided by the 180-day period of exclusivity.

These pressures on the 180-day exclusivity have prompted policymakers to question whether it adequately incentivizes generic companies to incur the risk and costs associated with a PIV certification [12]. This study aims to calculate the value to the FTF generic manufacturer of extending the 180-day exclusivity by 30 days. The first step is to assess the actual change in sales revenues for FTF generic entrants in the 30 days after their 180-day market exclusivity ends.

Methods

Data Sources

We used IQVIA National Sales Perspective (NSP) monthly dollar and unit sales for drugs sold in the U.S. from January 2014 to June 2021. The IQVIA NSP database includes nationally representative estimates of all drugs sold (in dollars and units) by drug manufacturers and wholesalers into retail and non-retail channels of distribution in the United States [13]. It is considered the industry standard for measuring pharmaceutical sales. Sale prices include markups by wholesalers [14], but do not capture off-invoice discounts, such as rebates to plans or PBMs (which are less common for generic drugs) that reduce the amount received by manufacturers [15, 16]. IQVIA’s data identify the drug name, drug type (brand, generic, branded generic), National Drug Code (NDC) number, dosage form, strength, type of container/closure, and manufacturer. Using these variables, it is possible to extract monthly sales of branded drugs that are the reference products for generic versions (i.e., reference listed drugs or RLDs), as well as sales of FTF generics, authorized generics, and other follow-on generics that did not file a PIV challenge.

To identify FTF generics that entered their markets with 180 days of exclusivity, we used FDA’s Paragraph IV Patent Certifications list of July 13, 2021. FDA updates this list monthly. For this analysis, we defined ‘drug’ as a unique molecule, dosage form, and strength combination (e.g., abiraterone acetate 250-mg tablet; budesonide 9-mg extended-release tablet). We defined our PIV sample as those drugs on FDA’s Paragraph IV Patent Certifications list that had a ‘date of first commercial marketing’ between January 1, 2014 and January 1, 2021 and that began commercial marketing within 75 days of final approval by FDA (PIV drugs that are not marketed within 75 days of final approval of their ANDA can trigger a ‘failure to market’ provision that terminates their right to 180 days of market exclusivity [17]).

Sample Inclusion and Exclusion Criteria

There were 1340 drugs in FDA’s Paragraph IV Patent Certifications list of July 13, 2021. Of these, 854 drugs (64%) had no FDA approval date and no date of first commercial marketing. Of the remaining 486 drugs with an FDA approval date, 228 drugs (47%) had no date of first commercial marketing. Of the remaining 258 PIV drugs with an approval date and a first commercial marketing date, 99 had a first commercial marketing date that fell outside the date range (January 1, 2014–January 1, 2021) for which we had sales data, which left a total of 159 potentially in-scope PIV drugs. Ninety-three of these were excluded because they were not marketed within 75 days of FDA’s final approval. We then applied several exclusion criteria to the remaining 66 PIV drugs, which resulted in a sample of 37 FTF generic drugs. These criteria are described in the Sample Inclusion and Exclusion Criteria section of the technical supplement (see electronic supplementary material [ESM]).

Modeling Approach

We matched the exact molecule, dosage form (e.g., chewable tablet, delayed-release capsule, cream, injection), and strength (e.g., 25 mg, 100 mg, 20 mL) of the 37 FTF PIV generic products in our sample to the corresponding IQVIA NSP data. We reviewed generic sales in each PIV drug market to determine the number of generic companies other than the FTF generic company with sales during the 180-day exclusivity period. We also identified whether any of these non-FTF generic companies were distributing an AG by using FDA’s Listing of Authorized Generics as of July 1, 2021, and the search function at authorizedgenerics.com.

Next, to assess the value of a 30-day extension of the 180-day exclusivity, for each market we compared the last month of dollar sales under exclusivity (Month 6), $S_6^{\mathit{FTF}}$, of FTF generics to their dollar sales during the first month after their exclusivity ended (Month 7), $S_7^{\mathit{FTF}}$. We focused on this time frame to mitigate other potential confounding factors that may arise over a longer time horizon. We assumed that Month 6 sales are a proxy for the sales that an FTF generic would experience if the 180-day exclusivity were extended for an additional month.

The 180-day exclusivity clock begins on the first day of marketing by the FTF generic company but does not necessarily fall on the first day of a month. So, we approximated the Month j sales, $S_{i,j}^{\mathit{FTF}}$, for an FTF generic, $i$, as:

$$\begin{array}{c}{S}_{i,j}^{\mathit{FTF}}\cong {\left(\frac{30.5-d}{30.5}\right)S}_{i,j}^{\mathit{FTF}}+\left(\frac{d}{30.5}\right)S_{i,j+1}^{\mathit{FTF}}\end{array}$$ 1

where d is the day of the month that the FTF generic entered the market and 30.5 is the average month in days. For example, if the FTF generic i began commercial marketing on January 10, 2018, the last month of sales during the exclusivity period (i.e., Month 6 sales) covers the period from June 10, 2018, through July 10, 2018, and the first month of sales post-exclusivity (i.e., Month 7 sales) covers July 11, 2018, through August 10, 2018. Then, Month 6 sales, $S_{i,6}^{\mathit{FTF}}$, and Month 7 sales for that FTF generic, $i$, can be approximated using Eq. 1 as:

$$\begin{array}{c}\begin{array}{c}{S}_{i,6}^{\mathit{FTF}}\cong {\left(\frac{30.5-10}{30.5}\right)S}_{i,Jun18}^{\mathit{FTF}}+\left(\frac{10}{30.5}\right)S_{i,Jul18}^{\mathit{FTF}}\\ S_{i,7}^{\mathit{FTF}}\cong \left(\frac{30.5-10}{30.5}\right)S_{i,Jul18}^{\mathit{FTF}}+\left(\frac{10}{30.5}\right)S_{i,Aug18}^{\mathit{FTF}}\end{array}\end{array}$$ 2

To approximate the value of an additional month of exclusivity, we first calculated the percent change in FTF generic sales from Month 6 to Month 7, $\mathrm{\Delta }{\mathit{SalesFTF}}_{6-7}$, and then estimated the effect of additional generic entrants in Month 7, $\mathit{NumEntrants}$. These estimates accounted for such confounding factors as the presence of authorized generics, $\mathit{AG}$ (1 if AG is present and 0 otherwise), and multiple FTF generics, $\mathit{NumFTF}$, during the 180-day exclusivity period using an ordinary least squares specification. Equation 3 presents the resulting model:

$$\begin{array}{c}\mathrm{\Delta }{\mathit{SalesFTF}}_{6-7}=\propto +{\beta }_{0}AG+{\beta }_{1}NumFTF+{\beta }_{2}NumEntrants+\epsilon \end{array}$$ 3

Equation 3 does not net out costs of production or marketing. In this industry, however, marginal production costs are small relative to sales, and thus sales appropriately reflect the magnitude of extending the 180-day exclusivity period. In addition, Eq. 3 assumes that the temporal trends before and after the exclusivity period cancel out by using the difference in sales. If the temporal trend in sales during the 180 days of exclusivity is larger than that post-exclusivity, then our results represent a lower bound estimate.

Results

Characterizing the PIV Market

The characteristics of our sample of 37 PIV drug markets are presented in Technical Supplement Table 1 (see ESM). For our descriptive statistics and empirical model, we characterize our sample in three groups. The first is the total sample of FTF PIV generic drugs (n = 37); the second is the subset of FTF PIV generics that had lower sales in Month 7 than in Month 6 (n = 25); and the third is the subset of FTF PIV generics that had higher sales in Month 7 than in Month 6 (n = 12).

Across all 37 PIV markets, the average decline in sales for the FTF generic from Month 6 to Month 7 was 13.0% (Technical Supplement Table 1), and Month 7 sales were 7.8% lower than the average monthly sales during the 180-day exclusivity period. The average decline in sales from Month 6 to Month 7 was 15.4% for FTFs competing with an AG during the exclusivity period and 8.4% for those without AG competition. The presence of multiple FTF generics during the 180-day exclusivity period resulted in a slightly steeper decline in FTF sales from Month 6 to 7 (17.2% vs 12.3%). We also observed a decline in average sales for FTF generics from market entry through Month 6 (Fig. 1).

Fig. 1.

Average monthly sales (in 2021 U.S. dollars) for Months 1 through 7, by type of PIV drug market. FTF first-to-file generic, PIV paragraph IV certification

In 25 of the 37 PIV drug markets, the FTF experienced a decline in sales from Month 6 to Month 7 (Table 1). Among the 25 FTF generics with lower sales in Month 7 than in Month 6, the average decrease was 29.0%. The decrease in sales from Month 6 to 7 did not vary significantly by whether there was a single FTF generic during the 180-day exclusivity (29.2%) or multiple FTF generics (28.0%) among this subset. The decline in sales for the FTF generic from Month 6 to Month 7 was 38.4% among markets that had an AG during their 180-day exclusivity period and 15.0% when no AG was present.

Table 1.

Average change in FTF sales from Month 6 (last month of 180-day exclusivity) to Month 7, by type of PIV drug market

Number of FTF generics during exclusivity period	Market with AG		Market without AG		Total
	n	Average change from Month 6 to Month 7	n	Average change from Month 6 to Month 7	N	Average change from Month 6 to Month 7
Sales from Month 6 to Month 7 declined
Single FTF generic during exclusivity period	13	(38.3%)	8	(14.4%)	21	(29.2%)
Multiple FTF generics during exclusivity period	2	(38.7%)	2	(17.3%)	4	(28.0%)
Total	15	(38.4%)	10	(15.0%)	25	(29.0%)
Sales from Month 6 to Month 7 increased
Single FTF generic during exclusivity period	8	22.4%	3	13.6%	11	20.0%
Multiple FTF generics during exclusivity period	1	25.9%	0	NA	1	25.9%
Total	9	22.8%	3	13.6%	12	20.5%
Overall
Single FTF generic during exclusivity period	21	(15.2%)	11	(6.8%)	32	(12.3%)
Multiple FTF generics during exclusivity period	3	(17.2%)	2	(17.3%)	5	(17.2%)
Total	24	(15.4%)	12	(8.4%)	37	(13.0%)

AG authorized generic, FTF First-to-file generic, NA not applicable, PIV paragraph IV certification

Among this subset, the most intuitive reason for the decline in sales would be the entry of new generic competitors into the market. While it is tempting to infer that, for the FTF generics in our sample, the average effect of adding a seventh month of market exclusivity is an average increase in sales of 13.0% over realized sales in Month 7, it would be fallacious. We would expect that an extra month of exclusivity will not harm or undermine the sales of those 12 FTF generics in our sample that managed to increase their sales in Month 7. Therefore, we excluded their percentage change in sales when calculating the average value of an extra month of exclusivity in our general results. Instead, we infer that an extra month of exclusivity for those FTF generics would enable even larger increases in sales than observed. In addition, in this study it is not possible to separate the value of being the FTF, which by itself confers an advantage in formulary position, from the value of losing some market share.

Among the remaining 12 PIV drug markets in which the FTF experienced an increase in sales (Table 1), the average gain in sales was 20.5% and Month 7 sales were 18.5% higher in comparison to the average monthly sales during the 180-day exclusivity period. In contrast to those PIV markets in which the FTF sales decreased from Month 6 to 7, in this subset, there was a larger increase in sales from Month 6 to 7 (22.8%) with an AG in the market than when there was no AG (13.6%). The small sample size for this subset (n = 12), however, constrains the reliability of these results. Some reasons why an FTF generic might experience greater sales in Month 7 than in Month 6 include a declining market share for the brand drug versus its lower-priced generic competitor; no new generic competitors entering the market; a more intensive and effective sales force effort; the observation by potential customers that the FTF generic has performed well medically with minimal side effects, an even lower price per unit, etc.

In addition to the above descriptive statistics regarding changes in sales, we also observed that in 30 out of 37 PIV drug markets in our sample (Technical Supplement Table 2, see ESM), FDA received only one substantially complete first applicant ANDA on the first date a PIV certification could be submitted. For the remaining 7 PIV drug markets, the number of substantially complete first applicant ANDAs received by FDA was greater than ten for three (13 for Zytiga [abiraterone acetate], 13 for Kerydin [tavaborole], and 29 for Tecfidera [dimethyl fumarate]) and between two and ten for the other four drugs. The average time from date of ANDA submission to final FDA approval was 60.7 months (range 9.5–119.0 months).

In the 37 PIV drug markets, 25 markets (68%) had a competing AG during the 180-day exclusivity period. This is consistent with related research, which found that, from 2010 to 2019, about 70.0% of AGs launched before or during the exclusivity period, thereby competing with FTF generics during the latter’s 180-day exclusivity period [18]. In addition, we also observe that five markets (14%) had multiple FTF generics that entered at different times during the 180-day exclusivity period.

Regression Results

Table 2 presents the coefficient estimates for the three models estimated by Eq. 3. The first model uses the total sample of PIV drugs (n = 37), the second model uses the subset of PIV drugs in which the FTF generic experienced a decline in sales from Month 6 to Month 7 (n = 25), and the third model uses the subset of PIV drugs in which the FTF generic experienced an increase in sales over the same period (n = 12). Not surprisingly, in the first two models, a higher number of generic entrants in Month 7 is associated with a greater decrease in FTF generic sales from Month 6 to Month 7.

Table 2.

Estimated models for change in FTF generic sales from Month 6 to Month 7 and from Month 1–6 average to Month 7

Variable	All PIV drug markets		PIV drug markets where FTF generic sales declined		PIV drug markets where FTF generic sales increased
	Model 1(a)	Model 1(b)	Model 2(a)	Model 2(b)	Model 3(a)	Model 3(b)
	Month 6 compared with Month 7 sales (n = 37)	Month 1–6 average compared with Month 7 sales (n = 37)	Month 6 compared with Month 7 sales (n = 25)	Month 1–6 average compared with Month 7 sales (n = 24)	Month 6 compared with Month 7 sales (n = 12)	Month 1–6 average compared with Month 7 sales (n = 13)
Constant	0.012 (0.096) p = 0.902	0.328 (0.149) p = 0.034	− 0.094 (0.069) p = 0.186	− 0.065 (0.0111) p = 0.564	0.000 (0.087) p = 0.182	0.460 (0.280) p = 0.131
AG	− 0.092 (0.096) p = 0.342	− 0.306 (0.148) p = 0.046	− 0.242* (0.067) p = 0.002	− 0.255* (0.103) p = 0.022	0.076 (0.098) p = 0.461	− 0.211 (0.244) p = 0.408
NumFTF	0.010 (0.025) p = 0.686)	0.012 (0.060) p = 0.848	0.014 (0.016) p = 0.403	0.001 (0.034) p = 0.976	0.009 (0.030) p = 0.766	NE
NumEntrants	− 0.083* (0.028) p = 0.005	− 0.097* (0.043) p = 0.031	− 0.047* (0.018) p = 0.018	− 0.045 (0.027) p = 0.111	0.024 (0.050) p = 0.642	0.024 (0.128) p = 0.854
Multiple R2	0.471	0.540	0.695	0.594	0.368	0.277
F-statistic	3.143*	4.540*	6.526*	3.630*	0.417	0.416

The numbers in parentheses are the standard errors

AG authorized generic, FTF First-to-file generic, NE not estimated, as NumFTF was 1 for all drugs in the subsample, PIV paragraph IV certification

*Indicates that the estimated coefficient is significant at a 90% confidence level or higher

The first model (Model 1(a), n = 37) shows that the FTF generic’s sales decrease by 8.3% (SE: 0.028) for each additional generic competitor (FTF and non-FTF combined) that enters the market after the 180-day exclusivity period. The presence of an AG in the market has a similar, but non-significant impact on the change in sales when examining all PIV drug markets; perhaps this is because about 70% of AGs launch during or before the FTF generics launch [18]. Similarly, the second model (Model 2(a), n = 25) shows that FTF generic sales decrease by 4.7% (SE: 0.018) for each additional competitor that enters after the 180-day exclusivity period. In the same model (Model 2(a)), in which PIV drugs have declining FTF generic sales, the regression shows a larger and highly significant 24.2% (SE: 0.067) decrease in sales for the FTF when an AG is present. None of the parameter estimates for the third model (Model 3(a)) were significant, owing in part to the small sample size (n = 12).

The number of FTF generics does not show any correlation to the change in FTF generic sales in any of the models. The model covering all 37 PIV drug markets (Model 1(a)) predicts that an FTF generic will experience a 13.0% reduction in sales from Month 6 to Month 7 in an average PIV drug market (calculated using the average values for AG = 0.65, NumFTF = 1.65, and NumEntrants = 2.84 for the estimated Model 1(a)) in Table 2). This finding is consistent with the descriptive statistics provided in Table 1. If there is no generic entrant after the exclusivity period, however, Model 1(a) predicts that this reduction in sales would be 3.1% on average (calculated using the average values for AG = 0.65, NumFTF = 1.65, and NumEntrants = 0 for the estimated Model 1(a) in Table 2), resulting in a 9.8% (13.0–3.1%) gain in sales that otherwise would have been lost to generic competitors. Thus, for the average FTF generic with around $8.9 million in sales in Month 6 in our sample (Technical Supplement Table 1, see ESM), the value of having one additional month of exclusivity would be approximately $870,000 ($8.9 million × 9.8%). Among the 37 PIV markets in our sample, about half (n = 18) had a generic competitor after Month 6 and the other half (n = 19) did not.

The average reduction in FTF generic sales from Month 6 to Month 7 in those 19 PIV markets that experienced competition from other generics after Month 6 (i.e., where NumEntrants >1 in Technical Supplement Table 1, see ESM) is 24.5%. For the 18 FTF generic markets that had no generic competitors in Month 7 (i.e., after the exclusivity period), our Model 1(a) predicts that reduction in sales would be 2.4% from Month 6 to Month 7 (calculated using the average values for AG = 0.63, NumFTF = 2.26, and NumEntrants = 0 for the estimated Model 1(a) in Table 2), resulting in a much larger (22.1% = 24.5−2.4%) gain in additional sales. For the average FTF generic in this subset, which has $15.1 million in sales in Month 6, the value of an additional month of exclusivity would be around $3.3 million ($15.1 million × 22.1%).

The average reduction in FTF generic sales from Month 6 to Month 7 in those 25 PIV markets where FTF generic sales declined after Month 6 is 27.7%. If no competitor generic enters the market after the exclusivity period, our Model 2(a) predicts that reduction in FTF generic sales would be 21.5% among this subset (calculated using the average values for AG = 0.60, NumFTF = 1.76, and NumEntrants = 0 for the estimated Model 2(a) in Table 2), Thus, the predicted percent gain in sales for the subset of PIV drugs with declining FTF generic sales from Month 6 to Month 7 (n = 25) is lower, at 6.2%. The average FTF generic in this subset has $11.4 million in Month 6 sales (Technical Supplement Table 1, see ESM), so the value of having one additional month of exclusivity would be approximately $707,000. Again, if we focus on those FTF generics with declining sales from Month 6 to Month 7 and that experienced competition from other generics in Month 7 (n = 16), our model predicts that extending exclusivity through Month 7 will show a 20.0% gain in FTF generic sales (calculated using the average values for AG = 0.56, NumFTF = 2.19, and NumEntrants = 0 for the estimated Model 2(a) in Table 2). In this subset, the average sales in Month 6 is $16.9 million, so the average value of an additional month of exclusivity would be about $3.4 million.

The associations discussed above are also observed when Month 7 sales are compared with the average of monthly sales for Months 1–6 of the FTF generic (see Table 2).

Discussion

Our analysis uses monthly sales data to estimate the change in FTF generic sales from the last month of 180-day exclusivity to the first month after the end of 180-day exclusivity. Our primary finding is that FTF generics experience an average reduction in sales of 13.0% from Month 6 to Month 7. Extending the 180-day exclusivity by 30 days could lower the magnitude of this reduction to 3.1%, resulting in a 9.8% gain in sales by the FTF generic. This gain represents about $870,000 in additional sales by the FTF manufacturer during Month 7, on average.

Given that the development costs of most generics are relatively low—around $3.2 million inclusive of FDA application fees [5]—an additional $870,000 in revenue in Month 7 amounts to about 27% of development costs.

Our method for estimating the value of an additional month of exclusivity for an FTF generic is an improvement over simply applying the average monthly generic revenue during the 180-day exclusivity or using the Month 6 sales to estimate the benefits of an extension. Our results consider the presence of AGs, multiple FTF generics, and whether other generics enter the market after Month 6. The model accounts for changes in generic revenues from the first month of marketing the FTF generic to the last month of the 180-day exclusivity period and also for post-exclusivity generic sales trends. Our results are adequately flexible to tailor to different extension lengths depending on market size. This is an important feature because current regulations, despite their success in incentivizing generic entry, comprise a one-size-fits-all approach by offering any FTF PIV applicant the same exclusivity length. This is understandable as a first step, but with more data and evidence, more tailored approaches are now available.

As an example of the values we find, in relatively large markets, a 6.2% increase in 1 month’s revenue would translate into $620,000 additional revenue for an FTF generic with $10 million in Month 6 sales. This added incentive could attract more generic companies on the margin to take on the risk of a PIV challenge. Additional months of exclusivity, however, may be even more meaningful for threshold markets where current expected sales may be insufficient to attract PIV challenges. Further, the value of such an extension goes beyond the increase in sales by giving the generic company an improved bargaining position in any settlement negotiations. Further analysis of month-by-month sales during the first year after generic entry would be worthwhile. Some FTF generics have higher sales in their first month after entry, while others take longer to reach their highest volumes. It could also be useful to examine monthly sales of generic competitors during the 6 months after exclusivity to develop a more precise estimate of the effects of competition on FTF and RLD sales.

Another avenue of research is the impact of PIV settlements on the timing of PIV generics’ market entry and sales. Although the terms of such settlements are often undisclosed, it is sometimes possible to infer, for instance, when an FTF delaying market entry until the end of their 180-day exclusivity coincides with the RLD’s patent expiration, or when an AG does not appear on the market until after the 180-day exclusivity ends.

Further research is also warranted given the enactment of the FDA Reauthorization Act of 2017 (FDARA), which created the competitive generic therapy (CGT) designation. Designation as a CGT is available to the first generic drug that enters a market in which the brand drug is no longer protected by patents. CGT designation provides the generic sponsor 180 days of exclusivity in such markets. These are typically smaller markets than PIV markets [19, 20]. The CGT designation can bolster sales of the recipient generic. For example, approval of Glenmark Pharmaceuticals’ ANDA for hydrocortisone valerate ointment USP, 0.2% with the CGT designation was followed by a 5% increase in the Glenmark’s share price and an 11% increase in the company’s U.S. business for the 2018–2019 financial year [21]. It would be important to study whether there is any difference in generic sales between the 180-day exclusivity granted via the traditional PIV certification versus the CGT route. Also, a longer period of exclusivity could encourage generic applicants to challenge brand patents in smaller markets. A recent study showed that the CGT pathway led to a large number of generic applicants requesting CGT designation (89 applicants for 292 unique products), and around 85% of the drugs approved with CGT exclusivity eligibility were marketed within 2.5 days after approval from 2017 to 2020 [20]. Thus, it would seem important to learn whether a firm would rather wait for patents to expire and try for CGT exclusivity, as opposed to going for 180-day exclusivity by challenging brand patents by a PIV certification.

Extending the incentive may induce challenges to patents and entry in some markets at the expense of delaying entry to other markets. Future research should examine the tradeoffs.

Limitations

This study has several limitations. First, IQVIA NSP sales data do not reflect rebates from brand manufacturers to wholesalers and purchasers. Hence, the market size of a brand drug offering rebates is likely to be smaller than the data indicates, leading to an overestimate of the value of a putative seventh month of exclusivity for an FTF generic. Despite some shortcomings, IQVIA NSP sales data comprise the most widely used and accepted source of U.S. drug sales data. Moreover, with the proper interpretation that our results represent the average increase in gross revenue, this limitation does not prevent understanding of the overall value gained from potential extensions.

Another major limitation of this study is the small sample size. Ninety-three (out of 146) PIV drugs within our analysis timeframe were eliminated from our sample because they were not marketed within the first 75 days after FDA final approval. The failure-to-market forfeiture provision at 505(j)(5)(D)(i)(I) requires a series of later-than/earlier-than date analyses to determine the failure-to-market date, which is not always 75 days after approval. Also, FDA cannot complete these date analyses unless an event under Section (bb) of the failure-to-market provision has occurred. This means that the FTF does not necessarily have to begin commercial marketing within 75 calendar days of FDA approval to avoid forfeiting its exclusivity. While the resultant sample is small, it reflects the market acting as intended by current law.

Finally, our regression models are potentially under-specified and do not capture other relevant factors due to data limitations. For example, our model does not account for the effect of the length of time FDA requires to evaluate and approve a submitted ANDA, market size, or therapeutic area, all of which may impact the change in FTF sales from Month 6 to Month 7.

Conclusions

This study shows that extending the 180-day exclusivity period associated with a successful PIV challenge by 30 days could result in an average 9.8% gain in sales by FTF generics in Month 7. Our results consider the presence of AGs, additional FTF generics, and additional generic entrants after Month 6. The model also accounts for the change in market size from the month of the FTF’s market entry to the last month of its 180-day exclusivity period. Our results are important as the gain in sales revenue from an extension of exclusivity could be large enough to attract more generic entrants to challenge brand patents in more markets via PIV certification. For example, the average monthly sales for the FTF generic of Crestor (a statin for reducing cholesterol) during its exclusivity period was over $125 million. An additional 30 days of exclusivity would have earned the FTF generic an additional $12.3 million in revenue according to our model estimates. In addition, an extension of the PIV 180-day exclusivity may be even more relevant to smaller markets where low profit expectations may be discouraging generic challengers. Our method and results offer the flexibility to tailor an extension of exclusivity based on market size.

Supplementary Information

Below is the link to the electronic supplementary material.

Funding

The funding for this study was provided by the U.S. Department of Health and Human Services Office of the Assistant Secretary for Planning and Evaluation (ERG Contract No. HHSP233201500055I Task Order No. HHSP23337005T). Role of the funder/sponsor: Three of the study co-authors are employed by the funder and contributed to the design and conduct of the study; collection of the data; preparation, review, or approval of the manuscript; and decision to submit the manuscript for publication.

Declarations

Disclosures

The views expressed in this paper are those of the authors and do not necessarily represent those of the Office of the Assistant Secretary for Planning and Evaluation, the U.S. Food and Drug Administration, the U.S. Department of Health and Human Services, or Eastern Research Group, Inc.

Conflict of Interest

Dr Sertkaya and Mr Lord reported receiving funding from U.S. Department of Health and Human Services Office of the Assistant Secretary for Planning and Evaluation for the duration of the study. Drs Klein and Parasrampuria and Mr El-Kilani were employed by the U.S. Department of Health and Human Services Office of the Assistant Secretary for Planning and Evaluation. Dr Jacobo-Rubio is employed by the U.S. Department of Health and Human Services Food and Drug Administration and reported no conflicts of interest. No other disclosures were reported.

Ethics Approval

Not applicable.

Consent to Participate

Not applicable.

Consent for Publication (from Patients/Participants)

Not applicable.

Availability of Data and Material

The pharmaceutical sales data used in this study were licensed from IQVIA and are proprietary. Due to contractual restrictions, the data beyond what is already provided in the technical supplement cannot be shared. Interested parties may contact IQVIA for access.

Code Availability

The code is not publicly available as it consists of standard ordinary least squares (OLS) procedures that can be readily replicated using any common statistical software using the data provided in the technical supplement.

Author Contributions

Concept and design: Sertkaya, El-Kilani; Acquisition of data: El-Kilani, Lord, Jacobo-Rubio; Analysis and interpretation of data: Sertkaya, Lord, Jacobo-Rubio; Drafting of the manuscript: Sertkaya, Lord, Jacobo-Rubio, Parasrampuria; Critical revision of the paper for important intellectual content: El-Kilani, Klein, Jacobo-Rubio, Parasrampuria; Statistical analysis: Sertkaya; Provision of study materials or patients: N/A; Obtaining funding: El-Kilani; Administrative, technical, or logistic support: Sertkaya, Klein; Supervision: Sertkaya, El-Kilani, Klein, Parasrampuria.