Chapter 14: Closing remarks
The drug life cycle and the reward box
As we saw in the previous chapters, the developmental part of medicines should be shorter than the
part which comes afterwards. The return of investments (when the drug is on the market) should be
longer than the investment part in the ideal world. At some point in time, the patent will expire (after
20 years). There is a decline in income for the company, because now, there is a competition with
other companies and other (generic) compounds.
The reward box will increase the income of a
drug and they are trying to decrease the costs
of a new compound. In the innovation period,
the drug will cost money (financial loss), this is
the period of investments, the period of
extensive research and development. In the
monopoly period, the company has exclusive
rights to sell the drug (this is the patent period).
The length and the height of this period is
increasing. The length is determined by the
duration of the patent. You can try to
lengthened this to limit the duration of the
innovation period. The height is determined by the number of drugs you can sell and on the price you
can receive for your drug. The approval is determined by the policy makers, depending on the region
you are living in. The price is then determined locally. So, the profits are determined by the price
setting and this is determined by the policy makers. In the competitive period, there will be the loss
of exclusivity. There is a decline in income. In large extent, this has to do with the generics and the
biosimilars which are coming on the market. Here, we see the “normal” situation and how it is right
now. There are some levers for policy makers to alter the “box”: change something about the market
entry; the monopoly protection; the payer requirement; or the tax policy and incentives.
Measures affecting the reward box
The market entry levers include the changes in time and cost to obtain approval. In other words,
there are some ways to try to adjust the situation and try to optimize it. So, for example, try to have
an impact on the innovation period, think about:
Policies allowing earlier market access (exceptional circumstances)
o e.g. orphan diseases: So, if your drug is an orphan drug. It might be that your files are
quicker reviewed and it might be quicker approved! Thereby, you can shorten the
innovation period
o Conditional marketing approvals (CMA): These drugs got on the market, earlier than
in normal circumstances. They need very intense pharmacovigilance and a very
intense follow-up to still allow these medicines on the market
o Emergency use access (EUA)
Policies improving the efficiency of research and development (e.g. eCTA)
Expansion of approval (e.g. biosimilars)
Research grants
The master protocols: You can shorten the innovation period through looking at more
diseases at the same time with one drug; or to look at more different compounds in one
disease
How can we lengthen the monopoly protection period, what are the levers?
Policies on duration of market exclusivity
Pagina 1 van 2
The drug life cycle and the reward box
As we saw in the previous chapters, the developmental part of medicines should be shorter than the
part which comes afterwards. The return of investments (when the drug is on the market) should be
longer than the investment part in the ideal world. At some point in time, the patent will expire (after
20 years). There is a decline in income for the company, because now, there is a competition with
other companies and other (generic) compounds.
The reward box will increase the income of a
drug and they are trying to decrease the costs
of a new compound. In the innovation period,
the drug will cost money (financial loss), this is
the period of investments, the period of
extensive research and development. In the
monopoly period, the company has exclusive
rights to sell the drug (this is the patent period).
The length and the height of this period is
increasing. The length is determined by the
duration of the patent. You can try to
lengthened this to limit the duration of the
innovation period. The height is determined by the number of drugs you can sell and on the price you
can receive for your drug. The approval is determined by the policy makers, depending on the region
you are living in. The price is then determined locally. So, the profits are determined by the price
setting and this is determined by the policy makers. In the competitive period, there will be the loss
of exclusivity. There is a decline in income. In large extent, this has to do with the generics and the
biosimilars which are coming on the market. Here, we see the “normal” situation and how it is right
now. There are some levers for policy makers to alter the “box”: change something about the market
entry; the monopoly protection; the payer requirement; or the tax policy and incentives.
Measures affecting the reward box
The market entry levers include the changes in time and cost to obtain approval. In other words,
there are some ways to try to adjust the situation and try to optimize it. So, for example, try to have
an impact on the innovation period, think about:
Policies allowing earlier market access (exceptional circumstances)
o e.g. orphan diseases: So, if your drug is an orphan drug. It might be that your files are
quicker reviewed and it might be quicker approved! Thereby, you can shorten the
innovation period
o Conditional marketing approvals (CMA): These drugs got on the market, earlier than
in normal circumstances. They need very intense pharmacovigilance and a very
intense follow-up to still allow these medicines on the market
o Emergency use access (EUA)
Policies improving the efficiency of research and development (e.g. eCTA)
Expansion of approval (e.g. biosimilars)
Research grants
The master protocols: You can shorten the innovation period through looking at more
diseases at the same time with one drug; or to look at more different compounds in one
disease
How can we lengthen the monopoly protection period, what are the levers?
Policies on duration of market exclusivity
Pagina 1 van 2
