Korean pharmaceutical companies would find it better to utilize long-accumulated generic drug development techniques to benefit from the U.S. market, rather than being obsessed with new drug development, experts of pharmaceutical patents said.

Their advice came at a seminar on “Strategy to Enter the U.S. First-Generic Market” at the headquarters of the Korea Pharmaceutical and Bio-Pharma Manufacturers Association (KPBMA) in Seoul, Wednesday.

William McCabe, a partner at Perkins Coie, speaks during a seminar on “Strategy to Enter the U.S. First-Generic Market” at the headquarters of the Korea Pharmaceutical and Bio-Pharma Manufacturers Association in Seoul, Wednesday. (Credit: KPBMA)

Speakers for the seminar included Brandon M. White, a partner at Perkins Coie, Kim Gwang-beom, president of the Korea Pharmaceutical Patent Institution, and Cho Won-hee, a partner at D'light Law Group. They explained about what to consider when participating in the U.S. generic drug market.

The U.S. generic drug market reached $70 billion in 2018. According to pharmaceutical market researcher IQVIA, generic medicines accounted for 90 percent of the total medications prescribed in the U.S. in 2017.

The number of approvals for generic drugs has been surging recently, as the U.S. Food and Drug Administration started to encourage generic drug development.

The U.S. guaranteed the exclusive rights of generic drugs under the Hatch-Waxman Act established in 1984.

In particular, the 180-day exclusivity is given to the first company that seeks approval for a generic drug copying an original product. The generic drugmaker with the 180-day exclusivity can compete against the original drugmaker without any other competitors for three months. Earning the “first-generic” status is the best way to raise profits.

India is known as one of the most successful countries to enter the U.S. generic market. Among generic drugs approved with an abbreviated new drug application (ANDA) in 2017, 38 percent were developed by Indian companies.

For example, Indian generic drugmaker Amneal Pharmaceuticals LLC obtained U.S. FDA approval for 66 generic products – 56 with final approval and 10 with tentative approval. The company rolled out 39 generics out of 66 with a strategy to tap the U.S. generic market. The size of the company grew rapidly in just 17 years after the foundation.

“The U.S. generic market is quite promising, but Korean pharmaceutical firms were reluctant to enter it because of lack of experience,” D’Light’s partner Cho said. “But recently, leading local pharmaceuticals such as Yuhan Corp., Daewoong Pharmaceutical, and GC Pharma started to break into the U.S. market.”

The patent issue is the most significant hurdle to become a first generic firm in the U.S. To block generics from entering the market, original drug manufacturers extend the period of intellectual property through various types of patents such as compound patent, the method of treatment patent, and formulation patent.

Depending on the type of new drugs, the FDA gives up to seven years of exclusivity to an original drug.

When considering entry into the U.S., generic makers should also brace for the FDA’s demanding request of data for strict ANDA review and the U.S. drug distribution structure where a few buyers decide the list of medicines.

Perkins Coie’s partner White said, “Compound patent is the most difficult one to challenge the invalidity or non-infringement. However, most patent litigations end up as a bilateral agreement via negotiations before the final ruling.”

White noted that an inter-parties review (IPR) could be another tool to challenge patents.

IPR refers to a procedure a generic drugmaker files with the U.S. Patent and Trademark Office to address the uncertainty over the original drugmaker’s patent infringement lawsuit.

“IPR can be useful because it makes a favorable condition for a generic drugmaker. As judges of district courts are not pharmaceutical experts, an invalidity ruling at the IPR will stay the same,” White said.

However, if a generic maker proceeds with IPR solely before the start of an ANDA review and a patent becomes invalid, not only the generic maker that filed the IPR but other generic rivals will face the same invalid patent, he warned. In that case, the generic company might not obtain the exclusivity.

“Rather than filing IPR alone, it is better to file it with two or three other firms. The timing should be appropriate, too,” he said.

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