This month, the Association for Accessible Medicines and its Biosimlars Council issued a report based on research and analysis undertaken by the IQVIA Institute for AAM examining the impact of patent settlements on patient savings and access. The findings reflect that the impact is, as expected, extremely significant: Patent settlements are responsible for billions of dollars of healthcare savings and years of market entry prior to patent expiration. Far from some misinformed assertions, patent settlements are a critical and necessary part of patient access to affordable medicines.

The IQVIA Institute Analysis aimed to comprehensively analyze every settlement entered by brands and generics/biosimilars since the Supreme Court’s 2013 FTC v. Actavis decision. As part of that analysis, AAM and the IQVIA Institute analyzed 288 molecules and consulted a variety of sources, including the IQVIA Smart U.S. Launch Module, Ark Patent Intelligence Database, SEC filings, FDA-issued approval letters, and Orange Book and Purple Book filings. To determine how much patent settlements accelerated generic entry, the IQVIA Institute and AAM determined the “but-for” generic entry date in the absence of a settlement based on Orange and Purple Book patent expiry dates, pediatric exclusivity, and the status of the litigation. The “but-for” date is not hypothetical—under the Hatch-Waxman statute, it is the date for generic entry if the generic manufacturer either chooses not to challenge or loses on a single patent claim asserted by the brand-name manufacturer out of the ever-increasing swath of patents now asserted in litigation. The analysis was conservative—the IQVIA Institute and AAM excluded any patents that were not listed in the Orange Book at the time of final FDA approval of the relevant generic product and therefore were not subject to any certification by the generic manufacturer. This resulted in a number of patents that were very likely accounted for in settlement not being considered in the but-for-calculation as a potential later-expiring patent.

Ultimately, the IQVIA Institute Analysis identified 84 molecules with patent settlements. The key takeaways highlight just how important settlements are to patient access to lower-cost medicines.

  • As shown below, for molecules with settlements and early generic or biosimilar entry, generic and biosimilar entry occurred, on average (mean), 64 months before patent expiry, with 17% of settlements accelerating patient access by more than a decade:
  • To put this in context, patent settlements allowed 14 drugs to come to market more than 10 years before the would-have-been entry dates.
    • One example of this is Aubagio (teriflunomide). As shown below, those settlements allowed all generics to enter the market on March 12, 2023, compared to the but-for date of August 3, 2034, saving the U.S. healthcare system over $1.1 billion in 2023 alone.
  • Overall projected healthcare system savings due to early generic and biosimilar launches is an estimated $422.9 billion;
    • Generics and biosimilars that have entered the market early due to settlements have accrued a mean of $5 billion in savings per molecule;
    • Early market entry has saved a median of $516.4 million per molecule.

The findings in the IQVIA Institute Analysis demonstrate the massive savings afforded by patent settlements, which are a testament to their importance. Despite these savings, some lawmakers continue efforts to make these types of settlements presumptively illegal. Such legislation will have a chilling effect on settlements—and consequently on the effective reduction of healthcare costs arising from such settlements. Indeed, as the data show, the loss of even a single patent challenge could result in enormous lost savings and delayed patient access to lower-cost generic and biosimilar alternatives.