- Eli Lilly and United Therapeutics have added new provisions to their nearly decade-long licensing agreement for the former's hypertension drug.
- Adcirca (tadalafil) hit the market in 2009 as a treatment for pulmonary arterial hypertension (PAH) less than a year after United Therapeutics picked up commercial rights to it for that indication. The drug's compound patent expires in November, however, and two other patents set to run out in 2020 likely won't keep generic competition at bay after the first expiry.
- Per the amended deal, United will hand Lilly milestone payments of $325,000 for every $1 million in net Adcirca sales, as well as 10% royalties. The Silver Spring, Md.-based drugmaker, meanwhile, is now guaranteed to hold onto licensing rights through 2020. The original pact required United to pay just 5% royalties on net sales, but also would have ended in the event all the drug's patent or regulatory exclusivity lapsed. The last of the drug's three patents flames out in November 2020.
Generics have threatened branded drugmaker's bottom lines for decades; yet copycat competition has become increasingly hard to ignore in recent years. A patent cliff that spanned much of 2011 and 2012, for instance, put billions of dollars on the line as primary care medications lost their exclusivity.
What's more, a QuintilesIMS report from earlier this year found branded products now are holding onto their patents for three years less than they did in the late 1990s.
United in some ways is a poster child for the risk posed by generics. The company has already battled Novartis, Par Pharmaceutical and Teva over patents related to another PAH treatment, Remodulin (treprostinil). Even so, generic competition for the drug — its highest income driver, bringing in $602 million, or 38%, of product revenues in 2016 — could come as early as next June.
Adcirca is United's third most profitable drug, with revenues of $372 million last year. Two other pharmaceutical developers, including the India-based Aurobindo, have already had Abbreviated New Drug Applications for their copycat versions of the drug tentatively approved by the Food and Drug Administration.
Adding salt to the wound, the U.S. Patent Trial and Appeal Board previously determined the 2020 patents protecting Adcirca were invalid based on an inter partes review spearheaded by Actelion Pharmaceuticals, now a part of Johnson & Johnson.
Lilly is currently appealing that ruling. Should those appeals pan out in favor of the company, United will go back to paying 5% royalties on net sales and the big drugmaker will refund the extra money it got under the 10% agreement. The newly-updated parameters of the agreement between the two companies kick in in December.
Despite the impending competition, United touts a history of keeping its products profitable.
"We competed against Pfizer for several years with our Adcirca product against their sildenafil product, and we beat them hands-down despite the vast resources of Pfizer," United CEO Martine Rothblatt said during a fourth quarter earnings call in Feburary. "Today, United Therapeutics has the larger share of patients with pulmonary hypertension on our drugs more than any other company and that's because of our successful ability to promote Adcirca against sildenafil despite the fact that sildenafil, after it went generic, is many times less expensive."
And it appears that mindset hasn't changed in the last three months.
"As for generic competition, we try to stay at least one step ahead technologically," Rothblatt said during a first quarter earnings call in May. "I think the generic companies are good because they keep us ethical companies always trying to move the technology hurdle forward and thereby providing more benefits to more patients."