When a drug is manufactured and released to the market in the initial period, it is sold under a certain brand names and can only be availed from a pharmacy after being prescribed by the doctor. The patent of the drug is owned by a few brands who are the only eligible brands to manufacture medicine using the same composition, market the product commercially and make profit from it.
Across US, a drug patent has a validity of over 20 years even though the tenure varies between countries as well as on the drug.
And since the companies appeal for the patent long before the drug even undergoes its safety and efficacy trial. And by the time it is released in the market, the leasers get around 10-11 years.
After the tenure is over, the patent is passed on to some other drug manufacturing companies who also leases the right to market the product. But the time the second manufacturer earn the patent, the drug is already categorized as generic drug. And as per the rule of US FDA, generic needs to have identical drug composition in terms of safety, efficacy, route, usage, pharmacokinetics, drug administration, and usage of drug administration.
So, a drug can also be categorized as a generic drug when the composition of the drug matches the above said features. And a pharmaceutical company can only manufacture the drug when:
Once the drug is commercialized and categorized as a generic drug. The patent holder’s monopoly is dropped. And this at the same time boost competition which eventually leads to a drop in the drug’s price which eventually means that more drug can reach out to more people now.
But, the company who owns the present patent of the drug may choose to extend the tenure of the patent by manufacturing a potent version of this drug that has more significant benefits.
But, the second version needs to go under clinical trial as well along with reapplication for the patent.
Moreover, the upgrade version may need to compete with the original module in order to stay in the market by removing the older one.