This year is the first in a string of what could be very good years for the generic drug industry. About $12 billion worth of brand-name drugs lose patent protection this year, according to pharmacy benefit manager Express Scripts. Another $11 billion in branded products go off patent in 2007, $10 billion in 2008, and even more in 2009 and 2010.

2006 patent expirations

Current patent expirations are only the beginning. Frear is watching another dozen products with patents that expired in 2005 or earlier. Generic competitors that have been delayed by litigation or other legal challenges may finally come to market sometime this year.

Potential generic approvals in 2006*

David Snow, CEO of Medco Health Solutions, called 2006 the "beginning of a blockbuster five years" for patent expirations at the Reuters Health Summit in late 2005. By Medco's count, about $45 billion worth of brand-name drug products will go off patent by the end of 2010.

Even products that are not going off patent this year are being affected by patent expirations. The bestselling brand drug in the world—Lipitor (atorvastatin, Pfizer)—is losing sales to the generic market even though it does not lose its patent protection until 2010.

The winner is Zocor, which goes off patent on June 23 of this year. PBMs began moving patients from Lipitor to Zocor in 2005, explained AG Edwards pharmaceutical analyst Albert Rauch. With no litigation, citizen's petitions, or other legal challenges expected, patients on Zocor will start receiving generic simvasta-tin almost immediately after the patent expires, he predicted.

"Lipitor growth has slowed to half the rate of the market," Rauch explained. "Zocor has grown by a similar amount. The PBMs look like they are setting up their clients to use brand-name Zocor now so they can switch to the generic as soon as it becomes available."

Generic switching is nothing new, of course. What is new is the speed with which generic products move onto formularies and into the market. In the late 1980s, generics came into the market at a relatively slow 15% per year, Rauch said. Today, generics can grab more than 50% of the total market in a matter of weeks.

But that market shift cannot begin until generic versions of the brand-name product are approved by the Food & Drug Administration. Brand makers are becoming more aggressive in extending patent protection.

"There is a lot of litigation that gets triggered pretty much automatically as patent terms move toward expiration," said Eric Bolesh, lead analyst at Cutting Edge Information, a market research firm based in Durham, N.C.

Cutting Edge found that most brand-name companies use legal action to delay generic approvals. In a recent survey, 60% of responding companies applied for new indications to extend patent protection. About 45% consider cutting a deal with a generic firm to issue an authorized generic, up from 39% in 2003.