As a result of Korea-US Free Trade Agreement, patent linkage (PL) of pharmaceuticals was newly implemented in South Korea on March 15, 2012. PL incorporates such components as registration of patents, notification of application for marketing approval of generics, and patentees’ prohibition of generic marketing. This study aimed to explore the effect of PL on access to generic drugs and drug expenditures in South Korea.

METHODS:

Delay of access to generic drugs was measured by extended market exclusivity period, defined as the period between the date of conditional market approval of generics and expiry of marketing prohibition, during which generic drugs were not allowed to be sold. Changes in drug expenditures were measured by comparing actual and hypothetical market share of generic drugs, the latter of which meant what the market share of generics had been like if marketing prohibition had not been implemented. The market share of generics was estimated by using a logistic function based on monthly utilization of 856 drugs obtained from National Health Insurance claims database.

RESULTS:

In the cases of two brand-name drugs where marketing prohibition of their generics was put to an end, it appeared that extended effective market exclusivity period was 1.4 month, compared to a maximum of 9 months regulation. This meant that, due to the extended market exclusivity, market entry of 19 generic drugs was delayed for 1.4 month and drug expenditures increased by $150,000~$290,000 in the short run.

CONCLUSIONS:

Though it is too early to generalize what effect PL had on access to generic drugs and drug expenditures, it appeared that not only PL itself but also many other factors including drug pricing, generic substitution, and patent litigation played a key role in influencing access to generic drugs and drug expenditures.