Nearly half a billion pounds will be cut from the NHS drugs budget as part of the QIPP savings agenda, according to a new DH report.

Forecasts included in The Quarter, a report which reviews NHS QIPP targets, predict that up to £477m will be saved from the prescribing budget by April 2013.

Savings will be generated by a number of treatments losing patent protection in 2011/12 allowing the NHS to purchase cheaper generic alternatives.

AstraZeneca’s Seroquel (quetiapine) and Pfizer/Eisai’s Aricept (donepezil) are two products used throughout the NHS which recently lost patent protection. Pfizer’s Lipitor (atorvastatin), one of the biggest components of NHS drugs expenditure, came off-patent in May and will also contribute to the savings.

The report shows that the NHS saved £1.2bn in the first quarter of the financial year and is on track to meet its £5bn savings target this year. Cutbacks on drugs spend are predicted to be the second biggest saving behind efficiencies coming from acute services.

The expected £477m savings is down on the £700m saved on the medicines bill the year before – when the NHS made £5.8bn of savings through the QIPP agenda.

AstraZeneca CEO David Brennan has played down speculation over his future at the company.

Major shareholders recently questioned whether Mr Brennan was the right man to lead the company out of its current pipeline problems.

However, the CEO says he is “plugged in” to the current issues the company faces and insists his role “hasn’t changed a bit” after the criticism of his leadership.

AZ is set to be one of the biggest losers during the ‘patent cliff’. Its major brands Seroquel and Atacand lose protection this year, Nexium is set to go off patent in 2014/15 and Crestor in 2016.

Its huge £15.6 billion takeover of MedImmune in 2007 was hoped to ease the pressure of generic competition but has failed to meet expectations and led one shareholder to say the deal has “tarnished” the CEO’s reputation.

But Mr Brennan, who has been the CEO for the past six years, insists he is the right man to lead the company. He commented: “I read and hear and see lots of things, but we’re here trying to change policy, make good decisions and execute our strategy.

“If it’s about restructuring, we can do that without a big deal. Maybe somebody sees something different, but spending more money does not have a linear increase in the number of returns you get from a research and development perspective.”

It’s widely expected that the 58-year-old will vacate his role around the time of his 60^th birthday. But an AZ spokesperson said that Mr Brennan is still “fully committed to leading AstraZeneca”.

NHS spending on drugs fell in 2011 due to patent expiry affecting a number of major products – and 2012 will see the trend accelerate.

The NHS in England spent £8.81bn on prescription drugs in primary care last year, compared to £8.83bn in 2010, according to the NHS Information Centre.

This fall, which reflects pressure on GPs to reduce their drug budgets, contrasts with the previous trend of drug spending increasing by 3–4% each year.

Therapy areas where the NHS pharmaceutical market was strongly affected by patent expiry in 2011 include cardiovascular care and CNS disorders – while diabetes care showed a new trend towards the selection of cheaper drug classes.

Cardiovascular drugs showed the steepest drop in sales: from £1.51bn in 2010 to £1.35bn in 2011. A major factor in this was the generic erosion of the anti-platelet drug Plavix from Sanofi and BMS, revenues from which fell from £46m to £12m.

By contrast, NHS spending on Pfizer’s statin Lipitor increased by £5m to a massive £310.8m – but that blockbuster will fall over the patent cliff in May, with wholesale shifting of GPs to generic versions expected.

The NHS spent £1.95bn on drugs for CNS disorders last year, but this therapy area is facing major generic erosion due to the recent patent expiry of AstraZeneca’s antipsychotic Seroquel and Pfizer and Eisai’s Alzheimer’s drug Aricept, which between them cost the NHS £170m in 2011.

In diabetes care, growing demand and the impact of new treatments is balanced by growing cost pressure forcing a retreat to older and cheaper drugs.

On the one hand, spending on Novo Nordisk’s new injectable GLP-1 drug Victoza increased from £9.6m to £21.9m last year, while AstraZeneca’s new oral medicine Januvia saw its revenue rise from £27m to £45m.

On the other hand, NHS spending on Novo Nordisk’s fast-acting insulin NovoRapid fell from £63.4m to £62.7m last year, due to pressure from the National Prescribing Centre to switch to the cheaper isophane insulin.

The UK pharmaceutical market thus faces both generic erosion and a new trend towards the choice of drug classes that reduce costs, but may not represent the standard of care.

AstraZeneca has won a US district court ruling in defence of its patent extension for the extended-release version of its antipsychotic drug Seroquel (quetiapine).

After the failure of AZ’s challenge to the FDA’s decision to allow generic competition to Seroquel, the ruling by a district judge in New Jersey gives the UK drug company a significant legal boost.

In addition, a US district judge in Columbia has ruled against allowing AZ a temporary restraining order (TRO) against generic competitors but has criticised the FDA for lack of fairness and transparency.

AZ is seeking an extension of the recently-expired Seroquel patent to cover its extended-release version, Seroquel XR, until December 2012, but the validity of the extension has been denied by a UK court and by the FDA.

US District Judge Joel Pisano in Trenton, New Jersey, ruled that four generic drug manufacturers – Mylan, Anchen, Osmotica and Torrent – have infringed on a valid patent for the extended-release version of quetiapine.

While the generic companies argue that the extended-release formulation applies technology that is in widespread use, Pisano accepted AZ’s argument that only its formulation of Seroquel XR proved it was effective in this case.

In addition, he noted, AZ had achieved a new indication for the XR version as a treatment for bipolar disorder.

Seroquel generated $5.83bn for AZ worldwide in 2011, including $1.4bn from Seroquel XR. However, low-cost generic competition from the above companies and from Teva in Europe threatens to affect AZ’s 2012 revenue severely.

AZ has already settled patent infringement disputes with two other companies, Handa and Intas, which will launch generic copies of Seroquel in 2016.

In a balanced statement on the dispute, Judge Beryl A. Howell of the US District Court for the District of Columbia denied AZ’s request for a TRO on generic versions of Seroquel, but criticised the FDA for unfair handling of the case.

Judge Howell concluded that AZ “has not demonstrated a likelihood of success on the merits, particularly given the deference the Court must provide to agency actions and interpretations of its own organic statute.”

However, she commented that the FDA appeared to have made a “tactical decision” to block AZ from seeking a judicial review of the Agency’s decision. The FDA’s statements “could appear to be less than forthright about the status of FDA decision-making,” she commented.

As a result of “the FDA’s tactics of ‘hiding the ball’ of its position until March 27, 2012,” Judge Howell stated, “consideration of the merits of the legal issues presented by the plaintiff’s complaint has been delayed”. She ordered the FDA to supplement the administrative record with any additional relevant records.

Teva UK has launched generic versions of AstraZeneca’s blockbuster antipsychotic Seroquel and the extended-release Seroquel XR on the first day of patent expiry.

The launch follows the decision by a UK court that the patent on Seroquel XR, extending the brand’s exclusivity, is not valid.

The new generic Quetiapine and Quetiapine (Sondate) XL were also launched on the day that AZ lost its appeal against the FDA’s decision to allow generic competition to Seroquel in the US.

Quetiapine is indicated for treatment of schizophrenia and moderate to severe manic episodes, while Quetiapine XL is indicated for treatment of schizophrenia and bipolar disorder and for adjuvant treatment of major depressive disorder in patients whose response to antidepressant monotherapy is sub-optimal.

Both generics are available on Teva’s PriceWatch service, which matches the lower of Teva’s list price and the month’s average market price.

Kim Innes, Teva UK’s Commercial Director, said: “With the launch of Quetiapine and Quetiapine XL, we’re making more medicines accessible for more people. Launches like these help towards saving the NHS over GBP9bn on generic prescriptions.”

The Seroquel brand accounted for 17% of AstraZeneca’s revenue in 2011, with sales of $5.7bn including Seroquel XR sales of $1.49bn. The Seroquel patent cliff in Europe and the US is expected to impact severely on AZ in 2012.

Teva UK is part of Israel-based Teva Pharmaceutical Industries, the world’s largest generic drug manufacturer.

AstraZeneca has had its lawsuit against the FDA dismissed without prejudice by the US District Court for the District of Columbia.

AZ issued the lawsuit after the US health regulator denied its Citizen Petition requesting the FDA withhold marketing authorisation on generic alternatives of Seroquel due to labelling rights.

Despite the preliminary injunction being dismissed, AZ said it “continues to believe strongly in the merits of its position” and is now “evaluating its options”.

The setback is AZ’s second in a matter of days after the UK High Court ruled its patent on an extended-release version of Seroquel was invalid.

The FDA denied a Citizen Petition filed by the Anglo-Swedish pharmaceutical firm on 7 March 2012. It had initially requested in September 2011 that generic versions of the blockbuster brand should not be allowed to enter the market until 2 December 2012.

AZ argued that data on label warnings was under exclusivity until the start of December and sought an injunction preventing the FDA granting marketing approval of copycats until then, or, alternatively, until a federal court had the opportunity to review the FDA’s action on pending generic marketing applications.

Generic competition cost AZ, it calculates, in the region of $2 billion in 2011. It had hoped to earn approximately $650m if an injunction had been obtained.

AstraZeneca’s patent on an extended-release version of its blockbuster antipsychotic drug Seroquel (quetiapine) has been ruled invalid by a British court.

The patent would have given Seroquel a new lease of patent exclusivity in the face of generic competition from Teva and other companies.

The decision comes nine days after AZ’s decision to sue the FDA for allowing generic competition to Seroquel in the US.

The UK patent on Seroquel expires on 23 March 2012. The formulation patent of AZ’s extended-release version, Seroquel XR, would last until May 2017.

The Seroquel XR patent was challenged by Accord Healthcare, Intas Pharmaceuticals, Hexal and Sandoz and Teva UK, leading to a court ruling that the patent is invalid in Britain.

The company’s share value fell by half a percent in London following the verdict.

AZ filed suit against the FDA on March 13, seeking to block the agency from allowing generic competition to Seroquel in the US until December 2 2012.

Seroquel is facing patent expiry in the US from March 26, with generic versions due to be released on the same day.

The Seroquel brand accounted for $5.7bn, 17% of the company’s total revenue in 2011, with Seroquel XR sales totalling $1.49bn.

AstraZeneca is anticipating a revenue drop of more than 10% in 2012, largely due to the Seroquel patent cliff in Europe and the US.

AstraZenca’s lawsuit against the US FDA over its decision not to block the entry of generic versions of Seroquel and Seroquel XR (quetiapine fumarate) has been called a gamble.

AZ claims the FDA cannot approve any generic versions of the blockbuster brands that lack specific label safety warnings – which the pharma company holds exclusive rights to.

But Ana Nicholls, Healthcare Analyst at the Economist Intelligence Unit, says the move could backfire and end up damaging AZ’s relationship with the US health regulator.

The FDA denied a Citizen Petition filed by the pharmaceutical company on March 7^th. AZ requested in September 2011 that generic versions should not be allowed to enter the market until December 2^nd 2012, when data exclusivity expires.

But the Agency’s denial of the Petition has led to AZ saying it will “vigorously defend its legal rights”.

It is now seeking an injunction preventing the FDA from granting final marketing approval of generic versions until the start of December or, alternatively, until a federal court has had the opportunity to review the FDA’s action regarding the pending generic marketing applications.

Generic competition cost the company almost $2bn in revenue last year, it calculates. Seroquel generated sales in the US worth $3.3bn in 2011 and could earn additional revenue of $650 million if AZ gets its way.

If the lawsuit is successful, Ana Nicholls predicts the move may be used by other pharmaceutical companies looking to protect or extend patent exclusivity. “If AZ does succeed in its argument over labelling requirements and data exclusivity rights, then this might give it (and other companies) another way of extending protection for drugs that are coming off patent,” she said.

“Other companies have tried different tactics – Pfizer, for example, struck exclusivity deals with pharmacy benefits managers to protect sales of Lipitor after its US patent expired late last year.

“But with the mood in the US firmly against attempts by patented drug-makers to block generic competition, the likelihood of AZ winning its case seems remote, raising the question of how much its lawsuit may damage its relationship with the FDA.”

The patent covering the active ingredient in Seroquel and Seroquel XR expired in September 2011, with paediatric exclusivity expiring on 26 March 2012. Seroquel XR is covered by a formulation patent that expires in May 2017, with paediatric exclusivity expiring in November 2017.

Last year, AstraZeneca agreed a licensing deal with generic firms Handa and Accord to enter a generic version of Seroquel XR in the US market on November 1^st 2016, or earlier under certain circumstances.

Johnson and Johnson may have to pay more than $1bn to the US government and various individual states to resolve civil investigations into the marketing and sales of its antipsychotic treatment Risperdal.

More than 12 different states are taking legal action after allegations that J&J marketed the treatment for a series of unapproved indications, according to people familiar with the matter.

J&J say it has been in negotiations to settle the investigations and has reserved funds to resolve the US government’s claims and cover additional criminal penalties.

The world’s largest health product company reached an undisclosed agreement last week with the attorney in Philadelphia, sources say, and may have to pay the state of Texas more than a billion dollars to resolve a similar case. Previously, a jury in Louisiana awarded the state $257.7m in 2010 and a judge in South Carolina ordered the company to pay the state $327m last year.

Risperdal, once J&J’s best-selling product, was approved by the FDA in 1993 for psychotic disorders, including schizophrenia. It generated global sales between 2003 and 2010 of $24.2bn.

But the US government has been investigating the sales of Risperdal since 2004 after allegations that J&J’s Janssen unit attempted to sell the treatment for the unlicensed indications: bipolar disorder, dementia, mood and anxiety disorders and other unapproved uses, according to documents used in the lawsuit by the state of Louisiana. Hundreds of salespeople from Janssen sold the drug incorrectly to doctors, nursing homes, Veteran’s Administration facilities and jails, according to the document.

In 1994, 1999 and 2004, The FDA ordered Janssen to stop making false and misleading marketing claims about the treatment’s superiority and told J&J in 1999 that the marketing material for geriatric patients overstated Risperdal’s benefits and minimised risks.

Risperdal is an atypical antipsychotic, such as Lilly’s Zyprexa and AstraZeneca’s Seroquel. Previously, Lilly and AZ, plus two other competitors, have paid $2.7 billion to resolve similar US government marketing claims.

Merck (MSD outside the US) topped the job-cutting charts in 2011 as the industry witnessed another year of workforce reductions after a series of cost-cutting measures from a number of pharma giants.

Merck revealed plans in July to reduce its workforce by 12,000 to 13,000 following its merger in 2009 and to realign expenses with the expected reduction in revenue when Singulair loses its exclusivity in August, in an attempt to save $1.5billion.

Pfizer followed Merck after it after cut thousands of jobs after planning to close R&D plants in Sandwich, Kent, at a cost of around 2,400 jobs and in Connecticut accounting for a further 1,100 positions. An additional 500 employees in Germany and 220 in Spain have also reportedly been axed.

The world’s largest research-based pharma company aims to cut its R&D budget by $1.5 billion after realigning its investigational priorities and following the loss of exclusivity on its blockbuster drug Lipitor.

Novartis came third when wielding the axe after it revealed plans to reduce its workforce by 2,000 in an attempt to save $200 million a year. Workers were relieved of their duties at sites across Europe and reportedly in New Jersey. However, the company did invest somewhere in the region of $600 on a new R&D facility in Cambridge, Massachusetts.

Abbott Laboratories followed in fourth position after it revealed at the start of last year that it would tackle the challenging regulatory environment by cutting 1,900 employees, or 6% of its staff. Further upheaval is also expected in 2012 when the company completes its breakup of the company into one focused pharmaceutical business and one solely for medical products.

AstraZeneca completed the top-five after it shed more than 1,500 positions in the US and Europe last year as it braced itself for the expiration of patents on brands on Seroquel by reducing its American sales team by nearly a quarter. The London-based company did however increase its presence in the emerging Chinese market.

Teva Pharmaceuticals, Sanofi, Johnson & Johnson, Eisai and Bayer Healthcare completed the top-ten companies for job losses as the industry struggled to compensate for major brand patent expiries, a challenging healthcare environment and a need to align expenses with growth targets.