What is loss of exclusivity (LoE)?

Loss of exclusivity (LoE) is when a brand drug's patents and FDA exclusivity periods expire, opening the market to generic manufacturers via ANDA approvals. LoE is the single most important event in a drug's commercial lifecycle from a plan-sponsor cost perspective.

A drug has two main exclusivity protections: patents (typically 20 years from filing, but extended by various term-extension mechanisms) and FDA exclusivity (typically 5 years for new chemical entities, 7 for orphan drugs, 12 for biologics, with various add-on extensions). LoE occurs when BOTH have lapsed.

Post-LoE pricing trajectory (typical pattern): month 0-6 with 1-2 generics shipping, NADAC drops 30-50%; month 6-24 with 5-10 generics, NADAC drops 80-90%; month 24+ with 15+ generics, NADAC stabilizes at 5-10% of original brand price. The FDA Orange Book lists patent and exclusivity expiry dates for every approved drug.