The patent cliff is coming up fast. While some companies won't feel the heat for a few more years -- Pfizer's (NYSE:PFE) top-selling compound Lipitor and Eli Lilly's (NYSE:LLY) Zyprexa both retain exclusivity until 2011 -- some of the pharmaceutical world's biggest sellers will face generic competition next year.

Triple trouble
Year-over-year comparisons in 2009 won't be pleasant for GlaxoSmithKline (NYSE:GSK). It already lost exclusivity of mood-changer Lamictal in July, and generic versions of migraine medication Imitrex, from Dr. Reddy's Laboratories, hit the market a few weeks ago. The pain will continue next year, when it'll lose blockbuster herpes treatment Valtrex. The drug already pulled in $1.6 billion in the first nine months of the year, with most of that coming from the U.S.

Fortunately, Glaxo is a big company. With more than $41 billion in revenue over the last 12 months, it can afford to lose a few blockbusters without seeing overall revenue drop too much. But then again, as the saying goes, a billion here, a billion there, and pretty soon you're talking real money.

Guilt by association
Boehringer Ingelheim's BPH treatment, Flomax, and UCB's epilepsy drug, Keppra, will both face generic competition next year. Most U.S.-based Fools won't be invested in either company -- neither company's shares are available on the major U.S. exchanges -- but that doesn't mean you should ignore them.

You see, it's quite common for competing drugs to take a hit when one drug goes generic. Doctors tend to favor the generic version when starting new patients with a treatment, and they may even switch patients from a branded drug not facing direct generic competition to the generic form of a competing drug. For instance, Pfizer saw U.S. sales of Lipitor decline when Merck's (NYSE:MRK) Zocor went generic.

Getting back to Flomax and Keppra, and what that might mean for you, sales of both Sanofi-Aventis' (NYSE:SNY) Uroxatral and Glaxo's Avodart are at risk when Flomax goes generic, while Pfizer's Lyrica could see a dropoff when Keppra goes generic.

Patents versus exclusivity
While some authors -- guilty as charged -- use the terms interchangeably, these two words really don't have the same meaning. The exclusivity period for selling a drug without generic competition can actually be shorter or longer than the patents.

Generic competition can come before patents expire, when drugmakers settle lawsuits with generic drugmakers to avoid the potential of losing patent-infringement court cases. The drugmakers allow the generic-drug company to launch before the patent runs out, and if they've got the upper hand in negotiations, they'll often take a cut of the generic sales in royalties. As an example, Teva Pharmaceuticals (NASDAQ:TEVA) settled with AstraZeneca last month, allowing Teva to launch generic versions of AstraZeneca's asthma treatment Pulmicort Respules next year, 10 years before the patent expires.

On the flip side, drugmakers can also extend the exclusivity period by doing research on the drug's use in children. For spending the money, the FDA gives the company a six-month extension before it'll approve generic equivalents. For instance, Johnson & Johnson's (NYSE:JNJ) migraine medication, Topamax, was on last year's list, but the company was able to extend its exclusivity period by six months by doing research on younger patients.

You should care, too
Even if you're not invested in any of the companies about to receive generic competition, the events could affect you, too -- in a good way. If you're taking any of the above drugs, consult your physician about switching to the generic version. If you're on insurance, you'll probably see a drop in the copayment, and if you're winging it without health insurance, or in the Medicare donut, you'll likely see your costs drop substantially.

Authors have been warning about the patent cliff for years, but it's up to investors to get the scoop on when individual drugs face the end of their exclusivity. Do your own homework and try to estimate the revenue of the company after the loss of exclusivity. Some companies, like Pfizer, are looking pretty good, despite their impending loss of revenue.

Pfizer, Johnson & Johnson, and GlaxoSmithKline are Motley Fool Income Investor selections. To see how dividend-paying stocks can offer both secure income and the opportunity for growth, take a free look at this newsletter with a 30-day free trial.

Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Eli Lilly is a former Income Investor pick. Pfizer is an Inside Value pick, and the Fool owns shares of Pfizer. Accept no substitutes for the Fool's disclosure policy.