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Effect of patents in the
pharmaceutical industry:
burden or boost to
innovation
6th Annual International Seminar of
MarkPatent.Org
“Intellectual Property Rights:
Advantage Business”
Héctor E. Chagoya C.
February, 2010.
Pharmaceutical Patents
Topics
1. Development and sanitary approval of new drugs and
generic drugs – patent independent.
2. Kinds of pharmaceutical patents and patent filings during
drug development.
3. Data protection, experimental use exemption, commercial
purposes of a sanitary registration and Roche-Bolar
exception.
4. Access to drugs and investment for development dilemma:
sources of conflict.
5. Conclusions.
A new drug
PRECLINICAL
TRIALS
“IN VITRO”
$$
Pass?
Y
$$$
MOLECULES
WITH
POTENTIAL
$$
PRECLINICAL
TRIALS
“IN VIVO”
(ANIMALS)
$
DOCTOR/
SCIENTIST/
INNOVATOR
$$$$
Pass?
Y
N
N
UNCURABLE/
NON-TREATABLE
DISEASE
DISEASE 1
DISEASE 2
DISEASE 3
CLINICAL
TRIALS
IN HUMANS
Phase I – Safety
Y
Pass?
$$$$$
N
> $$$$$$$$ OF
DEVELOPMENT
Y
N
RETURN
ON
INVESTMENT
N
Pass?
Y
SANITARY
Pass?
APPROVAL $$$$$$$
CLINICAL
TRIALS
IN HUMANS
Phase IV – Long Term
$$
CLINICAL
TRIALS
IN HUMANS
Phase II - Efficacy
CLINICAL
Y
TRIALS
IN HUMANS
$$$$$$
Phase III – Clinical
Pass?
N
A “generic” drug before
Bioequivalence
PRECLINICAL
TRIALS
“IN VIVO”
(ANIMALS)
FIRST
DRUG
HEALTH
APPROVAL
$
$
N
Pass?
Y
$$
CLINICAL
TRIALS
IN HUMANS
Phase I – Safety
Pass?
$
RETURN
ON
INVESTMENT
SANITARY
APPROVAL
Y
Pass?
N
N
$$$
CLINICAL
TRIALS
IN HUMANS
Phase II - Efficacy
$$
$
> $$$$$$$$ OF
DEVELOPMENT
Y
CLINICAL
TRIALS
IN HUMANS
Phase III – Clinical
Pass?
$$$$
Y
N
$
From first approval to generics
$$
BIOEQUIVALENCY
TESTING
(“Me Too”)
N
Y
Pass?
$$
OTHER
MANUFACTURERS
FILE
FOR APPROVAL
SAFETY
& EFFICACY
ALREADY PROVEN
(“Me Too”)
> $$$$$$$$ OF
DEVELOPMENT
HEALTH
APPROVAL
FIRST
DRUG
HEALTH
APPROVAL
RETURN
ON
INVESTMENT
Unfair competition
Paris Convention - Article 10bis
[Unfair Competition]
(1)…
(2)…
(3) The following in particular shall be prohibited:
1. all acts of such a nature as to create confusion by any
means whatever with the establishment, the goods, or the
industrial or commercial activities, of a competitor;
2. false allegations in the course of trade of such a nature as to
discredit the establishment, the goods, or the industrial or
commercial activities, of a competitor;
3. indications or allegations the use of which in the course of
trade is liable to mislead the public as to the nature, the
manufacturing process, the characteristics, the suitability for
their purpose, or the quantity, of the goods.
Understanding pharma patents
 From all the content of a patent, the RIGHTS
CONFERRED are limited to the CLAIMS.
 TRIPS presents an obligation to provide for patents in ALL
AREAS OF TECHNOLOGY (including pharma and
biotech), with very limited exceptions including therapeutic
methods.
 Accordingly, pharma patents are defined as such because
of the breadth or coverage of its CLAIMS, and may
protect several kinds of innovations according to the stage
of drug development. They can be divided into three
categories:
•Product
•Process
•Use
Regulatory vs. Patent timelines
PATENTS
NEW PROCESSES
ACTIVE
PRINCIPLES
PRECLINICAL
0
SUITABLE
SALT
2nd MEDICAL USE
OR FORMULATION
SPECIFIC
FORMULATION
ACTIVE
PRINCIPLE
EXPIRES
PHASES I-IV
10
SUITABLE
SALT PATENT
EXPIRES
SPECIFIC
FORMULATION
EXPIRES
HEALTH APPROVAL / COMMERCIAL USE
DATA
PROTECTION
FIRST GENÉRIC???
20
STAGE OF DEVELOPMENT / REGISTRATION
Limits of patent claims
 Pharmaceutical PRODUCT claims:
a. Active principles or modifications of active principles
(Preclinical)
b. Vehicles or delivery methods (Phases I to IV)
c. Pharmaceutical compositions or formulations. (Phases I to IV)
d. Intermediates. (Any stage during production)
e. Metabolites and precursor molecules (Phases I to IV)
 Pharmaceutical PROCESS claims:
a. Synthesizing Active principles (Any stage during production)
b. Formulation processes or medicines manufacturing. (Phases I
to IV, during scale-up).
 Pharmaceutical USE claims:
a. “Swiss style” CLAIMS – Second medical uses (Phases III and
IV)
b. Methods of treatment (not patentable in many countries)
Evergreen patents? Not so green!
 Some examples of “abuses” considered “evergreening”:
a. Patents for second medical uses of known active principles. Do
not cover the first medical use.
b. Patents for variations (i.e., new salts or enantiomers) of known
active principles. Do not cover the first described salt or form
of the active principle.
c. Patents for combinations of known active principles. Do not
cover the active principles alone (not combined)
 Back to business driven “critics”:
a. Patent holders: Accused to patent “insignificant” or “frivolous”
improvements to unlawfully make the monopoly last longer.
b. Generic manufacturers: Accused to copy those “insignificant”
or “frivolous” improvements instead of using the first described
product.
c. Patents directed to formulations, new salts, second uses and the
like are currently developed by different firms each, thus making
impossible “evergreening”.
Patents and access
 Any person may use the technology described in an
expired patent without permission of its holder.
 Any patent that is granted to an improvement of a former
invention does not include protection for the first
description, but only to the extent covered by the claims of
the NEW patent.
 A strong patent system has shown greater competition and
access to medicines.
 MEXICO: Before 1991 drugs were not patentable. 80% of
the drugs available in 1995 were registered in Mexico after
1992, in spite of a big base of generic drug manufacturers.
 Before 1991 counterfeiting of drugs was the only way to get
a new treatment, which leaded to less access to treatment
through social security.
The path to “bioquivalence”: US case
 Before
the
so-called
Hatch-Waxman
act,
the
REGULATORY provisions then in force:
• Testing in humans was required for registration of
generic drugs, which was both unnecessary and
unethical.
• Such testing in addition benefited the developer of
the product in excess of a patent (if it existed) by
posing an additional barrier to competition.
• Such testing was a burden to price in drugs and
was paid by the consumers, which restricted access
to better medicines to the general public.
• Use of a drug for purposes of obtaining health
approval is considered commercial use and therefore
infringement of patents (when existed).
Path to “bioequivalence”: US case
 The Hatch-Waxman Act “solution”:
• Authorized “me-too” approach as an exception to unfair
competition, thus authorizing the use of bioequivalence
testing as compared to a “reference drug” instead of full
clinical trials to prove safety and efficacy.
• Recognized that patent protection could be insufficient
given the length of the regulatory process. Therefore, in
exchange to making possible “me too” approvals, they
incorporated a data exclusivity term independent to
patent rights and also an exception to patent terms by
extending the same in account to any “extra” time spent
in the regulatory process.
• Accordingly, generic drugs based on bioequivalence
testing exist because patent terms were extended.
• Use of a patented drug for obtaining a health approval
was still infringement.
Further US fight: Roche-Bolar
Patents
Data
exclusivity
Linkage with
patent
1965
17 years of
exclusivity as of
grant
5 years to
independent
data generated
by applicant
Not linked at all
1985
17 years of
exclusivity as of
grants plus patent
term extension for
delays in health
approval
Hatch-Waxman
act allowed
Abbreviated
New Drug
Application
(ANDA)
Patent extended if
health approval is
delayed as a balance
because of ANDA’s
based on
bioequivalence
Hatch-Waxman did not consider the time required for the grant of
ANDA’s.
Roche-Bolar
 Roche v. Bolar, 733 F 2d, 858 (Fed. Cir. 1984). The case was
related to the sleeping pill Dalmane. Patent expired January 17,
1984 because it granted 17 years before, in 1967.
 Although the US permitted experimental use exemption of a
drug, due to the fact that the only use of a health approval is
commercial, the use of a drug for health approval purposes was
not considered “experimental” and therefore, such use was
considered patent infringement.
 Bolar desired to sell a generic version of Dalmane as of January
18, 1984 under Hatch-Waxman. However, it could not because
sanitary and patent law were inconsistent because the
regulatory approval process extended in the practice the patent
term if Bolar was not allowed to use the drug while the patent
was in force for performing bioequivalence testing.
Roche-Bolar
The controversy resulted in a decision favorable to Bolar, where it
was established that, if an ANDA was filed within 2 years prior to
the date of expiry of the corresponding patent, the use of the
patented drug would not be considered infringement, as an
exception to infringement, provided that the approval were
effective as of expiry date of the patent.
This leaded to the necessity of the so-called Orange Book, where
patent holders must list the patents related to a determined drug,
which in turn gave birth to the so-called “linkage” system, because
somehow the filing for approval of a drug covered by a listed
patent is somehow a “recognition” of infringement.
Access to drugs
According to the World Health Organization:
-
50 percent of the population in developing countries lack access to
essential drugs;
-
50-90 percent of drugs in developing and transitional economies are
paid for out-of-pocket, placing the heaviest burden on the poor;
-
Up to 75 percent of antibiotics are prescribed inappropriately, even in
teaching hospitals in developing countries;
-
The worldwide average of patients who take their medicines correctly is
50 percent;
-
Antimicrobial resistance is growing for most major infectious diseases;
-
Less than one in three developing countries have fully functioning drug
regulatory authorities; and
-
10-20 percent of sampled drugs fail quality control tests in many
developing countries, often resulting in toxic, sometimes lethal
products.
Drugs push inflation?
A matter of pricing?
Who is self sufficient?
Mexico’s pharma balance
What is the incentive?
New Drug
Development
Incentives:
 Service to mankind – Finding
new or better cures for
diseases.
 Differentiation through
innovation.
 Return on investment
through patents
Generic Drug
Commercialization
Incentives:
 Service to mankind –
Broadening access to
medicines.
 Differentiation through
manufacturing and distribution
capabilities.
 Return on investment through
low-cost and high volume.
Ethical issues for both models.
 Drugs and diseases are chosen through larger returns on
investment, not better service to mankind.
 Patent system either used or attacked due to its effect in
return on investment and business, not for the effect in
pricing or access.
Doha: Healthcare dilemma
BASED ON THE EVIDENT PROBLEM OF AIDS, THE
ENTIRE MODEL WAS QUESTIONED ABOUT:
What happens with epidemics in entire countries which
do not have money enough to pay for patented drugs nor
money to develop internal drug manufacturing capacities?
What happens with endemic or exotic diseases?
What if epidemics cannot be covered by a government if
there is lack of support from a patent holder?
Doha: The agreements
Ministerial Conference, 14-Nov-2001 (Doha)
 Recognized the severity of the health problems in developing
and less favored countries.
 Recognized the importance of IP as incentive for development
of new medicines and its effect in pricing.
 Stated that the TRIPS agreement is not intended to be a tool
for jeopardizing access to medicines to all people.
 Confirmed that countries are free to establish compulsory
licensing provisions consistent with TRIPS so as to make
AIDS and other EPIDEMICS be treated as a national urgency
or emergency.
Doha: In practice
 In spite of the fact that some countries had enacted
regulations on compulsory licensing under the decision of
August 30, 2003 about Paragraph 6 of the Doha
declaration concerning countries lacking of drug
manufacturing capabilities and the export possibility from
countries with manufacturing capabilities, DRUG
ACCESS HAS NOT IMPROVED.
 The criticism to the patent system only changes the
business balance from new drug manufacturers to
generic drug manufacturers, but does not solve the
problem of lack of access to drugs.
Doha in practice: The WIPO study
There are 16 sub-Saharan African countries where more than 10%
of the adult population is infected with HIV. 8 of them had no
obligations under TRIPS (until at least 2006), namely Burundi,
Central African Republic, Djibouti, Ethiopia, Lesotho, Malawi,
Rwanda and Zambia.
Causes of the lack of access to medicines in sub-Saharan Africa
are wide and complex. Laying blame on the WTO and TRIPS
Agreement is overly simplistic and wrong, and does nothing to
alleviate the crisis.
Most antiretroviral medications are not widely patented in Africa. In
the majority of countries of sub-Saharan Africa where no patents
exist, there is still a dramatic lack of access to drugs. Similarly, there
are tremendous access problems with medicines long ago off patent.
Even if antiretroviral HIV/AIDS drugs were made available free
tomorrow, there is a lack of health care infrastructure to conduct
testing, store and distribute medications, and monitor patient
compliance with what are often very complicated regimens.
CONCLUSIONS
 Access and cost of drugs is not directly dependent on patents.
They are consequence of regulatory processes and lack of
investment.
 “Evergreen” patents do not exist. There is reluctance of generic
firms to use “old” technologies.
 Not only have patents proven its effectiveness as a tool for
certainty in the return on investment for new drug development,
but have also proven to be an element of certainty for both, new
drug developers and generic manufacturers.
 Patents are not a burden for innovation, and are not the factor
for boosting innovation neither, which is demonstrated by the
lower number of new molecules available. However, patents
give certainty for investment on both, new drug and generic
manufacturers.
QUESTIONS?
[email protected]