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The Pharmaceutical industry and conflict with Patents

Authored by Rimsha Riyaz, Student at JLU School of Law, Bhopal

Introduction

In the wake of Covid-19, there is a heavy demand faced by the Pharmaceutical industry for drugs, steroids, vaccines, etc. The pharmaceutical industry is one of the most profitable industries and forms the backbone of the healthcare sector. Pharmaceutical companies mainly deal with the research and development, distribution, and commercialization of medicinal drugs and devices. Drug discovery and development are the main areas of work and are quite expensive. Thus, the cost of innovation and technological advances is higher in the case of the pharmaceutical industry than in other technology-based industries. Even after the development of the drug, it has to be approved by the regulating authority, mainly the government, to enter the market. It is a high-risk investment, it would be very difficult for pharmaceutical companies to recover the costs of manufacturing and gain profits. Here the patents come into play and ensure that the companies are rewarded for their innovation and research and also encouraged to continue doing so. Patents act as a time-bound privilege for companies to sell drugs at desired prices without having to compete with rival companies.

This article will outline the importance of patents in the pharmaceutical industry and the Indian laws governing patents. It will also highlight the impact of patents on technology transfer in drug development and focus on the issues and malpractices in pharmaceutical patenting.

Pharmaceutical Patents

A patent is a property right that is granted by the state to the inventor of a novel, non-obvious and useful invention. The owner of a patent has exclusive rights to make, use or sell his invention for a period set by the state. [1] Most of the inventions made are now patented before they enter the market. Just like any other business, pharmaceutical companies also seek patent protection for their products. However, the case of patent protection to pharmaceutical products is different from other industries. Unlike other industries like the computer or electronics, where there are a number of techniques to manage inventions, patents are the only way to protect pharmaceutical products. Clinical trials and research cost much more than manufacturing the final product, hence pharmaceutical products can be cheaply and easily replicated, once the method of manufacturing is known. Therefore, it is very important for pharmaceutical companies to patent their products for profit-making. Another fact that makes it distinct from others is that pharmaceutical companies have to disclose medical inventions much before launching the product. This is not the case with other industries which reveal their technology only when the products enter the market. Thus, it is important to have the know-how of the pharmaceutical patents separate from the other patents.

Patent law and Pharmaceutical industry: An Indian perspective

Indian Pharmaceutical industry has enormous potential and is growing rapidly. The favorable policies of the government and investment in research and development led to the growth of the industry. With the consistent growth of the industry for almost three decades, the patent law in India was also dynamically changing, especially with the globalization of the pharmaceutical industry.

The law that regulated patenting was older than the republic and was the British-made Patents Act of 1911. It patented the processes of manufacturing drugs and the product. The Act, however, didn’t allow domestic production of drugs and this led to the dominance of multinational corporations in the Indian pharmaceutical industry. Later in 1970, the government brought the Patent Act 1970 that repealed all the provisions of the earlier laws. It granted exclusive rights to the owner of the patent of a new, non-obvious, useful invention. However, agricultural and medical inventions were out of their scope and hence non-patentable. [2] In the case of the pharmaceutical industry, patents were granted only for the process of manufacturing and drug development and not for the final product. The Act encouraged domestic production of drugs and other pharmaceutical products but did not protect the final product. The term of the patent in case of processes of developing agricultural or pharmaceutical products was of seven years from the date of filing, or five years from the date of sealing the patent, whichever is less. The term of the patent for other products was 14 years from the date of filing. [3]

In the year 1955, the circumstances changed with the formation of the World Trade Organization (WTO) that sought to regulate the trade of the world. India was a signatory to the General Agreement on Trade and Tariffs (GATT) and hence had to comply with the agreement of Trade-Related Intellectual Property Rights (TRIPS) signed in the Uruguay round. [4] TRIPS requires the state to grant patents to pharmaceutical inventions, for processes involved as well as the product, for a period of twenty years. India resisted this as it meant changing the whole patent policy. However, the country’s patent policy saw many changes after that. This was evident from the Patent Amendment Act 1999, Patent Amendment Act 2002, and Patent Amendment Act 2005. These amendments were made to reform the patent policy and comply with the TRIPS standards.

Impact of Patents on Technology transfer

Technology transfer in the pharmaceutical industry is essential for drug discovery and development and gives a boost to innovation in this sphere. In simple words, technology transfer is a process by which the developer of a particular technology shares it with a commercial partner for further development and manufacturing of the drug. [5] As is already known, the pharmaceutical industry is keen on reducing the cost of drug development. Technology transfer helps reduce cost by making available already discovered technology to those companies which do not have the financial capability to develop such technology. Patent protection allows technology possessors to disclose their inventions without fearing imitation and thus facilitates the transfer of technology. [6] Hence, patents encourage technology transfer of all kinds from foreign or domestic firms. Foreign firms that fear stealing important information are now ready to transfer technology as their ownership rights are protected by patents. However, stronger patents increase the cost of innovation as companies have to seek permission from all related patent holders and larger firms have an unfair advantage over other firms.

Issues with Pharmaceutical patents

A patent is a legal device that is used to give exclusive market rights to an invention for a particular period of time and help pharmaceutical companies in profit-making. [7] These rights cease to exist as soon as the term of the patent expires and the product’s sales are now based on the market forces. Many companies face losses after the patent expiration of the drug and thus, take up different strategies to ensure protection. This is due to the high cost of the drug and with the increase in competition many high-priced drugs face a fall in revenue.

The losses faced by pharmaceutical companies have led to a considerable increase in strategic patenting.

Practice of Evergreening

Evergreening is a practice to extend the patent protection of the invention and the main agenda is to enhance profits. In the pharmaceutical trade, sometimes the inventions being patented are a slight modification of an older invention. The authorities are now wary of this practice and hence it would be difficult to have a slightly modified drug, patented. For instance, the Supreme Court of India refused to grant Swiss pharmaceutical company, ‘Novartis’ a patent for a new version of Gleevac, a cancer drug. Novartis claimed that the new drug was better absorbed in the blood; however, the industry minister said that Indian patent law does not accept Evergreening. [8]

Strategic patenting has now become the trend and includes new formulations, combinations, new uses of the drug, polymorphism. Due to these practices, there is a contention that the number of new breakthroughs in medicine will go on decreasing. Research by Robin Feldman showed that out of all drugs that entered the market between 2005 and 2015, 78% of the drugs were not new drugs. It also showed that more than 70% of the total drugs had their protection extended at least once.[9] This shows that profit-making has become the main agenda of pharmaceutical companies. There is a growing fear that access to treatment and vaccines will be affected due to patents especially during a pandemic like Covid-19. As was the controversial case of Gilead Science’s ‘Remdisivir’, a potential covid-19 treatment drug that secured a patent in February 2020. [10] Many healthcare groups urged the Indian government to revoke its patent, so that it may be available to covid patients at an affordable price. If incremental drug development and unaffordability of drugs due to high prices continue as it is in the current situation, it may take a toll on the health of the citizens.

Conclusion

Although it is important to incentivize the pharmaceutical companies for their investment and give them patent protection, this should not have an adverse effect on the access to healthcare for citizens and all the more, changing the focus from new breakthroughs in medicine to a mere increase in revenue. The misuse of pharmaceutical patents must be curbed and patent protection should come to an end at expiration. The state must employ strict regulations and reform the patent policy to cover the existing malpractices. The state may also find ways to help the pharmaceutical companies to make a profit through funding from other means. What the other means maybe is a much wider question that can be answered with time. But this might help to resolve the issue to some extent.

References

  1. Bruce Lehman, The pharmaceutical industry and the Patent system,
  2. The Patents Act 1970, 8, chapter II.
  3. Neelesh Zacharias, Sandeep Farias, India: Patents and the Indian Pharmaceutical industry, https://www.mondaq.com/india/patent/865888/patents-and-the-indian-pharmaceutical-industry
  4. Sarika Zambad, Dr. BR Londhe, To study the Scope and Importance of Amended Patent Act on Indian Pharmaceutical Company with respect to Innovation, p.821
  5. Popat B. Mohite, Sachin V. Sangle, Technology transfer in Pharmaceutical industry- A Review, p.2, ssrjournals.com
  6. Bronwyn H. Hall, Does Patent Protection Help or Hinder Technology Transfer? 24
  7. Himanshu Gupta, Suresh Kumar, R.S Gaud, Patent protection strategies, https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3146086/  
  8. Roger Collier, Drug patents: the evergreening problem, 2013, ncbi.nlm.nih.gov   
  9. Allie Nawrat, From evergreening to thickening: exploring the manipulation of pharmaceutical companies, 2019, https://www.pharmaceutical-technology.com/features/pharma-patents-manpulation/
  10. Call for the Indian government to revoke Gilead’s Remdisivir patent, 2020, https://www.thepharmaletter.com/article/call-for-indian-government-to-revoke-gilead-s-remdesivir-patent

Edited By: Subhadeepa Sen

*Disclaimer: The content of this article is intended to provide a piece of general information. The views are expressed by the Author solely and BFTLR may or may not subscribe to the views of the Author.

 

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