22 May 2013

Pharma Patents

'Patents Associated with High-Cost Drugs in Australia' by Andrew Christie, Chris Dent, Peter McIntyre, Lachlan Wilson and David Studdert in (2013) 8(4) PLoS ONE is an important work.

The authors comment that
Australia, like most countries, faces high and rapidly-rising drug costs. There are longstanding concerns about pharmaceutical companies inappropriately extending their monopoly position by “evergreening” blockbuster drugs, through misuse of the patent system. There is, however, very little empirical information about this behaviour. We fill the gap by analysing all of the patents associated with 15 of the costliest drugs in Australia over the last 20 years. Specifically, we search the patent register to identify all the granted patents that cover the active pharmaceutical ingredient of the high-cost drugs. Then, we classify the patents by type, and identify their owners. We find a mean of 49 patents associated with each drug. Three-quarters of these patents are owned by companies other than the drug’s originator. Surprisingly, the majority of all patents are owned by companies that do not have a record of developing top-selling drugs. Our findings show that a multitude of players seek monopoly control over innovations to blockbuster drugs. Consequently, attempts to control drug costs by mitigating misuse of the patent system are likely to miss the mark if they focus only on the patenting activities of originators.
They go on to comment that -
The prominence of patent owners other than the API originator in our findings may be surprising to some. We anticipated this result, although not its extent. What we did not anticipate, however, and which will surprise many, was the predominance of patent ownership among companies not engaged in the business of developing and marketing new top-selling drugs. It suggests that non-originator companies are investing substantial resources in follow-on innovations related to “blockbuster” drugs. Through sub-analyses it was possible to attribute a profile to one-third of these non-originators, with the largest sub-group being generic pharmaceutical companies. For two-thirds of this group, however, it was not possible, within the scope of the study, to know more about them beyond that they were companies in the pharmaceutical industry. More research is needed to better understand the identity of this group, the nature of their patenting activities, and what part those activities play in their business models. ...
Non-originators patented heavily in three areas: delivery mechanisms or formulations for the API; methods of treatment (different ATC class); and intermediates or different forms of the API. The focus of non-originators on intermediate and alternative forms is logical: they are likely to be exploring these compounds in preparation for manufacture of the API once the original patent on it expires. However, the reasons behind non-originators’ other areas of focus are less clear. The strategic value may be in providing leverage or bargaining power against the original patent holder should it seek to use its other associated patents to keep the non-originator out of the market after expiry of the original patent. The high levels of patenting activity we observed for both API originators and non-originators in the delivery mechanisms/formulations space, for example, points to this possibility. Qualitative research focused on non-originators’ motivations would be needed to determine whether these or other motivations explain the patterns of patenting activity we observed.
They conclude -
Commentary and policy discussions about inappropriate patenting behaviour, such as evergreening, have been centred on the originators of the drugs in question [5], [6], [8], [10], [11]. At one level, this is logical: as the owners of the original patent, they have the ability and incentives to extend their monopoly position. Implicit in this logic, however, is that mitigation of such behaviour by the originator will open the market to competitors and thereby drive efficiencies. The European Commission Inquiry put this view explicitly (para 461): “there have been no indications that patenting activities by generic companies, which are unlikely to hold a dominant position, would have negatively affected the possibility for generic or originator companies to enter the market” [26].
Our findings suggest that this account of patenting practices around high-cost drugs is too simplistic. It overlooks the substantial patenting activity undertaken by companies other than the originator of the high-cost drug, including generic manufacturers. Those other companies appear to be manoeuvring to stake out their own pockets of monopoly control for the period following expiration of the original patent on blockbuster drugs.
In the next few years, the original patents on a series of expensive drugs are due to expire. There is keen interest in how quickly greater access and efficiencies can be achieved [29]. Monitoring those important outcomes will demand attention to the behaviour of both the originators of those drugs and other companies scrambling to gain market control.