Lead Author: Tahir Amin
Organization: Initiative for Medicines, Access & Knowledge (I-MAK)
There is ample evidence to show that the founding social contract of the patent system, namely to give a period of exclusivity for disclosing and promoting the diffusion of new inventions whilst rewarding and remunerating the investment made so as to encourage R&D, is no longer working in practice. Patenting practices today, including the administrative system, are less and less about invention and more about defensive patenting and maintaining a broken system. This leads to a blockage in the diffusion of knowledge and longer exclusivity periods leading to higher prices. The current patent system is, therefore, less about rewarding inventions, but about rewarding investments. In that respect, the patent system is only working to reward pharmaceutical companies with significant power to control the market place and achieve a disproportionate return on their investment.
This contribution seeks to bring the patent system and related administration standards into the 21st Century, to reflect where drug discovery techniques and pharmaceutical business practices are today rather than what it was 30-40 years ago. It advocates for re-designing patent laws and patentability criteria to be industry specific. Through this re-definition of patent standards, it will also help determine how we as a society attach value to medical patents and what is progress. It also calls for better knowledge diffusion by requiring that inventions that are patented but which are not used within a certain period of time will fall into the public domain. And, in order to have a balanced patent system that deters gaming, such a system would impose a penalty on patent holders whose patents are subsequently invalidated. Finally, in order to achieve such reform there also needs to be change in the fee-based patent administration system that currently incentives patent proliferation and higher grant rates of unmerited patents.
The current patent system sits at the heart of the discontent that exists between the rights of inventors, international human rights law, trade laws and public health objectives to increase access to medicines. On the one hand, the originator pharmaceutical and biotech industry claim they need patent exclusivity in order to be incentivised to carry out the R&D to come up with new and useful medical inventions. This exclusivity then allows these companies to recoup their investment by being able to determine how much the market should pay for the patented medicines. On the other, public health and human rights advocates and potential commercial competitors believe the current patent system is not achieving what it was founded to do and is one of the main barriers to increased access.
The founding social contract of the patent system was based on two main components. One is to give a period of exclusivity for disclosing and promoting the diffusion of new inventions. The other is to reward and remunerate the investment made so as to encourage R&D that results in new inventions. However, when we look at patenting practices today and the impact it is having on the cost of health, we have to ask is the current patent system delivering on one of its key founding principles, namely to deliver new inventions?
To borrow the title of an essay by the late and much revered former UK High Court Judge in the Chancery division and patents court, Sir Hugh Laddie, ‘Patents – what’s invention got to do with it?’ (1). Although recognising the need for a patent system to encourage investment, Sir Hugh Laddie acknowledged that most inventions are obvious in light of today’s understanding of how chemicals and genes work and the drug discovery techniques, such as the use combinatorial chemistry and high throughput screening ¬techniques, which make it possible to prepare ten to thousand and even millions of compounds in a single process. Yet we continue to see a proliferation of patents.
Much of this is attributed to the lowering of patent standards over the years and as pointed put above, the law not keeping pace with where we are at in science and drug discovery technologies. It also reflects pharmaceutical company business strategies to extend the life cycle of products by extending patent protection through secondary patents beyond the basic patent term on the initial compound in order to maximise profits and to keep competition away from the market. Ample evidence exists to show these practices at play and how such patenting practices can extend the patent life of a drug for decades and contribute to rising costs (2), (3), (4), (5). And such practices are not limited to more downstream secondary patenting activity. Upstream compounds that are readily given the title of new chemical entities are often a slight change atone or two substitution groups from a previously known compound. This practice, which we term ‘patenting the gaps’ is a practice where companies seek to find the holes between existing patents which would then allow them to get a patent under the current system even though they should technically be deemed non-inventive. As such the current patent system does not incentivise a race to the top in terms of new drug discovery and path-breaking science, but minimal effort for maximum gain. Examples of such compounds include the HIV booster cobicistat, which are essentially ritonavir and the new hepatitis C drug sofosbuvir (6).
The proliferation of patents also hinders the other part of the social contract, the diffusion of knowledge. The excessive patenting, especially where it consists of obvious science, blocks knowledge diffusion. It prevents legitimate research from taking place that could turn useful compounds or science that is sitting idle on a company’s library shelf into a useful treatment.
Bringing the Patent System into the 21st Century
In light of the malaise with the current patent system, this contribution seeks to modernise the current patent system by:
• Re-designing patent laws and patentability criteria to be industry specific. The current one size fits all patentability criteria do not work. Patentability criteria that is specific to the pharmaceutical and biotech industry and which reflect modern drug discovery techniques and business practices need to be designed. There is ample evidence or guidance from case law and legal systems that curb secondary patenting or minor modifications of existing compounds that could guide this re-design.
• In order to encourage more diffusion of knowledge and avoid gridlock of research, this contribution proposes a system whereby inventions that are patented but which are not used within a certain period of time will fall into the public domain. While such a criteria would need to be flushed out further, an example would be if the thousands and/or millions of compounds in a markush type patent claim are not shown to be in use for clinical trials within 3-5 years, such compound claims will be open to be invalidated and fall into the public on the grounds of non-use thereby allowing for open access research to take place.
• In order to have a balanced patent system that deters the current industry gaming and abuses, a new patent system would impose a penalty on patent holders whose patents are subsequently invalidated, say by a patent challenge. Under the current system companies reap billions of dollars of profits whilst imposing a huge burden on public health without any consequence if the patent is eventually revoked.
• Related to the above the threat of retrospective damages should be removed from patent laws. This practice deters the early entry of competitors and significantly favours the patent applicant even before a right is granted.
• In order to achieve the above reform, the current patent administrative system and its incentives need to change. The current fee-based patent system, which help run patent offices, only incentivises the proliferation and rubber stamping of patents. It is well known that examiners are under pressure to grant than refuse in order to keep revenues high. Alternative revenue models are needed to run patent offices that do not incentivise more patenting and poor examination standards. Under a new administrative system there. In addition, practices such as divisional and continuation patents would not be permitted.
This contribution, whilst seeking a re-design of the current patent system and its standards, is also likely to complement other contributions that the High Level Panel may receive. For example, useful discoveries that are not patentable may be funded and brought to market by other contributions.
Impact on Policy Coherence
Only by cleaning up the patent system can there be policy coherence in all the various areas the UN HLP is dealing with. Indeed, only by truly reforming the patent system can other mechanisms like patent pools work. As they stand patent pools only serve to strengthen the current broken patent system, undermine any use of TRIPs flexibilities and hand back power to the pharmaceutical companies.
Impact on Public Health
The impacts would be significant, as we would see a reduction in unnecessary monopoly rights that lead to excessive pricing. It would also remove spending on medicines that do not provide any added health benefits. We would also see more research enabled as knowledge becomes more open rather than being constrained by artificial patents. It would also help re-define how we understand invention and innovation, thereby re-defining how we place value on new medicines.
Impact on Human Rights
The proposed reforms create a balance between human rights and private rights. At present the current system is heavily biased in favour of private interests.
Politically this would be a challenging process and there would be fear that it would dis-incentivise funding into new medicines. However, alongside other mechanisms and solutions that are possible, we believe that once established alongside other policies we would see significant developments in drug discovery that are not low-hanging fruit.
Bibliography and References
1) Sir Hugh Laddie, Patents - what's Invention got to do with it?, Intellectual Property in the New Millenium (2004)
2) Amin et al., Secondary Patenting of Branded Pharmaceuticals: A Case Study of How Patents on Two HIV Drugs Could Be Extended for Decades, Health Affairs (2012)
3) Kapczynski et al; Polymorphs and Prodrugs and Salts (Oh My): An Empirical Analysis of Secondary Pharmaceutical Patents, PLOS (2012)
4) European Comission, Pharmaceuticval Sector Inquiry (2009)
5) Vernaz et, al, Patented Drug Extension Strategies on Healthcare Spending: A Cost Evaluation Analysis, PLOS (June 2013)
6) On file with I-MAK and http://www.i-mak.org/sofosbuvir/