By David Cronin for Intellectual Property Watch
BRUSSELS – Leading pharmaceutical companies are using the patent system to delay the entry of generic medicines onto the market, the European Commission has alleged, sparking a debate at a conference held here this week.

In spring 2009, the EU’s executive branch will present the findings of an investigation into the pharmaceutical sector.

A preliminary report of this probe, launched in January this year, found that up to 1,300 patents can be filed for a single medicine in the European Union. The robust defence of patents by major firms can prevent makers of generic medicines from marketing drugs for some 12 months after the exclusivity rights on them has expired, according to the Commission.

The report is available here.

Examining a sample worth about 10 percent of the Union’s €150 billion-a-year prescription drugs market, the Commission estimated that €3 billion could have been saved to public health budgets if generic entry had taken place immediately once patents expired. This is based on data indicating that the price of a drug falls by about 20% after a year once it moves from being branded to generic.

Dominik Schnichels, an EU competition official who took part in the investigation, said there has been a widespread recourse to litigation by drugs companies eager to protect their patents. Between 2000 and last year, there were 698 cases of litigation over drug patents in the EU, most of which were initiated by the rights-holders. “Of course, they have a right to defend patents,” said Schnichels. “But when you know that generics win in 60 percent of the cases, you wonder why there are so many. On average, these cases last three years. It’s not that you get it clarified quickly.”

Pharmaceutical patents were one of the main topics addressed at the Pan-European Intellectual Property Summit, a gathering of IP specialists held in Brussels on 4-5 December.

Brian Ager, director-general of the European Federation of Pharmaceutical Industries and Associations (EFPIA), described statements by the Commission as “misleading.”

He pointed out that of the almost 700 cases of litigation identified, courts had only delivered judgments in 149 of them. Many other disputes have been settled out of court.

“What that suggests to me is that litigation is the exception not the rule,” he added.

The pharmaceutical industry contends that patents are essential to recoup the costs of research and development (R&D) and to secure resources for further innovation. Yet the Commission’s findings noted that large drug firms spend 17 percent of their revenues on R&D, compared to 23 percent on marketing.

Ager stated that such marketing should not be equated with television or magazine adverts. Instead, it tends to involve “educational facilities for doctors.” Otherwise, “how on earth would doctors know that there are new products there?” he asked.

Stéphane Drouin, a representative of Pfizer, claimed that nappies for babies are subject to higher numbers of patents than pharmaceuticals. A “difficult balance” has to be struck between increasing the speed at which drugs are put on the market and ensuring that quality is not compromised, he said.

But Greg Perry from the European Generic Medicines Association described the filing of multiple patents on single drugs as “an unjustifiable extension of monopoly.” Often patents are filed because of minor modifications to treatments, a process he described as “chemical trickery.” He recommended that the EU should insist on a “duty of candour” for patentees, as is provided for in the US.

Ellen ‘t Hoen, a campaigner with the humanitarian aid agency Médecins Sans Frontières (MSF), complained that the monopoly enjoyed by drugs firms over certain products is having adverse consequences for public health in developing countries.
Because the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement has come into effect in countries such as India, a leading manufacturer of generic drugs, “medicines are being more widely patented”, she said, driving up the price of new treatments. Administered by the World Trade Organisation, TRIPS was negotiated during the 1990s but has only applied to major developing countries more recently.

Although the price of many AIDS medicines has fallen dramatically, advanced new treatments deemed vital in fighting the disease are frequently too expensive for the poor to afford, said ‘t Hoen. She cited the example of Valganciclovir; manufactured by Roche; this treatment can cost patients $10,000 per year.

“We cannot just sit in rooms and celebrate the IP system, without recognising that it has huge societal costs, particularly in developing countries,” she added. “We need to look at separating research and development from the price of the product.”
One promising initiative, she said, could be the development of patent pools – agencies that manage negotiations over licenses, as well as the receipt and payment of royalties. UNITAID, an international drug purchasing body, decided in July to establish such a patent pool for AIDS treatments on a trial basis.

Tough IP for EU-Korea Deal

Meanwhile, the European Commission has signalled that far-reaching IP provisions will be included in a free trade agreement it is negotiating with South Korea.

Péter Balás, a high-ranking trade official in the Commission, said that such clauses would reflect the EU’s intentions to provide a high-level of protection for ‘geographical indications’, names of regional delicacies such as Parma ham or Roquefort cheese.
During the Doha round of world trade talks, the EU has been seeking the introduction of new rules on geographical indications (GIs). The Commission estimates that €6 billion worth the EU’s trade last year was connected to GIs.

According to Balás, the provisions in the agreement with Korea will go beyond rules currently applying at WTO level. Although some officials had hoped the accord could be finalised by year’s end, he acknowledged that talks will continue into 2009.

David Cronin may be reached at info@ip-watch.ch.