Chile: Study On Pharma Patents Shows Foreign Ownership

In Chile, pharmaceutical patents are almost exclusively the domain of foreign companies. Only a subset of drugs is protected by patents, while a much larger number of products is protected by trademarks, a study finds, offering for the first time empirical evidence on the use of primary and secondary patents in Chile.

The study looking at pharmaceutical patents in Chile was presented by WIPO Chief Economist Carsten Fink at the meeting of the Committee on Intellectual Property and Development (CDIP), which took place from 20-24 April (IPW, WIPO, 28 April 2014)

“Pharmaceutical patenting turns out to be important, especially in middle-income countries,” Fink said.

The study on pharmaceutical patents in Chile is available here, and the summary of the study is available here.

The study draws upon a distinction between primary and secondary patents, documenting the use of each type of patent in Chile. “This is a challenging task, because patents do not come with any type of designation,” Fink noted.

While there is no formal definition of primary and secondary patents, primary patents directly protect active ingredients that constitute pharmaceutical products, and secondary patents relate to new dosage forms, formulations, and new modes of delivery, the study says.

Authors of the study rely on the Orange Book of the United States, the Merck Index and experts in the field who examined a large number of patents to classify them into primary and secondary patents.

While more powerful – as they relate to active ingredients – primary patents are usually filed at an early stage of the research and development process with uncertainty as to whether a commercial product will be eventually introduced in the market, Fink observed.

With regards to secondary patents, he continued, there is greater certainty about the commercial product but they are less powerful because of a more limited scope of those patents.

According to the study, “despite the widespread use of secondary patents and the current contentious policy debate, there is little evidence on their effect in developing countries.”

There have been studies looking at similar questions for developed countries, especially the United States and the European Union. But “there has never been a study at that level of detail for middle-income countries,” Fink observed.

The study enquires whether secondary patents “protect genuine follow-on innovation,” or whether they “represent primarily a form of strategic patenting.”

It found that “the scarce available evidence on secondary patents suggests that secondary patents are pervasive and that they seem to be used overwhelmingly as a strategic tool.”

“Companies face a rather difficult decision which patents to file in different countries of the world,” said Fink, and such a decision will depend on the country’s level of development, market size and other factors.

“The study also looks at trademark data and links various products that have been introduced in the Chilean market to both patents and trademarks, and provides a descriptive analysis that looks at what type of pharmaceutical products are protected by different forms of IP,” he said.

As for the findings of the study, it turns out that only three percent of pharmaceutical patents granted in Chile are linked to a product that has been introduced in the market, Fink said. However, this figure is not surprising, he explained, and is consistent with findings in other countries. For example, in the United States the rate was below two percent.

Regarding the breakdown between primary and secondary patents, the study finds the ratio to be 1:4, i.e. one primary patent and four secondary patents for every five patents. This is considerably lower than the ratio 1:7 found in a similar study for countries of the European Union.

“This result suggests that fewer of these secondary patents make it to a country like Chile,” Fink said.

Another finding of the study is that almost all patents in the pharmaceutical sector are filed by entities in Europe and the United States, which holds for most middle-income countries, Fink said.

While Chilean companies are not necessarily the originator or licensor of the new pharmaceutical product, the study suggests that “there is a large degree of manufacturing in Chile,” he added.

Noting that the study offers lots of interesting descriptive evidence, Fink concluded that “there are a lot of technical details that are in the study that document the bridging process of patents to pharmaceutical products and trademarks that may also be helpful for similar studies that may be conducted in other countries.”

A Chilean delegate said, “This has been a very enriching experience because it has given us data on the behaviour of our patent applicants for inventions, and this has been extremely useful in formulating various policies, particularly for the definition of IP policies related to studies.”

“We acknowledge the result of the study and we do recognise the result of the study as beneficial as a field and factual study especially in developing countries,” said a delegate from Indonesia. “The discussion of this issue will be supportive for Indonesia particularly in the amendment process of our national patent law.”