Evergreening, a real phenomenon in pharmaceuticals

This piece aims to contest some of the propositions put forth by professor Prabuddha Ganguli in an article published on Intellectual Property Watch on May 20th, 2016. Prof. Ganguli gives a rather positivistic account, from a legal point of view, of the patent system’s functioning, which is not in itself wrong, but is certainly insufficient. The political, social and moral foundations and consequences of that system must be analyzed for a complete assessment of its effects over access to medicines.

That is the main issue with prof. Ganguli’s claim that “[t]here is no ‘ever-greening’ and/or extended patent protection in one form or another form”: it is built upon the observation of a system of legal norms that simply does not describe reality accurately. Although his demonstration of how patents refer to specific creations which may be freely used after their expiry seems correct on a cold analysis of the norms, that theoretical construct does not translate perfectly into practice.

That is to say, when the article states that the claims of a patent are not enforceable after its term, it fails to consider that the formation of patent thickets around an original patent has a real effect in disincentivizing market entry by competitors; and that patent claims are frequently so broad that they fail to give an accurate and reproducible description of a product. When it states that the patent system promotes innovation in the field of drug discovery, it fails to consider the strong evidence otherwise and the lacking evidence in support.

One must agree that the term “evergreening” is not a statutory term. However, it encompasses a range of practices – which may or may not involve patents – aimed at extending the monopoly over a drug market. There are official studies[[i], [ii]] and research efforts in academia involving “evergreening”[iii] in its various faces, of which we highlight those linked to patenting: secondary patenting[iv] aimed at forming patent clusters or thickets[[v], [vi]]; life-cycle management of patents[vii]; defensive patenting[viii]. These are all somewhat interchangeable names for practices that fit the informal category of “evergreening”.

They are all verifiable phenomena in IP, contrary to prof. Ganguli’s impression. AMIN et al. describe overlapping claims and lack of inventiveness and nonobviousness among the 108 patents related to the antiretroviral drugs ritonavir and lopinavir/ritonavir[ix]. The sheer number of patents covering different uses, formulations, polymorphs of a same basic ingredient presents a barrier to entry: in fear of litigation, competitors must engage in costly and time-consuming patent landscaping before entering the market. In the end, entry is delayed.

The Zantac case[x] illustrates the mechanism of defensive patenting as well, and how litigation may be a tool to drive away competitors. This anti-ulcer medication had patents covering two forms, 1 and 2, held by Glaxo. Novopharm, a generic producer, after losing in court with the allegation that Form 1 disclosed Form 2, filed an ANDA to market Form 1, guaranteeing that it would not infringe upon the patent for Form 2. Glaxo’s reaction was to sue the generic for infringement of their Form 2 patent. Even though Novopharm won this second litigation, the time and resources invested must be taken into account in analyzing incentives to entry by generic companies.

If Ganguli’s claim is that evergreening does not and cannot exist at all, these anecdotal evidences should be enough to prove it wrong: it can and it does, in varying forms, but centered around the idea of extending a monopoly. It exists as a consequence of the misuse of the patent system. If all patents were actually inventive and non-obvious, if their claims were restricted to what is industrially achievable (CORREA and VELÁSQUEZ describe how “Markush” formulas go against this requirement[[xi], [xii]]) and allowed reproducibility (there are many examples of virtually irreproducible patents, e.g. the zinc-finger proteins described by CHANDRASEKHARAN[xiii]), the volume of secondary patenting would arguably be far lower and the secondary patents which did exist would probably not exist for the sole purpose of making competitors’ lives harder.

Ganguli also makes other claims about the patent system and its effects. His statement that “the patent system promotes innovations in the fields such as drug discovery and drug delivery systems” is rather problematic and, once again, it goes against the observable reality of the R&D system.

Firstly, let’s determine what specifically is meant by “innovation”. The requirements for granting a patent are: (i) that it discloses something new, i.e., which hasn’t been previously disclosed; (ii) that its object has some kind of industrial applicability; and (iii) that it does not seem obvious to a professional in the field. Formulations and combinations usually fail to meet this last requirement: developing salts, polymorphs and delivery systems are usually basic operations in pharmaceutical R&D.

That is to say, patents covering the latter may be considered “weak”. BOUCHARD measures the strength of patents based on Canada’s classification of “most innovative” drugs, i.e., those which: are “new drug submissions”; contain a “new active substance”; have been granted “expedited review”; or which are “first in class”[xiv]. HEMPHILL and SAMPAT do it, in relation to US law, by analyzing patents which are more likely to be maintained in court, that is, those of an “active ingredient” or of a “new therapeutic entity”[xv]. Not being an incremental innovation, thus, figures as an important element of being “most innovative” or “stronger”.

Anyway, patents that don’t meet the patentability criteria should not be granted. But they are, and they amount to patent clusters that drive away competitors and ultimately damage innovation. The more patents there are surrounding a drug, be them weak or strong, the more venues there will be for litigation and even sham litigation, which disincentivizes entry by competitors.

BAKER describes how the effects of exclusionary conduct by dominant firms in an innovation market are at least ambiguous concerning overall R&D incentive. This means that the argument that patents guarantee appropriability of R&D investment thus incentivizing further investment is, to say the least, not a general norm and more of a case by case possibility – it could actually be that the fear of litigation ends up decreasing overall R&D potential[xvi].

The formation of patent thickets helps solidify a monopolistic agent’s dominance[xvii]. The overall patent protection on a drug is stronger when it is wrapped in a patent thicket, even though weak, late-expiring patents may be a particularly interesting target for challenges by generic companies[xviii].

Furthermore, data shows that although the number of patents has been increasing, the amount of new chemical entities has not been following the same trend[xix]. That is to say, there have been more patents regarding the same chemical entities – more formulations, combinations etc. -, but not many really innovative drugs[xx]. In fact, particularly in regard to neglected tropical diseases[xxi] and antimicrobials, the innovation gap is of such proportion that the WHO and its Member-States have repeatedly expressed concern about the failings of the patent system in spurring new treatments[xxii].

Thus, what the author must have meant by promoting “innovation” is that the current patent system incentivizes patenting. The two terms are not interchangeable – they often go in opposite directions. Patenting is merely an indicator – an extremely inaccurate one, at best – of R&D activities.

Ganguli’s article accurately describes the legal structure of a system. It inaccurately derives from that a series of conclusions on the actual functioning of that system. The discrepancy between what is and what ought to be is not an accident. The patent system was negotiated and implemented based on real interests and its functioning reflects that. If developing countries’ health needs are neglected, if even developed countries begin to face the hardships of an unsustainable system, and all that built on political, economic and legal arguments devoid of substance, it’s because at one point in history the interests of a few prevailed over those of many.


References:

[i] EUROPEAN COMMISSION COMPETITION DG. Pharmaceutical Sector Inquiry Final Report. Available at: http://ec.europa.eu/competition/sectors/pharmaceuticals/inquiry/staff_working_paper_part1.pdf.

[ii] THOMAS, J. R. Patent “Evergreening”: issues in innovation and competition. CRS Report for Congress.

[iii] TUOMINEN, N. Patenting strategies of the EU pharmaceutical industry. Crossroad between patent law and competition policy. Cahiers juridiques, v. 1, 2011.

[iv] KAPCZYNSKI, A.; PARK, C.; SAMPAT, B. N. Polymorphs and prodrugs and salts (oh my!): an empirical analysis of “secondary” pharmaceutical patents. PLoS One, v. 7, n. 12, 2012.

[v] NAYAK, N. Competition impediments in the pharmaceutical sector in India. Ministry of Corporate Affairs, Government of India, 2014.

[vi] OTTERSON, J.; FIUZA, E. P. S.; PEREIRA, D. G. Entry and competition in the Brazilian generic drug market. 40th Annual EARIE Conference. Annals… Évora: 2013.

[vii] GIBSON, S. The use and abuse of drug reformulation in pharmaceutical life cycle management: a comparison of the market defence of Tricor in the U.S. and Lipidil in Canada. Health Law Journal, v. 20, p. 107–143, 2013.

[viii] BOUCHARD, R. A. Qualifying intellectual property I: Harmonised measurement of new and follow-on drug approvals, patents and chemical components. B. U. J. Sci. & Tech. L., v. 18, n. 38, p. 38–101, 2012.

[ix] AMIN, T.; KESSELHEIM, A. S. Secondary patenting of branded pharmaceuticals: A case study of how patents on two HIV drugs could be extended for decades. Health Affairs, v. 31, n. 10, p. 2286–2294, 2012.

[x] PAINE, C. S. Brand-name drug manufacturers risk antitrust violations by slowing generic production through patent layering. Seton Hall Law Review, v. 33, n. 479, 2003.

[xi] CORREA, C. M. Patent examination and legal fictions: how rights are created on feet of clay. South Centre Research Papers, v. 58, n. December, 2014.

[xii] VELÁSQUEZ, G. Guidelines on patentability and access to medicines. South Centre Research Papers, v. 61, n. March, 2015.

[xiii] CHANDRASEKHARAN, S. et al. Proprietary science, open science and the role of patent disclosure: the case of zinc-finger proteins. Nature biotechnology, v. 27, n. 5, p. 485, 2009.

[xiv] BOUCHARD, R. A. Qualifying intellectual property I: Harmonised measurement of new and follow-on drug approvals, patents and chemical components. B. U. J. Sci. & Tech. L., v. 18, n. 38, p. 38–101, 2012.

[xv] HEMPHILL, C. S.; SAMPAT, B. N. When do generics challenge drug patents? Journal of Empirical Legal Studies, v. 8, n. 4, p. 613–649, 2011.

[xvi] BAKER, J. B. Exclusionary Conduct of Dominant Firms, R&D Competition, and Innovation. SSRN Electronic Journal, p. 19, 14 mar. 2014.

[xvii] OTTERSON, J.; FIUZA, E. P. S.; PEREIRA, D. G. Entry and competition in the Brazilian generic drug market. 40th Annual EARIE Conference. Annals… Évora: 2013

[xviii] HEMPHILL, C. S.; SAMPAT, B. N. When do generics challenge drug patents? Journal of Empirical Legal Studies, v. 8, n. 4, p. 613–649, 2011.

[xix] PAMMOLLI, F.; MAGAZZINI, L.; RICCABONI, M. The productivity crisis in pharmaceutical R&D. Nature reviews. Drug discovery, v. 10, n. 6, p. 428–438, 2011.

[xx] VIDOTTI, C. C. F.; DE CASTRO, L. L. C.; CALIL, S. S. New drugs in Brazil: do they meet Brazilian public health needs? Revista panamericana de salud pública, v. 24, n. 1, p. 36–45, 2008.

[xxi] MSF. Lives on the Edge: Time to align medical research and development with people’s health needs. Geneva: MSF, 2016. Available at: <http://www.msfaccess.org/sites/default/files/MSF_assets/Innovation/Docs/R&D_report_LivesOnTheEdge_ENG_2016.pdf>.

[xxii] GASPAR, Walter Britto. Overview of the 68th WHA. UAEM Brasil, 2016. Available at: <http://uaem-br.org/en/resumo-da-68a-ams/>.

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