INTRODUCTION:
Intellectual Property can be defined as creations of the human mind. It is concerned with creating or producing something, which is new and useful, for the better utilization of global resources. This property can be sold, purchased, hired or licensed and as such the rights in property created from the intellectual efforts of an individual need to be protected. Intellectual Property Rights (IPRs) are legal rights governing such creations. Books, Paintings, artistic works, inventions, designs or trademarks can be cited as examples of Intellectual Property. The basic philosophy of the IPRs is to protect the distinctive creations like trade mark, designs etc.
International property (IP) laws are both legal and business assets for pharmaceutical manufacturers. Market protection has played a major role in the growth of the pharmaceutical industry. Pharmaceutical companies invest in years of research and development, expensive clinical trials and a lengthy regulatory approval process before their products ever reach the market. IP laws are intended to give the investors an opportunity to recoup their costs. U.S. rules governing IP and pharmaceuticals are among the most generous in global markets in terms of giving commercial protection to manufacturers.
Patents
Research based companies that focus on new drug discovery, improving existing drugs, or developing new manufacturing processes or equipment to manufacture drugs rely on the patent system to recover their costs of development. A patent is an exclusive right granted by a regulatory body that prevents others from making, using, selling or importing the patented invention without the patent owner's permission. In the United States, pharmaceuticals, like all innovations, have patent protection for 20 years from the date of filing the patent. Most drugs are under market protection for a much shorter time because it takes years for development and the completion of clinical trials before final regulatory review.
Patent Extensions
Pharmaceutical patent holders often obtain exclusivity extensions that postpone generic competition by one to three years. One such delay is called patent evergreening, according to Aaron Kesselheim, M.D, JD, and MPH, who follows pharmoeconomics at Harvard Medical School. Ever greening refers to patenting a nonessential feature of a product such as its formulation or method of dosage. Other ways to delay generic competition are through patent infringement suits against a generic manufacturer at the time of registration and by entering into settlements with generic manufacturers.
Trade Secrets
Trade secrets are confidential business information which give a company a competitive edge or protects them from unfair competition. Pharmaceutical manufacturers protect their test data as a trade secret. Regulatory agencies, such as the U.S. Food and Drug Administration, may not make undisclosed test data available to competitors or the public. The company is responsible for protecting their trade secrets when sharing their data with partners, investors and staff through confidentiality agreements.
It’s a violation of law to disclose or gain unauthorized access to a trade secret. To be considered a trade secret, business information must be generally unknown, be of commercial value because of its secrecy, and the holder of the information must take reasonable means to keep the data secret.
Trademarks
A trademark, or brand, is a distinctive image, word or phrase that distinguishes a product or service from those produced by a competitor. In the pharmaceutical industry, trademarks may also be obtained for a distinctive color or shape used in processing a drug tablet or capsule or on its packaging. NA trademark must be registered before it can be protected from marketplace competition. Like patents and trade secrets, trademarks expire after a given number of years but unlike patents, trademarks can generally be renewed repeatedly.
Though patents are effective tools for promoting innovation and protecting intellectual property in the pharmaceutical sciences, there has been growing concern about 2 important ways that patents in this field can have a negative effect on patient care and the practice of medicine.
1) Inventors can seek and receive patents on pharmaceutical products or research tools that stretch the statutory requirements for patenting.
2) Second, patent holders in the pharmaceutical market can use legal loopholes or aspects of the patent registration system to extend exclusivity for inventions beyond what was anticipated by the Patent Act or subsequent legislation.
The monopoly control bestowed by such inappropriate patents or manipulation of the patent system can limit options available to patients, increase the cost of health care delivery, and make cooperative research more difficult. In response, several different government and market-based efforts have emerged to promote more equitable patent policy in health care that encourages dissemination of ideas while still supporting the development of innovative products.
Since 1790, the United States has employed a system of patents under the authority of the US Constitution to “promote science and the useful arts.”A patent is a grant from the federal government that permits inventors to exclude others from making or using their discoveries. It is a legal monopoly provided, for a limited period of time, in order to spur innovation and encourage investment in the production and dissemination of innovative products and processes.
The pharmaceutical sciences have long been closely entwined with the patent system. Pharmaceutical products often rely on substantial amounts of upfront investment and technical knowledge but may be relatively straightforward to copy once they are widely distributed. Providing market exclusivity to an inventor through patent protection can encourage the initial outlay of resources needed to develop the product. In fact, most significant pharmaceutical products have at one time been the subjects of patent protection, even including ones that today are considered to be as fundamental as aspirin, whose patent was held by the Bayer Company in the early 20th century.
Since the 1980s, several legal and social forces have strengthened the connection between the pharmaceutical sciences and the patenting system. In 1983, the Bayh Dole Act allowed universities and other recipients of federal research funds to maintain control of the intellectual property in discoveries made with public support. Previously, such rights were automatically assumed by the federal government. Today, much of the basic science work related to the pharmaceutical sciences occurs in academic settings under the support of federal funds, and researchers are seeking to obtain patents in the same fashion as their industry counterparts. In addition, the Federal Circuit Court of Appeals was created in the early 1980s to provide judicial review of patent related cases. However, by upholding numerous questionable patents, the Court of Appeals has encouraged patent holders to stretch the limits of patenting by setting low legal hurdles for the types of inventions deserving of patent protection.
In modern times the pharmaceutical sciences, more than any other technology-based industry, has come to rely on patents as the primary mechanism to promote innovation. As the pharmaceutical product market has expanded over the past several decades, the number of drug product-related patents has exploded. For example, from 1994 to 1999, 28 414 of the issued patents were classified by the United States Patent and Trademark Office (USPTO) as relating to “Drugs, bio-affecting, and body treating compositions.” Only 8365 similarly designated patents were issued during the years 1975 to 1979 as cited below:
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| Figure 1. Number of new drug-related patents granted that the United States Patent and Trademark Office designated as falling within the class of inventions related to “drug, bio-affecting, or body treating compositions.” Data source: National Bureau of Economic Research US patent citation data file. |
Recently, some commentators have become concerned about the problems with the ubiquitous nature of patents in the pharmaceutical sciences. Heller and Eisenberg in the late 1990s argued that too many patents on basic science discoveries could create an “anti commons,” where numerous holders of overlapping intellectual property rights could prevent effective cooperative uses of those rights. There have also been some indications that patents may not be contributing to innovation in the pharmaceutical market as intended. Despite the substantial rise in patenting, the Congressional Budget Office (CBO) issued a report in 2006 showing that the number of new pharmaceutical products on the market has declined in recent years. Finally, recent experiences and studies have identified several ways that patents and the resulting market exclusivity in the pharmaceutical sciences have had important negative effects on the public health.
In this project, I review the 2 major ways that patents in the pharmaceutical sciences can be manipulated to interfere with the practice of medicine. First, there is the problem of “inappropriate patents”; ie, inventors seeking and receiving patents in contexts that stretch the legal requirements for patenting or that protect discoveries that may not have been made by the inventors. Second, the federal government’s patent registration and oversight system can be manipulated through various legal means to extend market exclusivity for inventions beyond that which was anticipated by the Patent Act or through subsequent legislation. I conclude by discussing several new proposals that have been put forth to help reform the patent system.
Pharmaceutical Patents Stretching the Bounds of Patentability:
A patent is classically thought of as a “quid pro quo,” where inventors provide full disclosure of their invention and can allow it to be placed on the market in exchange for a limited monopoly protection. Currently, patent protection extends for 20 years from the date the inventor files for the patent, after which time the product becomes available in the public domain for all to use. A discovery must meet certain conditions for sufficient inventiveness to earn this limited monopoly protection. These requirements are spelled out in the Patent Act. A patent must fall within a certain subject matter; not be previously described publicly (that is, be “novel”); have a credible, specific, and substantial utility; and not be an obvious alteration to an existing product. However, when inventors stretch the limits of these statutory requirements, they can earn patents on discoveries that arguably should be in the public domain. These “inappropriate patents” disrupt the delicate policy balance underlying the patent system when issued for intellectual properties in the pharmaceutical sciences and can directly affect the advancement of medical research or the treatment of patients.
Some patents, for example, have stretched the notion of patentable subject matter. The proper subject matter for most patents is defined as a “process, machine, manufacture, or composition of matter.” Though the broad statutory definition may include “anything under the sun made by man,” several potential discoveries are still excluded from patent protection. In Diamond v Diehr, inventors patented an algorithm for determining the proper time and temperature for curing rubber in the context of an innovative process for transforming rubber. The patent was challenged because a basic scientific relationship—the parameters of rubber’s molecular stability—was integrated into the algorithm. The Supreme Court upheld the patent, clarifying that “laws of nature, natural phenomena, and abstract ideas” are only patentable when they are a part of a transformation of something “into a new state or thing.”
Despite the Supreme Court’s prior statement on patentable subject matter, several patents have been granted and upheld within the pharmaceutical sciences, especially as related to basic scientific relationships, which may not represent appropriate subject matter for patents. One example that reached the Supreme Court in 2006 is the case of Laboratory Corporation (LabCorp) v Metabolite Laboratories. That case arose out of a patent received by 3 scientists who discovered that elevated levels of homocysteine, a protein long known to be involved in inflammation, were associated with a deficiency of either cobalamin (vitamin B12) or folate (folic acid). In addition to claiming rights in the process of assaying total homocysteine levels in patients’ blood, the inventors asserted an intellectual property right in
A method for detecting a deficiency of cobalamin or folate in warm-blooded animals comprising the steps of:
1) Assaying a body fluid for an elevated level of total homocysteine; and
2) Correlating an elevated level of total homocysteine in said body fluid with a deficiency of cobalamin or folate.
This claim (“Claim 13”) covered the act of inferring, on the basis of a test result showing elevated homocysteine levels, that a patient was deficient in either cobalamin or folate. Claim 13 was challenged in court, but the Federal Circuit affirmed its validity, noting that drawing a “simple conclusion that a cobalamin/folate deficiency exists” based on the test result constituted patent infringement. The Supreme Court ultimately decided to allow the Federal Circuit’s decision to stand without reviewing the case, probably because it wanted a lower court to comment more specifically on whether the basic scientific relationship at issue was the proper subject matter of a patent. Patents like the one at issue in LabCorp extend the statutory interpretation of the proper subject matter of a patent by adding only trivial procedural steps to naturally occurring processes. These patents can increase health care costs through licensing fees and the need to negotiate use agreements. They can also inhibit cooperation among physicians and scientists.
Process patents stretching the bounds of patentability are widespread in the field of pharmaceutical sciences. Many pharmaceutical product patents include claims describing hundreds of theoretical ways that physicians can use the product, even before the product has entered into clinical trials. Other patents have been sought and granted on diagnostic or treatment algorithms. These patents are currently considered valid “process” patents, but many of them also describe, and attempt to assert intellectual property rights over, naturally occurring protein binding or signaling pathways. For example, in the case of Ariad Pharmaceuticals v Eli Lilly, a jury upheld a patent covering all processes modulating the naturally occurring NF-κB biological pathway.
Another group of potentially inappropriate patents in the pharmaceutical sciences relies on a loose interpretation of the non-obviousness requirement. According to the Patent Act, proposed invention must be non-obvious in light of the prior art and the proper way to evaluate what is obvious is from the point of view of a “person of ordinary skill in the art,” that is, the field to which the invention relates. The non obviousness requirement attempts to prevent offering monopoly protection to small changes to currently existing inventions, because such a policy would not successfully promote the progress of science and the useful arts.
Numerous patents in the pharmaceutical sciences, however, push the bounds of the non-obviousness requirement. Pharmaceutical manufacturers routinely apply for and receive patents on biological derivatives of existing products or for combinations of existing products. For example, AstraZeneca developed the proton pump inhibitor omeprazole (Prilosec) and later received a patent on its purified s-isomer (esomeprazole, Nexium). The latter can be considered an obvious subsequent development step. Despite the similar efficacy of these 2 molecules, the company used its marketing resources to promote the more expensive s-isomer when omeprazole, the original product, faced loss of its patent protection. Similarly, many drug combination patents lack the inventive step that should be required for patentability. Pfizer has received a patent on a pill consisting of the combination of the calcium channel blocker amlodipine (Norvasc) and the cholesterol-lowering agent atorvastatin (Lipitor). This patent will last until 2018, even though drugs in these pharmaceutical classes are routinely used in tandem in patient care.
Some arguably obvious patents have classically been allowed by the USPTO and have been upheld by the Federal Circuit because of the relatively low bar established by the Federal Circuit for determining whether a product meets the non-obviousness requirement. In the case of combination patents, the Federal Circuit has held that obviousness can only be established if there are statements in the literature at the time of the invention that include a specific “teaching, suggestion, or motivation” (TSM) to combine the elements. Although the TSM test does not require explicit statements, Federal Circuit cases have been decided on the inability to find such formal references. However, the TSM test has no basis in the Patent Act. In fact, the Supreme Court in 1976 rejected a patent specifically because it was merely the combination of existing products (albeit despite lacking explicit information relating to the combination of these 2 products), noting that the patent “simply arranges old elements with each performing the same function it had been known to perform, although perhaps producing a more striking result than in previous combinations. Such combinations are not patentable under standards appropriate for a combination patent.”
Some pharmaceutical patents push the statutory bounds of the Patent Act and earn products undeserved market exclusivity. Patent-protected products such as esomeprazole can increase health care costs. Patent-protected processes such as the one at issue in the LabCorp case covering naturally occurring biological pathways and relationships can interfere with physician decision making, and overly broad patents attempting to claim rights in natural biochemical processes can inhibit research that might otherwise lead to innovative new products.
Patent Extensions for Pharmaceutical Products:
In the pharmaceutical market, it has become common among patent holders of nearly all successful products to attempt to extend the market exclusivity beyond the length of time initially granted by the patent. Several different strategies are available for this purpose. One example is called “patent ever greening,” which is the patenting of nonessential features of products, including aspects of their formulation, their metabolites, or methods of administration. For example, in 1981 Schering obtained a patent on loratadine (Claritin), which became a popular antihistamine medication. Schering applied for and obtained 46 months of patent extensions owing to regulatory review time and changes in patent laws, giving it nearly 21 years of patent protection, which surpasses the standard 20 year time frame. Meanwhile, the manufacturer sought numerous other ways to extend its market exclusivity even further, including patenting the compound desethoxycarbonyl-loratadine (DCL), which is formed in the body during the normal metabolism of loratadine. The patent was challenged in court and was eventually overturned because DCL was “necessarily and inevitably” formed in every patient, and generic loratadine was ultimately marketed in 2002. However, the court noted that its decision did not extend to every metabolite of a pharmaceutical product, suggesting that “the metabolite may be claimed in its pure and isolated form or as a pharmaceutical composition (e.g., with a pharmaceutically acceptable carrier).
Research has shown that efforts to extend market exclusivity protection in this way can prevent the marketing of lower cost generic alternatives. In a study published in Health Affairs, I, along with my colleagues Michael Fischer and Jerry Avorn, examined 3 brand name pharmaceutical products whose market exclusivity was extended through patent ever greening efforts. These efforts included lawsuits aimed at exploiting federal statutory loopholes and attempts to patent peripheral aspects of products. Our analysis identified $1.5 billion in revenue that the Medicaid system could have saved if generic alternatives to these 3 medications had been available. For example, in the case of omeprazole, the patent on the active ingredient expired in April 2001, but litigation over patents relating to the coating of the pill prevented generic versions from entering the market until the first quarter of 2003. In the intervening time, AstraZeneca introduced an over-the-counter version of omeprazole and promoted its patent-protected esomeprazole for use in place of omeprazole. If a generic version of omeprazole had been available as early as April 2001, and been fully substituted for the over-the-counter price, Medicaid could have saved $860 million. If generic omeprazole was also substituted for Nexium, an essentially identical product marketed by the same manufacturer, savings could have reached $1.2 billion. As Medicaid programs costs for prescription drugs continue to rise, many programs are cutting back on important areas of coverage or are changing eligibility requirements to maintain their budget. This analysis identified one area where cost savings could be achieved without sacrificing the public health.
Another strategy that pharmaceutical manufacturers have employed to extend market exclusivity has involved the current patent registration and enforcement system. Currently, for example, when a generic manufacturer registers a generic version of a brand-name product, there can be an authorized 30-month stay on the marketing of the generic product to allow for resolution of patent infringement disputes. However, a recent study by the Federal Trade Commission (FTC) revealed numerous instances of widely used brand-name products, where pharmaceutical companies have sought overlapping or concurrent 30-month stays to extend their effective market exclusivity. In the case of the antidepressant paroxetine (Paxil), disputes over a total of 5 different patents listed with the Food and Drug Administration (FDA) led to an extra 35 months of delay in the approval of a generic version. During that time, annual sales of brand-name Paxil reached over $1 billion. According to the FTC, the delays caused by these overlapping stays ranged from 4 to 40 months.
Brand-name manufacturers can also delay market entry of generic equivalents to their drug products by entering into settlements with generic manufacturers. By law, the first manufacturer to register its generic alternative with the FDA can receive a 180-day period of generic market exclusivity once it is approved. However, the FTC found instances of settlement agreements between the brand-name and generic manufacturers that delayed the approval of the generic product. In one recent case, Bristol-Myers Squibb and Sanofi had agreed to pay the Canadian generic manufacturer Apotex nearly $40 million to hold off marketing a generic equivalent of clopidogrel (Plavix) until 2011 (when the final clopidogrel patents expired).
One rationale for ever greening and for using similar marketing strategies is that the effective market exclusivity enjoyed by the patent holder may be less than the full 20 years of patent length because patents applications usually occur early in the development of the product. Pharmaceutical products must then undergo preclinical and clinical testing, as well as governmental regulatory review, before being introduced on the market. However, these delays are mitigated by stipulations in the Hatch-Waxman Act that add FDA regulatory review time back into the effective patent life, which can extend the market exclusivity once a product is approved. A monopoly right that is appropriately limited is crucial to helping preserve the policy underlying the Patent Act of promoting innovation while still allowing the intellectual property to enter the public domain.
Promoting Optimal Patent Policy in the Pharmaceutical Sciences:
It is important to consider how intellectual property policies in the pharmaceutical sciences affect the health care system. Several strategies have been suggested to reform the patent system to better protect public health, patient care, and medical research.
For example, the FTC has proposed better scrutiny of the patent registration system. Since the FTC’s study, the FDA has helped prevent grants of overlapping 30-month stays that can prevent generic products from entering the market. In addition, legislation has been proposed in Congress that will affect pharmaceutical manufacturers that enter into agreements relating to the 180-day generic market exclusivity period. The Drug Competition Act of 2001 required the filing of brand-name and generic manufacturer agreements with the FTC and with the Department of Justice to enable more appropriate government scrutiny over those agreements in the future. However, while that bill passed the Senate with unanimous consent, it was not subsequently voted on in the House. Some have also investigated market-based alternatives. The Institute for One World Health has emerged as an alternative model for pharmaceutical companies, because of its nonprofit status. It has effectively introduced a treatment for visceral leishmaniasis in underserved markets in India. Currently, it is pursuing cooperative licensing agreements for future products that treat diseases (such as malaria and Chagas’ disease) that might not otherwise be pursued by traditional for-profit manufacturers. Similarly, the group Universities Allied for Essential Medicines (UAEM) has advocated for academic centers to proactively seeks development licenses with pharmaceutical manufacturers in an effort to produce reasonably priced products that would have otherwise not been available in low-income markets. According to a report in Nature, Yale University recently agreed not to enforce patents covering an AIDS drug in some low income countries. Though these examples deal with international health, their lessons are similarly applicable to the pharmaceutical markets in the developed world. These alternative models of intellectual property management emphasize improving access to products and limiting their costs, especially where those products are based on research done at academic institutions supported by taxpayer funds.
Intellectual Property Rights and the Challenges to Indian Pharmaceutical Industry:
The Indian pharmaceutical industry has changed remarkably over the last 50years, from being traders in imported drugs in the fifties, to major bulk drug producers by the eighties. During this transitional period Indian pharmaceutical units have learnt the technology of bulk drug production by their own research and adaptation, and today they produce more than 250 bulk drugs, emphasizing on import substitution and use of indigenous raw materials. At present the Indian pharmaceutical industry has about 300 large units, 1700 medium-size units and about 8000 small-scale units throughout the country.
The Indian law on this subject is contained in the Patents Act, 1970 (a law made by the Indian Parliament) as amended from time to time. In pharmaceutical industry what is patentable is an invention for making a product, and not a discovery in the field of fundamental science. In a discovery nothing new is created. On the other hand, an invention is creation of a new entity, or a new process, though this usually involves utilization of scientific discoveries. The basic requirement for patentability under the Patents law is that the invention should be new and useful, that is, it must have novelty and utility, vide Bishwanath Prasad Radhey Shyam v.Hindustan Metal Industries Once an invention is patented the patentee gets exclusive right to use it, though he may sell or lease it to another. Infringement of the patent can be prevented by an injunction in a civil suit.
TRIPs, the Agreement on Trade-Related Aspects of Intellectual Property Rights is an International treaty by the World Trade Organization (WTO) which sets down minimum standards for most forms of intellectual property (IP) regulation within all member countries of the World Trade Organization. It was negotiated at the end of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) treaty in 1994. After India signed the General Agreement on Trade and Tariff (GATT) and the Trade Related Aspects of Intellectual Property Rights Agreement, 1994 (TRIPS) and became a member of the World Trade Organization (WTO). As India is a signatory to the TRIPS Agreement and is a member of WTO, the Patents Act is amended in 2005 to make it confirm to these international agreements. Under Article 70(8)(9) of the TRIPS Agreement regarding pharmaceutical industry, India has the following obligations:
(a) To recognize in principle all kinds of inventions in the area of pharmaceutical and agricultural chemical products in accordance with Article 27 of the Agreement.
(b) To provide a mechanism by which applications can be filed for new inventions as understood in Article 27 in these areas from 1-1-1995.
(c) To apply the test of patentability as laid down in the Agreement irrespective of the law of the country on the date of filing, at the time when patent is granted or rejected.
(d) To provide patent protection for a period of 20 years, from the date of filing once the parties decide to grant the patent.
(e) In the case of product patent applications in these areas, grant exclusive marketing rights for five years or until patent is granted or rejected, whichever period is shorter.
Granting of exclusive marketing rights is subject to three conditions:
(i) product patent for the invention has been granted by another member country;
(ii) market approval is obtained in such other member country; and
(iii) market approval from the country/member granting exclusive marketing right is granted.
Before the recent amendment Section 5 of the Indian Patents Act, 1970 Expressly prohibited product patents and only permitted process patent. After the implementation of TRIPS, the Patents (Amendment)Act, 2005 repealed it and therefore gave way to product patents as well. The difference between process patent and product patent is that under a process patent, medicine or drugs which have been patented can be manufactured by another manufacturer but by using a different process. However, in a product patent drugs which have been patented cannot be manufactured by any process. Thus, product patent is a much stringent restriction than process patent. In consequence of India signing the TRIPS Agreement and WTO India accepted the product patent from 1-1-2005 in accordance with the obligation under Article 27(1) of the TRIPS. It is open to a country signing the TRIPS Agreement to exclude from patentability inventions which are necessary to protect morality, order or health or avoid serious prejudice to the environment, but such exclusion can only be in areas where the majority of member States are also prohibiting the commercial exploitation and denying protection.
The implementation of the TRIPS Agreement will give rise to factors that can put access to medicines out of reach for millions of people in the developing world. The TRIPS Agreement obliges WTO Members to adopt and enforce high standards of intellectual property rights protection, which were derived from the standards used in developed countries. Conforming to TRIPS by recognizing and strengthening protection of intellectual property rights over pharmaceutical products and processes will cause problems for developing countries. Implementation of the TRIPS Agreement may lead to high drug prices, low access to medicines and a weakening of pharmaceutical industries in the developing countries. It is feared that patent protection for pharmaceutical products and processes will have the effect of reducing or eliminating competition from generic production of medicines. There are about 10 industrialized countries with the pharmaceutical industry and research base, capable of developing new chemical entities or new medicines. The multinational drug companies in these countries own most of the pharmaceutical technologies and products through patents. The minimum term of 20-year patent protection required by TRIPS effectively allows a pharmaceutical company a monopoly over the production, marketing and pricing of patent protected medicines. It will be able to keep the price of the drug high during the protection period, free from competition. By virtue of TRIPS protection, no generic equivalent can come into the market until expiry of the 20 years, denying patients cheaper alternatives. Domestic manufacturing of pharmaceutical products in developing countries will come to a standstill. Developing countries are able to produce new medicines by a process of reverse engineering; that is, researchers in developing countries may develop a new process different from the process invented (and protected by patent) to manufacture the new medicine or chemical entity. Reverse engineering is possible only in countries where the patent law protects processes but not products. The TRIPS Agreement extends the scope of patent protection to both products processes. It would therefore be possible to apply for patent rights over products for 20 years, and thereafter, further periods of 20 years each could be applied for products covered by patented processes. Developing country pharmaceutical producers will find themselves pushed out of the market, having to compete with the large MNCs. For the smaller producers in the developing world, which specialize and depend on manufacturing cheaper generic alternatives, this would no longer be possible at least, until the expiry of the 20 year period. The TRIPS Agreement further requires patents to be granted, regardless whether the products are imported or locally produced. The means that patent holders can merely import their product, without having to work the patent in the country granting the right. This will mean that a MNC can supply global markets under the patent monopoly, exporting the finished product instead of transferring technology or making foreign direct investment. This is contradictory of the argument of TRIPS proponents that strict patent regimes will increase the flow of technology and investment into developing countries. The TRIPS Agreement, in its present form, contains certain provisions that can be used to limit patent rights. These limitations or exceptions are to be effected through national legislation, in order to curb abuses of intellectual property rights and anti-competitive practices, and generally, to offset the negative impact of patent monopolies. Two of the most important measures include the right of government to grant compulsory licenses and the application of the principle of exhaustion of intellectual property rights, which allows for parallel importation of patented products.
National Pharmaceutical Policy, 2006 Announced:
The National Pharmaceutical Policy, 2006 has been announced, it is focusing on research and drug development with clinical trials. The policy lays emphasis on developing human resources in pharmaceutical sciences by opening more institutions on the pattern of the National Institute of Pharmaceutical Education and Research (NIPER). The policy aims at providing a better access to anti-cancer and anti-HIV/AIDS drugs to the patients.
Hon,ble Minister Shri Paswan said the draft National Pharmaceutical Policy, 2006 seeks to rationalise the excise duty on pharmaceuticals. It also seeks to streamline the system of bulk procurement of drugs by the Government besides promoting the generic medicines. The Minister said consumer awareness campaigns would be launched to educate the masses on the new policy. Drugs would be made available to the poor, especially the families living below the poverty line. He said the new policy encourages production of critical bulk drugs in India with emphasis on good manufacturing practices. There would be a Settlement Commission for settling old dues under the Drugs (Prices Control) Order, 1979. A Drug Price Monitoring Awareness and Accessibility Fund (DPMAA Fund) would be set up along with pharma parks. Shri Paswan said the policy lays greater thrust on pharma exports and on improving the retail system for an efficient network for distributing drugs. A Pharmaceutical Advisory Forum would be set up at the national level besides an advisory committee in the National Pharmaceutical Pricing Authority (NPPA) at its head office and five in different regions. These would be headed by the NPPA Chairman.
In addition to the existing 74 drugs and their formulations, the 354 drugs with specified strength as mentioned in the National List of Essential Medicines (NLEM), 2003 have also been included in the draft Pharmaceutical Policy. Apart from the cost plus method, other systems of price control like negotiated prices, differential prices, reference prices and bulk purchase price have also been proposed. He said the raw material cost would be obtained from the manufacturers, central public enterprises in the pharmaceutical sector, import data and market sources.
Govt. disclosed that the Maximum Allowable Post-manufacturing Expenses (MAPE), presently 100 per cent over the manufacturing cost, is proposed to be revised as follows:
(a) 150% in general
(b) 50% additional MAPE for R&D intensive companies which fulfill the laid down standards.
(c) For existing 74 drugs under price control MAPE would continue to remain at 100% for one year in order to avoid a sudden increase in prices. It would be increased thereafter on the above pattern.
(d) Based on the given percentage of MAPE, prices would be fixed for all drugs in the cost plus price control system. Wherever possible ceiling prices would be fixed.
(e) Maximum Retail Price (MRP) would be inclusive of all taxes as in the case of all other packaged commodities.
(f) Some exemptions have been provided for certain drugs from the price control new drugs developed in India through product patent, process patent and new drug delivery systems would be exempted from price control for 5 years. This will boost R&D in India. Simultaneously, vaccines and biological drugs, drugs for sale to hospitals only, drugs whose MRP is at Rs. 1 per capsule / tablet and generic formulations fulfilling the prescribed norms would be exempted.
(g) A new Drugs (Prices Control) Order would be issued under the Essential Commodities Act 1955 to replace the existing DPCO, 1995.
(h) Re-structuring and strengthening of the National Pharmaceutical Pricing Authority (NPPA) greater computerization and better monitoring.
(i) Price Monitoring Cells in the State Drug Controller Offices with funding from Government of India.
(j) Drugs (Price Management and Distribution) Act to be enacted for effective regulation of drug prices and for handling health emergencies it will also provide compounding of minor offences.
(k) Trade Margins on generic-generic drugs, would be fixed (15% wholesalers and 35%-retailers).
(l) Change in the name of Department of Chemicals and Petrochemicals to reflect Pharmaceuticals also (Name proposed is Department of Chemicals, Petrochemicals and Pharmaceuticals).
(m) Draft policy along with Cabinet Note has been circulated to all Departments for their comments. On receipt of their comments it would be put up before the Cabinet.
Conclusions:
According to the National Science Foundation, pharmaceutical research and development spending has risen on average 5% annually since 1980, but the approval of innovative new drugs has declined in recent years. The respect of basic intellectual property rights is important in drug development to protect innovation. While patents are useful means of encouraging innovation, they can also increase costs, hinder access to diagnostic and therapeutic products, distort clinical practice, and complicate progress in medical research. The central policy goal remains the balancing of legitimate application of patent laws to support innovation, while preventing their improper use and the resultant negative effect such use has on public health. Pharmaceutical scientists can take a more active role in academic, charitable, government, or for-profit organizations regarding patent policy. Scientists should understand the policy implications of seeking patents on products or processes that are not true innovations, as well as how efforts by their patent attorneys (to seek overly broad intellectual property protections that their inventions may not deserve) can have substantial ramifications in the marketplace. Scientists, particularly in the academic setting, can lend their support to efforts by UAEM to encourage patenting practices that provide ways to ensure access to products in low-income settings. The goal ultimately should be to ensure that management of intellectual property does not upset the delicate policy balance and favor pursuit of profits over the public good.
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