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Big pharma faces an incendiary mix of distrust and austerity

Emma Barraclough

Everyone knows pharmaceutical companies are under pressure as they edge slowly towards (and off) the patent cliff. But now regulators and judges around the world seem to be turning against them too

In the past two weeks alone judges in America’s top court have scrutinised reverse payment agreements; the Australian government’s Pharmaceutical Patents Review Panel has published concerns about patent term length and the duration of pharmaceutical patent extensions; and India’s Supreme Court has ruled that Novartis’s Glivec drug does not warrant a patent.

Now another report makes it a quadruple whammy for the industry.

But this time criticism is not just reserved for originator companies; it is handed out to their generic rivals too – companies that are often presented as the good guys in discussions over access to medicines.

Academics from Melbourne Law School have concluded that companies may be misusing the drug patenting system to gain control over high-cost drugs in Australia. Their research considered patents on 15 high-cost blockbuster drugs in the country over the past 20 years and found that each drug was covered, on average, by 50 patents.

What surprised the researchers was who owned the patents.

“It is the non-originator drug companies – those that do not develop new drugs – that are taking out the most patents. We are not sure why, but we suspect it is to ride on the coat tails of the drug’s success – such as by owning an alternative formulation or delivery mechanism for the drug,” said lead author Andrew Christie, Foundation Chair of Intellectual Property at Melbourne Law School.

While originator pharmaceutical companies may be relieved that the spotlight is not shining solely on them, it is the industry as a whole that comes in for criticism for keeping Australia’s health care costs high.

“The 15 drugs in our study cost the country more than $17 billion over two decades. There are suspicions that abusive patenting by the big pharmaceutical companies is keeping that cost high. Our research shows that patenting by generic manufacturers and other players may be just as important,” said Christie.

In times of austerity, as governments struggle to keep healthcare costs down, it is inevitable that pharmaceutical companies will find themselves under increasing pressure over costs. That could lead to a shake-up of all kinds of laws and norms that big pharma in particular has taken for granted over the past decade or so. Australia’s questioning of the economic benefits of extending patent terms (as mandated by TRIPs and free trade agreements) could be just the start.

Even the US Supreme Court seemed focused on the economic impact of pay-to-delay deals: Justice Elena Kagan said the companies involved were harming consumers by “splitting monopoly profits”.

Drugs companies already get a bad press (despite the life-saving medicines they make). Now it looks to be getting worse. A group called Patient View this week suggested that 63% of the US patient groups that responded to its survey believe that the corporate reputation of the pharma industry declined last year.

While pharmaceutical companies are used to criticism, they face a new explosive mix: public distrust added to government cost-slashing could result in changes to the IP laws. If they want to avoid that, the industry might be best advised to rethink its advocacy strategy and consider very carefully whether it is also wise, in the present environment, to litigate to secure maximum protection for its intellectual property.


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