Labour forced licensing plan ‘disastrous’ say pharma companies
Managing IP is part of the Delinian Group, Delinian Limited, 4 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2024

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Labour forced licensing plan ‘disastrous’ say pharma companies

A Labour Party influencer, in-house counsel and pharma trade representatives debate the merits and potential failures of the UK Labour Party’s Medicine for the Many plan

Innovator and generic pharmaceutical companies say proposals made by the UK’s Labour Party to bring cheaper medicines to patients under the NHS would be disastrous for innovation and healthcare.

The Medicines for the Many plan sets out radical new provisions including the creation of a state-owned generics company and seizure of patents through forced licensing, in what is known in the UK as ‘crown use’.

Jeremy Corbyn, leader of the opposition in the UK, introduced Labour’s policy proposals at the party conference in Brighton two weeks ago by citing the unaffordability of Orkambi, a treatment for the rare disease of cystic fibrosis, and how nine-year-old Luis Walker was denied access because the drug is not reimbursed by the NHS.  

“We will redesign the system to serve public health – not private wealth – using compulsory licensing to secure generic versions of patented medicines,” said Corbyn. “And we will create a new publicly owned generic drugs manufacturer to supply cheaper medicines to our NHS, saving our health service money and saving lives.”

The problem with these proposals, according to pharma in-house counsel and representatives, is that any seizure of patents would constitute theft of private property, and more importantly result in less innovation and fewer medicines.

The vice president for IP of an innovator drug company tells Patent Strategy that Labour’s policy proposals risk sending the wrong signal to science. “It is incredibly radical what he is announcing. It is the nationalisation of the pharma industry. Not to be too flippant, but communism has never been the source of medical advances,” she says.

“We have not found a better way of stimulating innovation than the IP system we have. Taking something into public ownership rarely stimulates innovation to meet the unmet medical demands the world is facing.”

She adds that the drug industry wants to work with the NHS to bring medicines to patients, but that compulsory licences would mean innovator companies would not have the same incentive to invest the millions of dollars needed to bring new drugs to markets.

“Labour is citing a rare disease with a medicine that only treats a few patients. These cases are outliers. The way research is going means it is challenging to pay for some of the high tech treatments. The industry acknowledges this and wants to work with the NHS to find solutions,” she says.

But proponents of Labour’s proposal disagree strongly with this view. James Love, director of the Washington DC-based think tank Knowledge Ecology International, who was cited in Labour’s proposal to experiment with delinkage as an alternative to the patent system, tells Patent Strategy that a new approach to drug creation is needed.

“Critics of the Labour proposal are fine with patients dying or suffering, and fine with unequal access to health, and they justify their position by minimising the extent that access has been limited by high prices, or pointing to jobs in the pharma sector.”

Richard Torbett, executive director of the Association of the British Pharmaceutical Industry, also points out that the situation Corbyn cited with Orkambi is rare, and that a solution needs to be found to make the medication accessible for patients. But he strongly disagrees with the stance taken by Labour in their policy proposals.   

“Compulsory licensing – the seizure of new research – is not the answer. It would completely undermine the system for developing new medicines. It would send a hugely negative signal to British scientists and would discourage research in a country that wants to be a leader in innovation,” he says.

Getting investment for new therapies is an essential part of drug development, but after Brexit it will become more important for medical start-ups that are worried about attracting investors, according to sources. Pre-market start-ups could have an even harder time finding funding if investors believe patents will be seized through forced licencing.

The IP director for a UK based start-up adds: “It would be incredibly unattractive for any pharma company to have its IP seized. It would result in a reduction of drugs on the market which would then harm patients.

“A lot of companies will say they won’t bring their product to market in the UK if the government resorts to crown use.”

Carolyn Fairbairn, director general of the Confederation of British Industry says Labour’s proposal is a no-win situation if investment and jobs leave the country as a result of the suggested policy.  

“An entire Labour conference passes with no mention of the value business brings to communities and workers across the UK; the jobs they create, the people they train, the innovation they deliver. Instead, firms have faced a volley of attacks on sectors from life sciences to utilities.

“This is desperately disappointing.”

The generic effect

Generic companies would also be hit by Labour’s proposals to resort to crown use and build a state owned drug company. Depending on how widely forced licensing occurred, UK generics would find it difficult to compete with an entity that could manufacture drugs long before they could.

There is also an argument that such proposals would disrupt the pharma patent ecosystem. Generics sources responding to Patent Strategy’s recent SPC Landscapes report suggested that they were pro-SPC and pro-patent because without innovator incentive, generics would have nothing to copy in the first place.

The general counsel for a European generic drug company says crown use should only be used in the most extreme cases. “If there is going to be wide use of crown use, it will be a bit damaging for companies and will damage the government’s relationship with the whole industry.

“Labour is vastly underestimating the task of creating a generic drug company from scratch, and in any event, I’m not sure it’s necessary because we have many already all over the world who are well established. What is the need to create a new one?”

Generics sources argue that there are also avenues to take beyond the seizure of patents. In the past, the NHS has bargained with pharmaceutical companies to reduce high drug prices. Biogen initially offered the NHS a reduction for their spinal muscle atrophy treatment, Spinraza for £450,000 ($557,000) for the first year of treatment instead of an initial price tag of nearly £600,000 ($743,000), for example.

Spinal muscular atrophy is the leading cause of death for infants and affects a very small patient population of 1,200 children and adults in the UK. An agreement was made between the NHS and Biogen to lower the price for one year of treatment in exchange for collection of clinical data for the pharma company.

The most expensive drug on the NHS is Eculizumab, which at £10 million per patient allows those with a rare blood disease to prolong their lives by 20 years. The drug costs the NHS £82 million a year. While the price tag is steep, some pharma sources agree more needs to be done to ensure medicines are cheaper and get to sick patients.

“If I have a child and they are sick and I can’t get their medication, then yes, I will think the prices being proposed by drug companies are too expensive. So I can understand why people have that view,” says the IP director for the UK start-up company.

“The counter argument is there are massive R&D costs that need to be factored in. The views people take are too simplistic. There are instances where pharma companies have overcharged but authorities come down on them like a pile of bricks. The fact that this doesn’t happen too often shows we are pricing on the right side.”

Who funds drug research is another issue in the wider patent debate. With so much of the research beginning in publicly-funded universities and hospitals, many believe the results of that research should remain in the public domain.

In response to this criticism, the vice president of IP says the vast majority of risk for R&D is still the responsibility of the pharma industry. “Universities contribute to the ideas stage, and certainly public hospitals can be involved in the clinical trials. But the investment and risk is still very much in the hands of the pharma industry.”

The Labour Party proposes investing heavily in late-stage clinical trials so that publically funded institutions can compete with private industry. They also suggest the government should receive a share of the returns for medications that were partially funded through public funding, and then reinvest those funds for future innovation. 

Love at the Knowledge Ecology International says: “Nowhere do the industry critics address the proposal to change the business model, so that incentives are no longer linked to high prices. It is Labour that is being innovative here, not the innovative pharma sector lobbyists.”

Flexible models

One proposal outlined in Labour’s Medicine for the Many plan is a revamping of the incentives used to create new medications in a system known as delinkage. Rather than using a temporary monopoly model in the form of patent rights, which result in temporarily high drug prices, governments would use a combination of very large cash market entry rewards and R&D subsidies.

Love at Knowledge Ecology International, who was cited in Labour’s proposal to experiment with delinkage, says: “What Labour is proposing is to ensure that patients have access, while exploring new ways of rewarding innovators, so that incentives do not depend upon high prices and unequal access.”

Delinkage has also been proposed by pharma innovators in the past. Speaking in 2016 at the Center for Strategic and International Studies, former GSK CEO Andrew Witty said delinkage means pharma companies would be upfront about their R&D costs with reimbursement bodies to ensure they have enough to reinvest in new research.

“That that is something we should really start to explore as an idea. I’m sure there are 5,000 people who can give me 10,000 reasons we shouldn’t try it, but they’ll be the same people who told me transparency was a terrible idea,” he said.

Witty was transformative for GSK and the pharma industry as a whole when he cut drug prices in poor countries to 25% of the UK’s prices and offered not to seek patents in underdeveloped countries for essential medicines.

In a move he referred to as ‘flexible IP’, he offered licences to generics companies through the Medicines Patent Pool. Under his leadership, GSK topped the medicine access for pharma companies rankings.

The debate around patent protection for essential medications stirs up a lot of emotions. Unlike the telecoms industry, no one ever died from lack of access to the newest iPhone – and so the argument for forced licensing is a sensitive one.

Labour’s policies are bold, to say the least. But if in-house counsel are right, and they may very well be, this plan could do far more harm than good for patients in the long run.

more from across site and ros bottom lb

More from across our site

External counsel for automotive companies explain how trends such as AI and vehicle connectivity are affecting their practices and reveal what their clients are prioritising
We provide a rundown of Managing IP’s news and analysis coverage from the week, and review what’s been happening elsewhere in IP
The winners of the awards will be revealed at a gala dinner in New York City on April 25
Counsel debate the potential outcome of SCOTUS’s latest copyright case after justices questioned whether they should dismiss it
Each week Managing IP speaks to a different IP lawyer about their life and career
The small Düsseldorf firm is making a big impact in the UPC. Founding partner Christof Augenstein explains why
The court criticised Oppo’s attempts to delay proceedings and imposed a penalty, adding that the Chinese company may need to pay more if the trial isn’t concluded this year
Miguel Hernandez explains how he secured victory for baby care company Naterra in his first oral argument before the Federal Circuit
The UPC judges are wrong – restricting access to court documents, and making parties appoint a lawyer only to have a chance of seeing them, is madness
The group, which includes the Volkswagen, Seat and Audi brands, is now licensed to use SEPs owned by more than 60 patent owners
Gift this article