ROUND TABLE
Ownership of knowledge the role of patents in pharmaceutical R&D
Propriété intellectuelle - Le rôle des brevets dans la R & D en pharmacie
Propiedad de los conocimientos - Función de las patentes en la I+D farmacéutica
Carlos María Correa
Director, Centre of Interdisciplinary Studies of Industrial and Economic Law, University of Buenos Aires, Av. Figueroa Alcorta 2263, 1st floor, 1425 Buenos Aires, Argentina (email: ceidie@derecho.uba.ar)
ABSTRACT
Both the public and the private sectors contribute to research and development (R&D) in pharmaceuticals. The public sector originates many of the discoveries of new drugs. The private sector, which focuses on development, is heavily reliant on patents. Though patents are presumed to reward genuine inventions, lax rules on patentability and shortcomings in procedures permit protection to be obtained on a myriad of minor developments. These patents, though weak and possibly invalid in many cases, are used to restrain competition and delay the entry of generic competition. Developing countries should design and implement their patent laws so as to prevent strategic patenting and promote competition and access to medicines.
Keywords: Patents/legislation; Pharmaceutical preparations; Research; Diffusion of innovation; Drug industry (source: MeSH, NLM).
RÉSUMÉ
Le secteur privé, comme le secteur publique, contribuent aux activités de recherche et développement (R & D) dans le domaine pharmaceutique. Le secteur public est à l'origine de la découverte d'un grand nombre de nouveaux médicaments. Le secteur privé, qui axe ses efforts sur le développement, dépend fortement des brevets. Bien que ceux-ci soient supposés récompenser de véritables inventions, le laxisme des lois sur la brevetabilité et les défauts de procédure permettent d'obtenir la protection d'une multitude de progrès mineurs. Ces brevets, quoique faibles et éventuellement invalides dans de nombreux cas, sont utilisés pour restreindre la concurrence et retarder l'entrée en compétition des génériques. Il convient que les pays en développement conçoivent et mettent en œuvre leur législation sur les brevets de manière à prévenir la prise de brevets stratégique et à promouvoir la concurrence et l'accès aux médicaments.
Mots clés: Brevet/législation; Préparations pharmaceutiques; Recherche; Diffusion des innovations; Industrie pharmaceutique (source: MeSH, INSERM).
RESUMEN
Tanto el sector público como el sector privado contribuyen a la investigación y el desarrollo (I+D) de preparaciones farmacéuticas. Muchos de los descubrimientos de medicamentos nuevos tienen lugar en el sector público. El sector privado, que se centra en el desarrollo, depende en gran medida de las patentes. Aunque se supone que éstas recompensan auténticas invenciones, la laxitud de las normas acerca de la patentabilidad y los fallos de los procedimientos permiten obtener protección para innumerables desarrollos de poca importancia. Estas patentes, aunque poco consistentes y posiblemente carentes de validez en muchos casos, se usan para restringir la competencia y retrasar la introducción de medicamentos genéricos. Los países en desarrollo deben diseñar y aplicar sus leyes en la materia de manera que prevengan las patentes estratégicas y promuevan la competencia y el acceso a los medicamentos.
Palabras clave: Patentes/legislación; Preparaciones farmacéuticas; Investigación; Difusión de innovación; Industria farmacéutica (fuente: DeCS, BIREME).
Although governments are responsible for a significant portion of global spending on research and development (R&D), since the 1980s a steep decline in the share of government funds for R&D is a trend common to all major industrialized countries and many other Organisation for Economic Co-operation and Development (OECD) countries. In the largest OECD countries (with the exception of Italy), the private sector performed between 62% and 70% of total national R&D (1).
Private and public sources also coexist in pharmaceutical R&D. The division of labour in pharmaceutical R&D between the two sectors is related, at least in principle, to the nature of the knowledge that is fostered (2). In most cases, the discovery of important new drugs is made by public institutions, which later license their development and exploitation to private firms. Some 70% of drugs with therapeutic gain were produced with government involvement (3). Basic research that led to the discovery of potential "drug leads" has almost always been publicly funded at universities, in-house government facilities, or research institutes in Europe, North America, and Japan. Since the beginning of the 20th century, publicly funded research has led to major drug lead discoveries in, for example, tuberculosis, other infectious diseases and cancer. More recently, publicly funded research has led to the discovery of antiretrovirals for the treatment of human immunodeficiency virus/acquired immunodeficiency syndrome (HIV/AIDS). Publicly funded genome research has also produced many drug leads (4). In the United States, the federally funded biomedical research supported by the National Institutes of Health (NIH) plays a vital role in new drug development, feeding into the R&D activities of the private pharmaceutical industry that operates under patent protection (2). In addition to this direct and important contribution, governments of many developed countries grant tax credits and other incentives for R&D (1).
However, private industry invests the largest part of global funds for pharmaceutical R&D. Unlike the public sector, industry's research agenda is dominated by profit-making objectives. Most of industry's resources are concentrated on applied R&D, though funds are also devoted to basic research. In 1999, for instance, 24.5% of R&D spending was on basic research in the United Kingdom, 36% in the United States, and 18.4% in Canada (5).
Given the objectives and nature of industry's activities, they rely heavily on the acquisition and enforcement of patents worldwide. A common belief is that patents are normally acquired to protect new drugs, and thereby recover the substantial R&D investments made for increasing the range of available therapies; but the number of patents annually obtained to protect genuinely new pharmaceutical products is very small and declining, whereas thousands of patents are applied for or granted concerning pharmaceutical-related inventions. The number of patents acquired in relation to "upstream" inventions, that is, scientific discoveries rather than specific technical solutions, is increasing. This kind of patenting detracts from public domain knowledge that could be used "downstream" by many researchers to explore multiple inventive opportunities; it deprives society of the benefits that the widespread use and dissemination of basic scientific ideas could generate (2). The problems raised by this form of privatization of science have been explored by an extensive literature (6, 7). Patents, on the other hand, are ordinarily acquired for a myriad of follow-on, merely incremental, or minor developments.
Innovation in pharmaceuticals
Innovation in pharmaceuticals relies increasingly on the knowledge gleaned from preceding innovations and on generally available techniques (8, 9). As in other sectors, innovation "has shifted away from models based on absolute novelty and first improvement towards a model in which innovation is no longer driven by technological breakthroughs but by the routine exploitation of existing technologies" (10). Innovation in this sector follows, therefore, an essentially "cumulative" model of innovation, as opposed to the "discrete" model, where the prospects of variations and improvements of inventions are substantially bounded.
Many of the new chemical entities of pharmaceutical use do not entail a genuine therapeutic progress; they are "me too" drugs, developed as a result of the great deal of emulation of successful drugs undertaken by rival companies (11). Pharmaceutical innovation also includes a large number of improvements or minor changes to existing drugs, and the identification of new uses of known products. Incremental innovation is often motivated by the objective of extending the commercial benefits derived from existing products, particularly when original patents expire and new patents may be used to prolong market exclusivity.
According to a report of the National Institute for Health Care Management (NIHCM) in the United States, from 1989 to 2000 the United States Food and Drug Administration (FDA) approved 1035 new drug applications. Of these, a third (35%) were products with new active ingredients, or new molecular entities (NMEs). The other 65% used active ingredients that were already available in a marketed product. Over half (54%) were incrementally modified drugs, or new versions of medicines whose active ingredients were already available in an approved product. The rest (11%) contained the same active ingredient as identical marketed products (12).
Priority NMEs, the most innovative type of new drugs, were rare in the 12-year period 19892000: just 153 (15%) of all new drug approvals were medicines that used new active ingredients and provided significant clinical improvement. Drugs providing moderate innovation comprised another 28% of approvals. The other 57% of approvals were for drugs showing only modest innovation, at best: 46% made some modification to an older product containing the same active ingredient, while the remaining 11% were identical to marketed products. As a result, the NIHCM reports, priority NMEs the most innovative drugs contributed little to the increase in new products, and most growth came from products that did not provide significant clinical improvement, especially modified versions of older drugs (12).
Patenting cumulative innovations
The cumulative nature of innovation has important repercussions on the patent system. Though theoretically conceived to reward inventions marked by considerable originality, the patent system is plagued with grants covering incremental, minor in some cases trivial developments. They are not the product of inventive efforts, but rather the outcome of "taking a speedy path down a trail that was obvious to many" (8, p. 128). In 2001, the United States Patent and Trademark Office granted over 171 000 patents, almost twice the number granted ten years earlier. This increase cannot simply be attributed to an increase in R&D productivity, but to the flexibility of the patent system to permit the protection of follow-on and other developments (13, pp. 1933-4).
Moreover, there is increasing evidence about poor patent quality. (A poor-quality patent is one that is likely to be invalid or contains claims that are likely to be overly broad (14).) "Non-obviousness" or "inventive step" (one of the key patentability requirements) is assessed against a standard that many follow-on and routine innovations do not find difficult to meet, based on the fiction of what "a person with ordinary skill in the art" would have been able to derive from prior art. Weaknesses in patent procedures, in addition, favour the granting of patents over trivial or minor developments (14, 15), despite the significant resources invested in developed countries to fund patent offices (16).
Large firms have rapidly learned how to exploit lax patentability standards and the shortcomings in the patent examination process. They apply different strategies to use patents offensively as means to encumber or block potential competitors. Thus, "blanketing" strategies aim at mining every step in a manufacturing process with patents claiming minor modifications; "fencing" refers to a situation where a series of patents blocks certain lines or directions of R&D; "surrounding" takes place "when an important central patent can be fenced in or surrounded by other patents, which are individually less important but collectively block the effective commercial use of the central patent, even after its expiration" (17); and "flooding" is based on the acquisition of many patents on minor or incremental variations on technology developed by another company (18, 19). For other anti-competitive practices, see (20).
As noted by the NIHCM, "drug manufacturers patent a wide range of inventions connected with incremental modifications of their products, including minor features such as inert ingredients and the form, color, and scoring of tablets. In many cases, these patents discourage generic companies from trying to develop a competitive product" (12). Moreover, backed by substantial budgets for patent acquisition and litigation, pharmaceutical companies have been able to delay substantially the entry of generic competition by "evergreening" many of their patents (2123). According to United States lawmaker Waxman (one of the authors of the United States Drug Price Competition and Patent Restoration Act of 1984, commonly known as the "WaxmanHatch Act") brand-name companies "have used creative lawyering to try and extend the period of their monopolies long past the time intended by Congress" (24).
Poor-quality patents acquired to encumber or delay generic competition are generally aggressively used against competitors. They are likely to be invalidated totally or partially, however, if subject to a more serious scrutiny by judicial courts than the examination made at the patent office, as shown in a study by the United States Federal Trade Commission on drug entry and patent expiration (25).
Conclusions
Patents have become a key factor in the R&D process in pharmaceuticals. Although, in certain contexts, they provide the incentives to develop new pharmaceutical products from which society may benefit, by their very nature they limit the diffusion of the innovations that they are intended to promote. When the innovation process is cumulative, strong protection for the first-generation producer limits the scope of second-generation producers, and slows down follow-on innovation.
Patents often establish barriers to entry that are unjustified in terms of the technical contribution effectively made. Low standards of patentability have allowed a significant expansion of patent coverage. Strategic patenting diverts resources into litigation and restrains legitimate competition. While this is taking place in both developed and developing countries alike, it is particularly worrying in the latter since competition laws are in many cases non-existent or poorly implemented, and domestic firms are generally too small to bear the costs and risks of litigation. Developing countries have struggled in the past few years to confirm their rights to use the flexibilities allowed by the Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS), particularly in relation to parallel imports and compulsory licences.ª Without abandoning these efforts, they should pay more attention to the way in which patents are examined and granted, in order to avoid abuses and the negative effects on access to medicines that patents on noninventive developments entail. 
Conflicts of interest: none declared.
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(Submitted: 18 December 2003 Final revised version received: 23 June 2004 Accepted: 24 June 2004)
a See World Health Assembly Resolution WHA56.27 (2003) which recommends Member States "to use to the full the flexibilities" contained in the TRIPS Agreement.