With the global shutdown that has occurred due to COVID-19, its presence has caused long-lasting effects in all aspects of our lives and the way businesses operate. To no surprise its presence is also interacting with exclusivity offered by IP rights.
These discussions have appeared as major drug companies rush to develop vaccines to tackle this pandemic. Last month, (WHO) announced that remdesivir, an antiviral drug originally developed by Gilead sciences to treat ebola, might be effective in curing patients from the virus. GSK and Sanofi among others are developing vaccines to stop the spread and Fujifilm’s flu drug has been reported by the Japanese government to be a potential cure.
There is no doubt that these companies will seek patent protection for their products. Gilead was granted three patents for remdesivir and already has five more pending. However researchers from the Wuhan Institute of Virology have also reportedly filed a patent application for the use of remdesivir for the treatment of Coranavirus. This move was highly criticized (which Unacom will cover soon). But essentially although Wuhan did not develop remdesivir, if it was the one that established that it can be used to treat COVID-19, then it should be able to be awarded a new medical use patent. This would be further supported if it was the one to perform all the relevant research and clinical testing.
The deputy director of China’s National Intellectual Property Administration stated that drug investment is extremely costly and requires strong patent protection. If remdesivir proves effective and is distributed to patients this will only be done while respecting the legitimate interests of the patentee. Amidst a global pandemic these statements are quite surprising and does nothing to ease the tension between private and public interests in patent law, especially when it comes to pharmaceuticals. This is shown in global attitudes where in some countries it was not until the 1990’s that pharmaceuticals were allowed to be patented.
In reflection of the global health crisis that is occurring and the disastrous effects it is having on all aspects of life, it would be beneficial to curtail exclusivity to that benefit of the common good. Actions that could be taken are those such as a government award, where there is a large cash prize for any firm that develops a successful coronavirus vaccine. If planned well, such a prize could provide adequate incentives for private firms to make the necessary investments.
Another option that could be implemented especially considering the imminent threat to public health in multiple jurisdictions would be that of a compulsory license. This is when the government allows other firms/manufacturers to produce a patented product without the consent of the patent owner. In whatever decision is made, health ministries and courts should feel no qualms in setting appropriate limits to patent exclusivity in cases where the public interest so strongly requires immediate and affordable access to a certain medicine.
Coronavirus’s impact on trademarks
As the previous paragraph showed, private interests can provide a barrier to public problems. Interestingly trademarks display a reversal of this, where the public problem can affect a trade-marks holders private interest.
The purpose of trade mark law is first and foremost to claim exclusive use of a designation to indicate the origin of certain goods or services. However as it being shown with the Coranavirus, the associated with a specific company may become a curse rather than a blessing. For example it has been reported that Corona beer has seen a sharp drop in sales as a result of negative associations with the virus.Of course, the news about the declining sales may end up helping the brand. It will be interesting to see the marketing tactics used by Corona to turn the negative attention around.
While patents are an essential component of the pharmaceutical industry in driving innovation and research, it should never outweigh actual lives of patients. When a cure/vaccine is eventually discovered, the first matter of action should be getting it to the countries suffering the worst outbreaks, not deciding the earning potential of the patentee. This further supports why a prize might be in the best solution in this case, as it would ensure the invention is fairly awarded but also fairly available.
The German Federal Constitutional Court has published its long-awaited decision on Friday (20/03/20). In this announcement, the constitutional complaint against the legislation required for Germany to ratify the Unified Patent Court (UPC) Agreement was upheld.
According to the Court , the German act by which it was to pass to the UPC, violates the Germans populace democratic rights under Article 38 Basic Law, because it was not passed with the parliamentary majority required.
Article 1 of the UPC Agreement provides that “ A Unified Patent Court for the settlement of disputes relating to European patents and European patents with unitary effect is hereby established. According to the German constitutional court, this constitutes a transfer of adjudication authorities, which implicates the constitutional rights of the German populace. Such a transfer of authority requires, according to German law, a two-thirds majority in the Bundestag.
The Hungarian constitution has also raised a similar issue and decreed that it would be unconstitutional to allow jurisdiction for resolving private legal disputes to transfer from Hungary's courts to an international institution ,the UPC, that is not established within the boundaries of the EU's founding treaties. Thus Hungary has joined the likes of Spain and Poland in refusing to sign the agreement.
As stated above, the German court upheld the constitutional complaint due to the ratification of the UPC agreement not passing through the required parliamentary majority.
William Hoyng, member of the drafting committee of the UPC’s rules of procedure stated:
“ Today's decision will set back the UPC project at least five years. Also in lights of Brexit, it will require participating states to renegotiate the UPC Agreement. That is unfortunate, but it also provides us with opportunities. For instance, it would allow filling in gaps or deciding on problems encountered by the Drafting Committee. We can also try to draft a text that would make it possible for European Economic Area countries and perhaps even other countries to join.
It is not the complete end for the UPC, with the compliant upheld so far as it concerned a formal voting requirement. However given the current crisis occurring with the COVID-19 pandemic, it is not likely that this is high on the political priority list.
The UK government announced on the 27th February as it published its approach to Brexit negotiations that the UK will not be seeking involvement in the UP/UPC system. The statement was accompanied by the reasoning that participating in a court that applies EU law is inconsistent with the UKs aim of becoming an independent self-governing nation.
This is a huge blow to the project, with the UK formally a key participant in the project with its formation framed around the UKs participation. Although the agreement has yet to be ratified by Germany, the remaining participant Member States will need to consider whether the project remains viable/lucrative without the UK.
What is the Unitary Patent Court (UPC)
The EU is planning on providing the option for businesses/inventors to apply for unitary patents. This is a means by which businesses can obtain patent protection for their inventions across multiple EU countries through a single application. The current system of the European Patent System requires patents registered at the EPO to be validated in each of the countries that businesses with the patent wish to apply to. This creates a complex process (requirements to translate patents into the native language), time consuming and costly process.
Before unitary patents can be applied, a judicial framework needs to be established to be able to handle disputes over the unitary patents. The Unitary Patent Court (UPC) has been developed to perform this function.
European patent owners will be subject to the UPC’s jurisdiction unless owners ‘opt-out’ those patents. This means where those patents are opted-out (of the UPC), disputes over their validity or infringement will be heard before national courts as is the current case.
Challenges facing the UPC
The UPC has faced legal challenges and uncertainty over Brexit. With the UK now formally announcing it will no longer participate, due to the UPC requirement to adhere to EU law and the overarching jurisdiction of the CJEU in relation to the UPC system, at odds with the UKs Brexit strategy of fierce independence.
Germany's ratification process has been held up by a legal challenge brought before the country’s Federal Constitutional Court. The complaints arise from concerns that the ratification involves the transfer of sovereign rights from Germanys judiciary to another organisation, with the transfer of patent litigation powers to the UPC. There have also been complaints regarding whether the judges if the UPC will be independent in the sense that is prescribed by the German constitution and whether the way the reforms have been structured will align with the constitutional mandate to promote Germany's integration within the EU.
What are businesses reaction to the UPC?
The recent decision by the UK will come as a ‘huge disappointment’ to the patent attorney trade and to SME’s. The UKs lack of involvement will most likely affect small businesses, with one of the main benefits for the UK would have been lowering the cost and time of patent enforcement and challenge.
Of course from the outset the UPC presents advantages of being able to simultaneously gain patent protection across all Member states by-passing complex and time-consuming requirements. However if a successful dispute is brought forward to the UPC, all rights across all member states could be lost, creating a huge risk for the industries involved. This is a particular worry for life science industries that depend heavily on their ‘blockbuster’ treatments that could face jeopardy if a successful dispute/infringement is brought forward. However the prospect of a pan-EU interim injunction against an alleged infringer may be attractive. Life sciences companies, both originator and generic, are likely to want to have some input in shaping the law and jurisprudence in this area.
Pharma companies are likely to keep a patent portfolio outside of the UPC, meaning they would continue to be able to defend their patent rights in individual proceedings in each of the EU countries in which their rights apply.
In the TMT sector there is a larger volume of patents, especially patents essential to technology standards, Standard essential patents (SEP), than for blockbuster inventions.
The high volume of these patents in the TMT sector, means that national infringement proceedings in Europe for technology patents typically seek to enforce more patents in each case than pharmaceutical patent cases. This is because there is a safety in numbers, because even if some of the patents are invalidated, the patent owner will win and obtain financial compensation provided that one patent is valid and infringed. This probability of finding often encourages alleged infringers to settle agreements and/or enter into cross-licensing agreements. Therefore patent applicants in the technology sector are much more likely to use the UPC to enforce their existing European patents. This is because a single litigation before the UPC should be more cost effective than parallel patent litigations in various European jurisdictions. If the UPC invalidates some of the patents in suit then there are others to fall back on.
The UK is not completely out of the UPC, with a European Parliament think tank of the opinion itself that UK membership post Brexit still possible, with the main barrier actually being the UKs own red line. Membership of the UPC would have been greatly beneficial for IP lawyers and patent attorneys, as London was planned to be the location of the Life Science division of the UPC, the UK would have had significant influence over the development of UPC related jurisprudence, influence that it will no longer have.
The new strategy dubbed “Shaping Europe’s digital future” is the EUs plan to shape the EU market with digital transformation. This new strategy builds upon the previous Commissions achievements in delivering its digital single market objectives.
Data has been put as a prime focus with the Commission believing that data is the “lifeblood of economic development” and can/should be used to address challenges facing society and for driving economic growth.
The Commissions first step is to bring forward proposals for an ‘enabling legislative framework for the governance of common European data spaces’ later this year. This legislation will establish nine distinct ‘common European data spaces’ in areas such as manufacturing, mobility, energy, finance and health, where it has envisaged that businesses will be able to access large data sets, as well as technical tools and infrastructure to use and exchange information.
The Commission also hinted towards a new Data act, which has the potential to be brought forward in 2021, which could result in a mandate for business to business sharing in some circumstances. This act also has the potential to change existing property rights frameworks including laws on database rights and on the law of trade secrets.
One of the major data strategy proposals is centred around cloud computing. With the commission stating it wants to create a single ‘cloud rulebook’ by the middle of 2022, which will include codes regarding data protection, portability, quality of service and energy efficiency. There are also further plans for the creation of an EU cloud services marketplace by the end of 2022. This will put users (particulary SMEs and the public sector) in the position to be able to choose cloud processing software and platform service offerings that comply with a number of areas like data protection, security etc.
Regulation of AI
As industries across the board increasingly utilise AI into their services to streamline their processes and improve customer services. The EU has begun to set its sights on AI, with the Commission recently publishing papers indicating their will be further regulations and legislation to account for the use of AI.
The papers stated that existing legislation in areas such as liability, product and safety could be improved.
The Commission seeks to create a bespoke system of rules established for ‘high-risk’ AI, accompanied with criteria that make the distinction between AI that is ‘high-risk’ and those which are not. With criteria looking at the sector in use and what the AI is used for. This is to prevent divergent national rules from emerging, that are likely to create obstacles for companies that want to sell and operate AI systems in the single market.
Regulatory requirements will not just be used during AI operation but there also plans to be a ‘ prior conformity assessment’ framework, which would verify and ensure that regulatory obligations are met before the technology is put in use. This procedure would include checks for testing, inspection and certification. The type of data used will also be investigated including the type used to train AI systems, data and record keeping obligations.
The frameworks will be established to who is (are) best placed to address any potential risks, so this applies both to those developing the AI systems and those deploying the technology.
As well as prior conformity assessments the regulations will also allow for post-market monitoring and enforcement by national regulators.
The Digital Single market strategy is a wide-ranging group of individual legislative initiatives from the European Commission to adapt the European market to the digital age. The primary aim of this initiative is to create a pan-European framework of laws for the digital economy, with the core principles of the single market at focus. This includes free movement of goods, services, people and capital, fair competition and well harmonised level playing field for all stakeholders.
The DSM will be built upon four very familiar EU rules:
1) Harmonised rules: applying the same minimum standards to the same activities (eg handling of consumer data, content of digital services) across all Member states making it easier for citizens and business to conduct their activities regardless of borders.
2) Reduced barriers: Making it easier to treat key ‘assets’ of the digital economy, like content they acquire and their own personal data. Thus increasing rights to move these assets across national borders or from one service to another.
3) Co-ordinated enforcement: Cooperation between those responsible for enforcing the rules locally, at Member state level or EU wide combined with ‘passporting’ (meaning compliance with the rules in one state covers the whole EU) thus increasing confidence for businesses and citizens that they can trade EU wide. And it reduces the costly need to establish compliance systems for multiple countries.
4) Economies of scale and robust competition: To be able to compete on the global markets, EU-based businesses should (a) be able to serve the entire EU market without having to duplicate infrastructure or seek local licenses, and (b) be subject to robust competition from both EU based and non-EU based players. With competition in the EU-wide market leading to the emergence of EU digital champions able to compete on world markets.
The new Von der Leyen Commission has further developed the 16 initial initiatives to streamline the DSM to four key areas:
1) Data protection: Individuals shall gain more control over their personal data and businesses shall benefit from a level playing field
2) eCommerce: Online barriers shall be broken down so that people enjoy full access to all goods and services offered online by businesses.
3) Digital Networks: High speed, secure and trustworthy infrastructures and services shall be supported by the right regulations.
4) European Digital Economy and Society: Maximising the digital growth potential within the EU to the benefit of the people and businesses in Europe
These initiatives will cause some changes to businesses and consumers:
Who and how will be effected by the changes in Online Content and Platforms:
Content owners and licensees will need to review the entire production chain starting with the acquisition of content, the making available of content, structure of websites, the protection of content etc
Clients will have to review their business models, looking at whether those who will work int the future because of added regulatory burdens and changes in sourcing costs due to different exploitation rights and different exemptions/limitations.
Who and how will be effected by the changes in Privacy and Data:
All industries who are engaged in data management or processing are affected, in particular the cloud industry and those using AI or data analytics.
Likely to be new rules for AI
High fines in regard to data protection infringements
Less restrictions on the flow of non-personal data between businesses.
Encouraging the sharing and opening of data between businesses and the public sector.
On the 13th February 2020, the UK’s Food Standard Agency issued a deadline for CBD businesses to provide more information about their CBD products. It also published safety advice to consumers particularly vulnerable groups not to take CBD and healthy adults not to take more than 70mg a day. This announcement comes as CBD products become more widely available on the high street but are not properly authorised.
The FSA set a deadline of 31st March 2020, to submit valid novel food authorisation applications. After this deadline only products which have submitted a valid application will be allowed to remain on the market. Up to the deadline date, businesses should be able to sell their CBD products provided that during this time they are not incorrectly labelled, unsafe to eat or contain substances that fall under drugs legislation.
The FSA also advised that those who are pregnant, breast-feeding or taking any medication not too consume CBD products. And for healthy adults to think carefully before taking CBD with the FSA recommending that no more than 70mg a day (about 28 drops of 5% CBD) unless under medical direction. With these findings coming from the Governments Committee on Toxicity.
What is CBD
CBD is a chemical found naturally within the cannabis plant and it has only recently been removed and sold as a separate CBD extract. CBD extracts can be found in a range of products such as drinks, confectionary, oils and bakery products.
CBD was as also confirmed as a novel food product in January 2019. Under these novel food regulations, foods or food ingredients which do not have a history of consumption before May 1997 should be evaluated and authorised before they can be placed on the market.
The FSA is now responsible for regulating CBD as a novel food and does not have enforcing power over cosmetics, vapes, products making medicinal claims or products containing controlled drugs such as THC. Where CBD extracts contain THC ( or other controlled cannabinoids then they will likely fall under the Misuse of Drugs Act 1971.
With the Coranavirus recently declared a ‘global threat’ by WHO and now officially surpassing the SARs virus for deaths and number of people affected. This pandemic now represents a real threat to the pharmaceutical supply chain as well as the health of the population at large.
China is an integral part of the supply chain, with it being the world’s largest supplier of active pharmaceutical ingredients (APIs) being responsible for around 40% of global production to supply the ingredients for the makers of generic and innovator drugs alike. In the UK, 80—90% of the generic medicines used in the NHS are imported and China is among the top five providers outside the EU. This dependency has arisen from the cost-saving incentives that Chinese pharmaceutical markets offer.
Although most Chinese drug manufacturers are based along the east coast a long way away from the Wuhan province. The virus has since been detected in every province. With imposed measures such as a diminished workforce, growing number of travel bans and other countermeasures such as potential international embargos, presenting uncertain sustainable production levels. The full scale of the impact is unlikely to be known until many months to come.
The pharma industry has already begun to respond to the pandemic, such as companies like Inovio Pharmaceuticals and Moderna developing vaccination programmes with the help of the Coalition for Epidemic Preparedness Innovations (CEPI)
GSK has made its adjuvant technology available to help the University of Queensland, to expand its rapid vaccine production system. The adjuvant should reduce the amount of antigen necessary for each vaccine, allowing more people to be treated faster with available antigen supplies. GSK is not the only major pharma company to make strides into Coranavirus vaccination, with Gilead making efforts to re-purpose its drug remdesivir, originally developed to treat Ebola with recent reports allegedly claiming it has received light from the Chine Food and Drug Administration for a clinical trial to take place in Wuhan.
The UK exits the EU on 31st January 2020. By virtue of the transitional period in the Withdrawal Agreement, EU law will continue to apply in and in relation to the UK only until the 31st December 2020. The EU Treaties, EU free movement rights and the general principles of EU law will then cease to apply in relation to the UK, and prior EU regulations will only continue to apply in domestic law insofar as they are not modified or revoked by regulations under that 2018 Act.
IP law is one of the most harmonised law networks across the UK and Europe, with a large majority of the UK legislative framework composed of directly effective EU Regulations and Directives. Depending on the type of Brexit envisioned by PM Boris Johnson, if these regulations are not transposed they face entering into a regulatory vacuum.
The European Union Withdrawal Act 2018, will fully come into action on January 31st and it will repeal the European Communities Act 1972. The act includes provisions to convert currently directly applicable EU laws into domestic UK law. MPs will then go through each law and decide whether to amend or repeal them, based of national interests.
Implications of Brexit still remain very uncertain and are likely to be effected by both the repeals and amendments of EU laws as well as the terms of international agreements negotiated. This following post will cover three of the main implications of Brexit.
Patent approval will continue to remain as before, with patents covering the UK able to be granted by both the UK Intellectual Property Office (UKIPO) and the European Patent Office (EPO). This is because neither EPO or UKIPO are EU institutions therefore their operation will be unaffected by Brexit. The UK will continue to be a member of the 38 contracting states to the European Patent Convention (the treaty that established the EPO), therefore companies will be able to continue to file their applications with the EPO and request validation in countries of interest including the UK. The outcome of granted patents will continue to remain the same, with granted and approved patents for the UK having the same legal effect in the UK as national patents granted by the UKIPO.
There plans to be an introduction of a new Patent regime which is intended to provide patentees with the option to apply for pan-EU Unitary Patent, covering the majority of the EU. Through this regime the Unified Patent court will be created (UPC), which will hear and determine patent disputes on an EU-wide basis. (UPC).
This regime has faced challenges in its implementation, where its future was uncertain after Brexit and is currently delayed in the German courts. The UK ratified the UPC agreement in 2018, (UK ratification is needed in order for the system to launch) .The message from US companies and practitioners clearly is that the UPC would be less attractive without the UK. Patent law is a global playing field in which the US, Europe and Asia are the main regions and direct competitors. It does seem to be in the best interest of Europe if the UPC covers the largest possible territory; at least this seems to be a clear industry position. UPC is not an EU instrument and it remains legally possible for the UK to remain a member; it is whether politically there will be tensions.
Life Science Regulation
The UK’s life science regulation has already been affected by Brexit, with the European Medicines Agency which was previously based in London moving to Amsterdam. With a “soft Brexit” of continued affiliation with the current system rejected by the government, organisations have to be ready to adapt to the regulatory framework that will be reshaped.
One of the biggest worries facing the UK pharma industry would be the exclusion of the UK from operating in the European Digital Single Market (DSM). This market was created to promote common data practice laws, greater acceptance of digital services and better access to products and services. The DSM is of particular importance to the UK because currently the EU is the UKs largest export market for digital services and the DSM allowed for easy entry to the European markets. Therefore, Brexit has a substantial effect on the data protection, privacy and creative content production as UK service providers may lose their passports to EU markets because companies need an EU headquarters to access the service market.
Brexit is going to be a complicated affair for all businesses in the UK but the IP field faces harsher implications of tougher negotiations. With recent statements made by the Chancellor Sajid Javid that the UK will deviate from EU laws, this would create woes for the UK IP industry, given the high interconnected trade and harmonisation. The UK will not be able to influence EU policy potentially undermining the position of UK based IP and IT companies in both Europe and the world stage (especially with the US considering the UK may be seen as a second class citizen without a voice in Europe) ultimately making it more difficult to compete.
Pfizer is launching three Roche cancer blockbusters generics at discounts ranging from 22% to 24%. Pfizer is eyeing the lucrative combined $10bn that the three drugs accumulated at their peaks. With Pfizer having already rolled out its biosimilars to Roche’s Avastin and Rituxan at discounts of 23% and 24% respectively. The pharma company has now announced its plans to launch its biosimilar to Trazimera at a 22% discount on the February 15th.
Pfizer has always been an active player in the biosimilar market and with this recent announcement it will be the first company to market three oncology monoclonal antibody biosimilars in the US. However not all of Pfizers biosimilar releases have been met with success, with its 2016 launch of Inflectra (a biosimilar to J&Js blockbuster immunology med Remicade) coming to a spluttering start as it could not gain any traction against competition.
Pfizer consequently sued J&J for making “anti-competitive” deals with payers that blocked out biosimilar competition. With Pfizer claiming that Roche tied rebations of Remicide to payers provided they did not use biosimilars. US sales have picked up since for the biosimilar reaching $280 million in the first nine months of 2019, but this pales in comparison to the $2.32bn take-in for Remicade over the same span.
Since that rollout, Pfizer has managed to gain some success as it launched Retacrit, a biosim to J&Js Procrit, at a 33% discount. With Retacrit gaining a 16% market share, the most of any biosim in the US. Pfizer stated that this experience gave them the opportunity to learn what it takes to launch an oncological biosimilar as well as what to expect in that space.
It will be a tough challenge for Pfizer as it enters the Roche biosimilar market, with there already being competition from the Teva-Celltrion team for Rituxan and competition for Avastin against Amgen and Allergan.
The negotiations between the US, Canada and Mexico have reached an agreement to scrap patent exclusivity for biologics, meaning that each country can decide its own rules.
Previously the US had also negotiated favorable trade agreements regarding the pharmaceutical industry and have always pushed its exclusivity rules to its trade partners (previously 12-year patent exclusivity for biologics.) This change now means that pharma companies will not have the luxury of a 10-year period to keep data and other information related to their drugs confidential or have longer pricing monopolies on the market.
According to Politco, this final agreement arose from the need to compromise to end the deadlock between the Republican and Democratic party.
Responding to these recent developments, industry organisation's BIO’s president and CEO stated that removing these IP protections for biologic medicines will not end foreign free riding on American innovation. And puts small pharma companies in jeopardy that depend on the government to protect them in the global markets.
This trade agreement might set a worrying precedent for pharma companies in future trade deals globally, meaning that global drugmakers could face sooner-than usual competition from biosimilars.
GSK, Pfizer and Sanofi are some among the many drug-makers planning to implement price hike in the US
According to a report from Reuters, these three companies among others are planning to increase the price of around 200 drugs in total. The planned price hikes were revealed by healthcare research firm Axis Advisors. According to Axis, the median price increase of these drugs is set to be around 5%, with around half of them in the 4%-6% range.
This is a bold move by pharma companies, amidst the political discourse and intense public scrutiny over prescription drug prices in the US. Drug prices have been a key issue for both Trumps administration and the opposition Democratic party, and it would come to no surprise if it dominated the election campaign in 2020.
GSK will increase prices of around 30 of its drugs including its Ellipta inhaler, cancer drug Zejula and various products from its HIV division ViiV healthcare. Pfizer has planned price hikes for over 50 of its drug, including inhibitor molecule Ibrance, which grew by 27% to $1.3bn in the last quarter.
Both American parties have come up with plans to tackle the pricing epidemic currently rampant in the US. In July, Trump unveiled plans to allow the re-importation of certain drugs from Canada, which has since been advanced last month. This draft guidance would allow states in the US to import prescription drugs from Canada. While the Democrats have recently passed a bill through the Senate targeting 250 high-cost drugs that would be subject to cost-cutting negotiations by Medicare.
Both plans have been met with harsh criticism, with industry body PhRMA hitting back at the Democrats plan, stating that it “ would end the current market-based system that has made the US the global leader in developing innovative, life-saving treatments and cures.” There has also been skepticism from industry experts regarding the pharma industries willingness to sell more drugs to Canada so that the US can import them at cheaper prices.
From all this political scrutiny, the most recent drug prices although they have drawn criticism, they are substantially lower than historical price hikes. With major pharma companies sticking to the cap of 10% drug price increase, whether this can be attributed to the increased scrutiny remains to be seen.
Patents are exclusive property rights in intangible creations of the human mind. The vital point of a patent is that the product, manufacturing process or device must have never previously been disclosed anywhere in the world and something that would not be obvious to a person ordinarily skilled in the field before.
Patents are an integral part of the pharmaceutical industry. They have a huge role in preventing market failure and for keeping investment high in research. Medical innovation requires an extremely high amount of financial capital, with the Association of the British Pharmaceutical Industry placing the cost for drug discovery at approximately £1.15bn per drug. They prevent market failure because they provide an incentive for companies to invest these huge amounts of money so they can experience a 20yr period where they do not have to face government price control or competition.
Patents differ from industry to industry, with patents shared in the electronic industry through pooling or cross-licensing. This occurs because a given product often contains many patented technologies. To contrast, in the chemical and pharma industry the patent normally equals the product and protects the extensive investment in research and clinical testing required before placing it on the market.
The pharma industry has a very particular characteristic that sets it apart from other tech-based industries. In many other tech based industries it is possible to keep inventions a secret until they are marketed. This enables companies to delay patent filings until the last possible moment and therefore maximize the effect of the 20yr patent run. However, the culture of the medical research industry emphasizes early disclosure of inventions, usually long before the product is placed on the market. This is because scientists working in the medical research field have an obligation to share their findings as soon as possible with peers, so that their peers can also benefit from the research in their own work. Thereby there is a lengthy time period between patent filing and placing a product on the market, which means pharma companies receive far shorter periods of patent exclusivity than other tech companies.
However, patents have come under attack as patent protected drugs face no price caps or competition for 20 years and they have come under criticism for reducing patient’s accessibility to the latest treatments because they cannot afford them. There have also been arguments that patent protection can also cause incentive issues, as patents can be bought and sold. Therefore, certain companies have adopted the strategy of purchasing licenses and hiking up the drug price instead of investing money into new medicine research instead.
As previously stated, that product etc must have never been disclosed anywhere in the world and not be something that was obvious to someone working in the field. In order for this to be determined, the claims of the patent is compared against bodies of published literature, including previously issued patents. This process is called examination and assures that no one is able to claim patent rights on anything that is already in existence.
Patents are territorial in nature and exists only in the national jurisdictions in which the patentee has applied for and received recognition of there property rights.
Every country with a patent system has a national patent office where claims of inventors may be made a matter of public record. In most countries there is a detailed examination process before the inventor is given any rights, but some countries delay the examination process until a dispute over infringement arises. However even in these countries, a search of the prior art is often conducted as part of the registration process and the search results are published so that members of the public can assess the claims made by the registrant.
Patents can only be applied to ‘useful’ inventions. Patent applicants need only to supply a single operable use of the invention that is credible to persons of ordinary skill in the art. This can present some issues in the pharma field, as inventors often synthesize compounds without a precise knowledge of how they may be used to achieve a practical working result. To also be patentable, a pharma invention must be considered ‘novel’ and ‘non-obvious.’ To be considered novel, the invention must not be wholly anticipated by other public domain materials such as publications and other patents.
The first step for applying for a patent is preparation of the application. The application must be accompanied by a filing fee and must contain a specification of the invention. First the specification must enable persons of ordinary skill in the art to which the patent pertains to make and use the invention. Second the specification must contain a written description of the invention, sufficient enough to show that the inventor was in possession of the invention at the time the application was filed. And finally, it must detail the ‘best mode’ contemplated by the inventor of practicing the invention. Most importantly the specification must conclude with one or more claims the boundaries of the invention that the inventor claims as their own.
Once the application is completed it is sent to the countries patent office, such as the USA’s USPTO. It will be forwarded to an examining group who have expertise in that sort of invention. A supervisory patent examiner will assign the application to an individual examiner who will review it and conduct a search of the prior art.
The examiner must notify the applicant of their response coined an Office Action. If the claim is rejected, then the examiner must publish a case of unpatentability by a preponderance of the evidence. If a rejection has resulted, a patent attorney will usually respond by either amending the claims or asserting that the rejection was improper. If the examiner still remains unconvinced, they will issue a second Office Action termed Final Rejection. The applicant normally has three responses; 1) Abandon the application 2) Persist in prosecution by filing a so called ‘continuing application’ 3) Seek review of the examiners action by filing a petition to the Commissioner or appeal to the Board of Patent Appeals.
Types of Patents
There are a variety of pharmaceutical patents that inventors can apply for and they include:
- Product patent: This claims that the active ingredient is a new chemical entity and this claim is regarded as the superior claim. If there is a product patent, then no-one other than the patent holder or licensee can make, sell or import the product.
- Product by process patent: This type of claim ‘claims’ a chemical or other process used to manufacture the drug, whenever the drug is made by the manufactured process. It is regarded as the next best claim, as it also confers protection against importation of a product. But the drug can be made and sold if another company devises a commercially viable process not covered in the patent
- Process patent: This covers the process used to manufacture the drug. The chemical product itself is not covered.
- Formulation patent: Claims the pharmaceutical dosage form on the drug. It may take the form of formulation of a particular drug or class of drugs or a general formulation applicable to many drugs with different actions such as slow release technologies etc
- Method of use: This covers the use of the drug to treat the disease
Astellas has announced its acquisition of Audentes Therapeutics for $3bn, adding a late-stage candidate for a rare disease into its portfolio.
This move fits well into Astellas recent strategy of streamlining its R&D operations, where it has been cutting programmes and staff to focus on its self-proclaimed key areas of immuno-oncology, cell therapies in ophthalmology and mitochondria-targeting small-molecules for neuromuscular diseases.
The Audentes deal not only provides gene therapy as a fifth platform technology but also a neuromuscular treatment, AT132, which is a candidate for the treatment of X-linked myotubular myopathy (XLMTM). XLMTM is a rare, genetic, neuromuscular disorder that causes muscle weakness that can range from mild to life-threatening.
As it is a rare disease, XLMTM only affects approximately 40,000- 50,000 newborn males, so there is a small indication. However, as Audentes treatment is a gene therapy, it will command high prices, as shown by Novartis spinal muscular atrophy therapy, Zolgensma, which is now the most expensive drug in the world, pushing the therapy to $160m in sales in its first full quarter in the market.
Astellas stated that gene therapy will be a ‘key driver’ for the company in the future and intends to let Audentes operate as an independent subsidiary, allowing to keep its flexible operation but also to tap into Astellas scientific resources. A benefit for Astellas is the fact that Audentes comes with its own gene therapy manufacturing site, a high valued asset considering the lack of production capacity for gene therapies.
Analysts say that Astellas did pay a premium for Audentes, at a quoted value of 110% premium on the share value. However this follows the recent trend of gene therapy acquisitions such as Novartis $8.7bn AveXis takeover and Roches $4.3bn takeover of Spark Therapeutics.
The $13.4bn deal was in response to competition authorities imposing a key requirement onto the proposed BMS/Celgene acquisition to divest Celgene’s blockbuster Otezla.
Otezla has continued to perform well, growing 26% to reach $1.6bn across its psoriasis, psoriatic arthritis and Behcets disease indications last year and continuing to a total tally of $1.43bn in the first nine-months of this year.
Amgen in response has raised its full year sales forecast to $23.1-23.3bn, with Amgen stating it now expects “at least low double-digit percentage Otezla sales growth, on average…over the next five years.”
Amgen also plans to build the scope of Otezla by entering the drug into ongoing trials such as genital psoriasis and paediatric plaque psoriasis, potentially expanding the eligible patient population. Otezla also fits well into Amgen’s current portfolio of psoriasis and anti-inflammatory product range which includes Enbrel and Amgevita (biosimilar of AbbVie’s Humira, which is approved and already available in Europe and approved ahead of a likely US launch in 2023).
Celgene/BMS will continue to produce Otezla finished goods for Amgen under a contract manufacturing agreement for up to two years, which can be extended. With the other agreement also being workers joining Amgen from Celgene as a result of the takeover
At a R&D event in London, Novartis unveiled their long-term growth strategy, highlighting 25 or more potential blockbusters.
Among these products are a group that are set to enter into pivotal trials in the coming year. These products have been fastracked by Novartis due to belief they address areas of significant unmet need. Some of these products include:
· MBGG453: a first-in-class anti- TIM-3 mAb which is currently advancing into a pivotal phase 2 programme in myelodysplastic syndrome. With phase 1 data due to be presented at the upcoming ASH 2019 conference.
· Iscalimab (CFZ533), a monoclonal antibody (mAb) which has the potential to become the standard of care in transplants, as well as demonstrating a positive proof-of-concep tin Sjogrens syndrome, which can cause rheumatic autoimmune diseases.
The pharma company not only has promising early stage products, but also has an impressive series of late-stage pipeline phase 3 readouts and launches to announce, which are to be used to drive mid-term growth. These launches include:
· Ofatumumab (OMB157): A novel treatment for relapsing multiple sclerosis which has produced new analysis demonstrating a reduction in confirmed disability worsening.
· Canakinumab (ACZ885), AN 1L-1 beta mAb for non-small cell lung cancer, which as trials being recruited in both the first and second line settings and plans for regulatory filings in 2021.
Rounding of the day with a big announcement, Novartis announced that it has 90 new emerging molecular entities (NMEs) from its Institute for BioMedical Research, creating a diverse portfolio for the company. This implies that Novartis plans to make 80 significant submissions to regulators for approvals from 2020-22 in the US, Europe, Japan and China, an improvement from its 60 submissions it reported lasted year for the period of 2019-21.
MedCo is a company that has produced an inhibitor that lowers cholesterol by blocking the synthesis of PCSK9 in the liver rather than targeting the protein itself. It acts via a mechanism that can be given as a subcutaneous injection initially and then again at three months and every six months thereafter
MedCo’s Inclisiran is seen as a serious competitor and disrupter to the market, particularity Amgen’s Repatha and Sanofi/Regeneron’s Praluent. Especially in the sense that Inclisiran has the benefit of a twice-yearly dosing schedule and data demonstrating it can reduce cholesterol even in patients on maximum does of statins. While Repatha and Praluent are dosed much more frequently either monthly/bi-monthly.
Novartis has obviously seen the promise in MedCo and has agreed to pay $9.7bn for the company, which amounts to $85 per share. Novartis is betting on the growth potential of inclisiran, where analysts have suggested it has blockbuster potential if approved for a wide patient population.
Repatha and Praluent have been struggling this year with payer resistance stinting growth. The respective developers have sinced offered discounts ranging from $14,000 per year to $6,000. This presents interesting food for thought for Novartis as it considers the price it will be on offer for inclisiran if approved.
According to Bloomberg, analysts have responded well to this announcement as Inclisitan fits very well into its current cardiovascular portfolio along with Entresto. Inclisirans planned approval is set to be completed before the end of the year in US and in Europe for the first quarter of 2020. If this all goes to plan, Novartis expects inclisirian to start to contribute to group sales from 2021.
The Competitions Market Authority (CMA) has raised concerns that the proposed merger between Illumina and Pacific BioSciences will lead to a loss of innovation in the DNA sequencing market.
Illumina is one of the worlds leading companies working in genetics and they provide next generation DNA sequencing to a number of leading organizations all over the world. One such project is the 100,000 genome project, ran by Genomics England. This shows how important the work that Illumina provides is, as its DNA sequencing aides in projects that tackle to research genetic diseases producing innovative personalized solutions.
Illumina holds 80% of the global market share in DNA sequencing, with a 90% share in the UK alone. The CMA concludes that a merger between Illumina and PacBio will cause a loss of competition between the two companies, leading to a reduction in alternative DNA sequencing systems, which ultimately leads to less choice, higher prices and/or lower quality of products. Furthermore, because this market is extremely concentrated, the CMA is also worried that a deal between the two would also lead to a decrease of innovation in the market.
Further supporting the CMA’s case, is that in the investigation between the two companies, it was found that PacBio is one of Illumina’s closest competitors, with internal documents from the companies referring to each other as competitive threats.
Illumina had hoped to close the transaction in mid-2019, but the way things are progressing it seems like they have a long time to wait just yet.
Medicine shortage has increased exponentially over the past decade, the reasons for this can be accounted due to the outsourcing of production to subcontractors located in counties where the quality controls are not as strict as in Europe, resulting in more and more frequent supply disruptions.
The National Agency for Medicines and Health Products Safety (ANSM) has previously charged a hefty financial penalty of EUR 348,623 to a pharmaceutical company because it breached its obligation to supply the market in a continuous manner. The ANSM stated that the company has not planned any shortage management plans, presenting a serious and immediate risk to patients.
The ANSM hoped that this decision will underline the responsibility that pharma companies have in regard to supply distribution with response not only vital for the wholesalers.
The above events occurred in February 2019. The Health Secretary of France as of July 2019 is setting up a select committee to help her implement her plan for pharma companies. She hopes to strengthen the ANSM powers to sanction manufacturers who do not have shortage management plans. With penalties for each day of shortage reaching up to a maximum of 30% of the average daily turnover in France.
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