Patents And Drug Pricing

Patents Drug Pricing

Relevancy

  • G.S. Paper 2, 3
  • Relations between patents and drug pricing
  • About secondary patents and issue of humira case
  • Indian patent law

Recently:

  • India’s rejection of secondary patents has kept blockbuster medicines affordable for many.

How are patents and drug pricing related?

  • Patents offer their owners market exclusivity for a limited period of time.
  • For medicines, this exclusivity should last as long as the primary patent is in effect, typically 20 years.
  • Primary patent relates to the active pharmaceutical ingredient (API) of the medicine.
  • The end of patent exclusivity is referred to as a patent cliff.
  • This is because drug prices fall steeply by as much as 80% after the end of patent exclusivity.
  • The price fall is driven by the generic competition that sets in.
  • Resultantly, pharmaceutical companies witness fall in profits.

What are secondary patents?

  • Secondary patents are claimed for derivatives and variants of the API.
  • This may include a physical variant of the API, a new formulation, a dosage regimen, or a new method of administering the medicine.
  • The pharmaceutical companies, who face losses, attempt to postpone their patent exclusivity by filing secondary patents.
  • The secondary patents prop up before the expiry of a primary patent.
  • It thereby stretches the patent exclusivity beyond 20 years.
  • This practice of extension of patent exclusivity is called “ever greening”.
  • The strategy is most lucrative when employed in the context of so-called blockbuster medicines.
  • These are medicines that reap annual revenues exceeding $1 billion.

What is the issue Humira case?

  • Humira is one of the world’s best-selling prescription drug.
  • Its main ingredient is adalimumab which is a biologic used for the treatment of arthritis.
  • In 2015, Humira faced imminent expiry of patent of its main ingredient.
  • AbbVie Inc, makers of Humira, reassured its investors by citing the option of filing secondary patents which is allowed in the US.
  • Humira thus continues to grow even after the expiry of the patent over its main ingredient.
  • Over the years, AbbVie has increased the price of Humira in the U.S. by 100%, by steadily filing secondary patents.

What is the case with secondary patents in India?

  • The U.S. recognizes and encourages secondary patents.
  • India, however, does not encourage and has limitations in securing secondary patents.
  • Humira – Indian Patent Office (IPO) had rejected Humira’s secondary patents.
  • Consequently, cheaper versions of the drug were introduced in India.
  • Evidently, Humira costs Rs.85,000 in the U.S., and the same treatment costs only Rs.13,500 in India.

What are the other similar cases?

  • Another patent case worth mentioning is the Novartis’ Glivec, a crucial leukaemia cure.
  • The Supreme Court of India in 2013 upheld the rejection of a secondary patent for Novartis’ Glivec.
  • Likewise, Spiriva, a medicine for asthma, enjoys patent protection until 2021 in the U.S., largely due to secondary patents; rejected in India.

What makes Indian patent law unique?

  • As per the Indian Patents Act, the product in question must feature a technical advance over what came before.
  • Secondary patents for pharmaceuticals are often sought for trivial variants.
  • They typically fail to qualify as an invention as prescribed in the Act.
  • Further, when a medicine is merely a variant of a known substance, the Patents Act necessitates a demonstration.
  • This is mandated in terms of showing the improvement in its therapeutic efficacy.
  • The provision also bars patents for new uses and new properties of known substances.
  • This additional requirement is unique to Indian law.
  • Thus, to be deemed patentable, applications for secondary patents have to clear significant hurdles.
  • The patent approval procedure ensures that bad patents stay out of the system.
  • Indian patent law is thus commendable in preventing the ever greening practices by pharmaceutical companies.
  • This is supportive in making affordable the blockbuster medicines which are crucial to the success of public health.

 

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