India is a country with a large poor population many of whom cannot afford the cost of patented drugs which are sold there by Western companies. It also has a thriving generics industry and is known as the ‘pharmacy of the developing world’. It provides strong patent protection and is an important emerging market, and therefore has been the recipient of a lot of foreign investment. Since last year India has started taking steps to circumvent patent protection on important drugs in order to allow generics companies to make them available at a fraction of the cost.
In principle the WTO has accepted the concept of circumventing patent rights on the grounds of public health. In 2001 the ‘Doha Declaration on the TRIPS Agreement and Public Health’ was adopted by the WTO Ministerial Conference. It concerned the right of members of TRIPS to grant compulsory licences on patents on certain grounds, including public health. However in practice compulsory licensing rarely happens in the developing world.
In 2012 India issued its first compulsory licence for a medicine. This was issued to Natco for Bayer’s Nexavar, and Bayer failed to reverse the decision at the Intellectual Property Appellate Board earlier this year. BDR Pharmaceuticals has now also requested a compulsory licence for Bristol Meyers Squibb’s Dastinib.
India has also been revoking patents held by Western drug companies, such as Allergan’s patents for Ganfort and Combigen recently. This is a policy which China also seems to be following, recently declaring Gilead’s patent on the AIDS drug Viread invalid. Indian patent law requires derivatives of drugs to have significantly improved properties to be patentable, making it difficult to pursue ever-greening strategies to extend patent life. This policy has been cited as an example which other developing countries should follow (see here) and has also been criticised (see here).
It seems that India is also considering changes to its foreign investment rules that would prevent Western drugs companies taking control of local drugmakers (see here).
So it seems that for now India continues to pursue a brave and aggressive policy to make Western drugs more affordable to its population. Whilst many in the West have voiced their criticism, no action has yet been taken at the level of the WTO. It will be interesting to see how the developed world chooses to respond.
Big pharma is facing many different pressures in a changing world. Drug regulation is becoming stricter, generics are becoming more competitive and governments are increasingly imposing drug prices. However big pharma is also doing badly at R&D. The list below represents my own summary of why that might be.
- Large organisations are inevitably bureaucratic and become incapable of change. They have internal politics where blame games and vested interests affect performance.
- A culture of innovative long term R&D is difficult to achieve as company culture inevitably changes once success is achieved. It then becomes a case of maximising the potential of what has been found rather than discovering new things.
- As companies start to manage innovation more and more they can destroy it. That’s because it is difficult to really grasp the essence of what makes people creative. Imposing artificial performance criteria on them takes away from the ‘thinking outside the box’ and ‘following irrational hunches’ side of things. The commercial people find it hard to grasp what innovation is really about and they can easily crush it if they are too powerful in the organisation.
- Risk taking is an essential part of innovation. However very few company cultures allow risk taking, and will tend to punish the inevitable failures that result.
- There are too many layers of decision-making in big pharma, countless committees that stifle creativity.
- Innovation requires protection from the commercial aspects. The bottom line is important, but researchers cannot work with the added distraction of having to worry about the economics of what they are doing.
Life Sci VC recently wrote about how to restructure big pharma R&D (see here), and In The Pipeline commented on that (see here). The essential ideas were to (i) reorganise R&D to ‘invert the periphery’ so that the core R&D was done by collaborative units acting as a biotech science park, (ii) get the commercial side out of the way of the researchers, and (iii) to adopt science based governance with a lot more science people in executive positions. That would produce a ‘a healthier culture that is both more entrepreneurial and empowered to take risks, and less encumbered by legacy baggage and short-termist thinking’.
Patenting by universities has its critics (see here) and can cause controversy (see here). Here are our top 8 points as to why chasing patents could be harmful to universities.
- Universities can end up behaving like patent trolls, enforcing patent rights with no intention of working the invention. Some universities have been aggressive in enforcing their patent rights.
- Given that universities do not work the invention, they have no interest in cross-licensing and so can be more difficult to negotiate with.
- Academics feel pressurised to commercialise their work. It adds to their stress and this could cause long term damage to the culture of innovative research in universities.
- It could lead to a change in the areas which are researched, commercialisable research being favoured, so that certain important areas may get neglected as a result.
- The production of patents will be favoured over journal publications, which would be a loss to our collective knowledge.
- Ownership issues over patents could hinder cooperation and sharing of information between scientists.
- There is an argument that publically funded research should be available to all, and perhaps university research should be used to promote open innovation.
- There is a question as to whether commercialisation of research changes the role of universities in the research ecosystem. Their role changes from one of having social responsibility to one of generating profits.