FTC Gets $1.2 Billion From Drug Company Over 'Pay For Delay' Patent Scam

from the one-down dept

For many years now, we've been covering the pay for delay scam that many pharmaceutical companies have used to effectively pay generic drug makers not to compete with them, even though they are able to do so. The full details of how the scam works are complex, but involve abusing a ridiculous part of the Hatch Waxman Act that grants additional monopoly benefits to the first market entrant of a generic drug. The big pharma firms used that to their advantage, filing bogus lawsuits against those generic drug makers and then agreeing to "settle" the lawsuit they filed by paying the generic drug maker to not actually enter the market. The greater monopoly protection afforded to the big pharma company more than makes up for how much they have to pay the generic drug maker. In short, it's taking advantage of the stupidity of giving drug companies massive monopolies.

The FTC started looking into these practices years ago, and two years ago the Supreme Court ruled that the FTC had every right to go after drug makers using antitrust laws over these "deals." And the FTC has been filing lawsuits on an ongoing basis about these deals.

Teva has now settled one such case for a cool $1.2 billion -- giving you a sense of just how valuable it has been to these pharma companies to extend their monopoly, keep out competition and keep drug prices artificially high. With Teva, it was the sleep disorder drug provigil (and, technically, the drugmaker was Cephalon, which Teva then bought). Teva had been fighting with the FTC for years over this, and the case was scheduled to go to trial next week -- but the settlement ends that. The amount, $1.2 billion, by the way, is the largest ever settlement with the FTC. You have to imagine that there will be more of these coming considering the number of other lawsuits and the fact that "pay for delay" was a widespread practice in the pharma industry.

Of course, even with all of this abuse, some people still insist that giving monopoly rights to pharmaceutical companies is the best way to produce new medicines and to provide healthcare. Isn't it about time we began to question those assumptions?

Filed Under: ftc, generic drugs, hatch waxman act, patents, pay for delay, pharmaceuticals, provigil
Companies: cephalon, teva

Key Hepatitis C Patent Rejected In India, Clearing Way For Generic Treatment Costing A Thousand Times Less Than US Price

from the rather-exorbitant dept

As Techdirt explained back in 2009, India has a long and complicated relationship with patents, but more recently, it has established itself as the leading "pharmacy of the developing world," thanks to its generic drug manufacturers which are able to supply key medicines at affordable prices. A recent patent decision, reported here by Intellectual Property Watch, continues that tradition:

Today's rejection by the Patent Office Controller of India of a patent application by Gilead company for a key drug against hepatitis C is being hailed by advocates as a path to dramatically lower costs of treatment for the disease. Hepatitis C has made news for the emergence of exorbitantly priced medicines over the past year.

A press release on the news from Médecins Sans Frontières explains just how exorbitant:

The oral drug, which first received regulatory approval in the US in November 2013, and has been priced by Gilead at US$84,000 for a treatment course, or $1,000 per pill in the US, has caused a worldwide debate on the pricing of patented medicines. A study from Liverpool University showed that sofosbuvir could be produced for as little as $101 for a three-month treatment course.

That gives an idea of the kind of profit margin involved -- rather excessive even allowing for generous research and development costs. But as well as being good news for those who will soon be able to afford this drug, the judgment is also significant for its underlying reasoning, as Intellectual Property Watch notes:

A look at the decision shows that a provision in India's law continues to stop patent applications if they fail to show sufficient novelty and inventive step -- and are subject to opposition.

That's important because it confirms that India is still taking a very strict approach to granting pharma patents, which must meet stringent conditions of novelty and inventiveness. Millions of people in the developing world who stand to benefit from India's low-cost generics will be grateful, while some in the West may be less happy.

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Filed Under: competition, generic drugs, health, hepatitis, hepatitis c, india, patents
Companies: gilead

The Nasty Patent Games Drug Companies Play To Stop You From Getting Cheaper Drugs

from the the-evilness-of-drug-companies dept

The astoundingly wonderful radio program/podcast Radiolab just recently had an episode called "Worth" -- which included a few different stories trying to establish how much something is truly "worth." The first story in the collection talked about how much extra time in life is worth, as part of a discussion on whether or not it's reasonable for certain drugs to be priced insanely high. It was an interesting discussion, mostly revolving around the question of whether it's "worth" paying tends of thousands of dollars for a drug treatment that might only extend your life a few weeks. There is just a brief discussion about whether or not it's appropriate for pharmaceutical companies to charge the rates that they do -- with the Radiolab team unfortunately accepting the tired (and incredibly misleading) claim from a drug company that because drug research includes so many failures, it needs to charge these ridiculous high rates to make up for all the failures.

This is misleading in all sorts of ways, though that will need to be the subject of another post at another time. My biggest complaint, after the story was over, was that it failed in economics 101. It stuck with the premise that there was a quantifiable single amount that something was "worth" -- and that price is a reflection of that. This is something that many people tend to feel, instinctively, but it's not accurate. The value of something is different to different people and depends on many factors. The price of something may be quite different than the value -- again, something we've been highlighting for years.

Here's the key bit: the price of something is driven by supply and demand. When you -- as the program did -- look at price solely based on "value" you're only looking at the demand side of the equation, and not the supply. And that's where things get extra tricky in pharmaceutical pricing -- because the supply side is massively distorted through patents, which enable drug companies to artificially limit the supply, driving up prices to insane levels. In a normal, functioning society, we might recognize that this is a problem. Deriving pricing for healthcare solely based on demand is ludicrous, and shows a society with very short-term thinking. It prioritizes short-term narrow profits of drug companies over long-term contributions from a more healthy populace.

But this is the way of our pharmaceutical industry today. And these distortions have become something of, well, a drug to the pharma industry. They've become so fat and happy based on the monopoly rents of patents artificially limiting supply, that they can't fathom how to survive without such rents. That crutch has resulted in big pharma running into some serious problems lately -- because they haven't been discovering many really valuable new drugs lately. At the same time, many of their old drugs have seen their patents start to expire.

In response, pharmaceutical companies have been pulling out all sorts of tricks to try to extend the monopoly rents (rather than actually improving people's health or their own business model). For a while, we were discussing "pay for delay" schemes, in which big pharmaceutical companies would sue small generic drug makers... and then "settle" by paying those generic companies a bunch of cash not to compete with generic drugs for some time. That practice recently became harder after the Supreme Court said that the FTC can go after such practices as a form of antitrust enforcement.

But that's not the only game that big pharmaceutical firms have been playing. A recent lawsuit filed by New York against Forest Labs and its parent company Actavis revealed that the company was trying to force Alzheimer's patients onto a new drug, and away from one that they had been using. The only real difference in the two drugs: the length of the patent protection. Basically, the company was trying to force patients onto a drug that wasn't close to becoming available in generic forms, which would make it much, much cheaper. From the lawsuit:

This case is brought to prevent Defendants from illegally maintaining their monopoly position and inflating their profits at the expense of patients suffering from Alzheimer's disease. The manipulative tactic that the Defendants seek to employ here is what some in the industry, including Defendants' own CEO, have called a "forced Switch." In a forced switch, a pharmaceutical company that sells a drug facing imminent generic competition withdraws its drug from the market, forcing patients to switch to a different form of the drug with patents that expire later. The switch has the effect of impeding the entry of lower-cost generic drugs. A physician recently complained to Defendants, aptly describing their contemplated action as "immoral and unethical." It is also illegal.

Defendants sell a blockbuster drug to treat Alzheimer's disease, called Namenda. Namenda is Forest's top selling drug, and is protected by patent and regulatory exclusivities that prevent generic versions from entering the market until July 2015. But rather than allowing patients with Alzheimer's to continue to take Namenda and switch to the less expensive generic version when it becomes available, as contemplated by federal and state drug laws, Forest instead hatched a scheme that interferes with patients' ability to make this switch.

Defendants' strategy is to discontinue or severely restrict patient access to its original, immediate-release version of Namenda, known as Namenda IR, prior to generic entry in order to force patients to switch to Forest's newer, virtually identical, extended-release version of Namenda, called Namenda XR. Because Namenda XR is protected by patents for many years longer than the original Namenda IR, Defendants' goal is to use the "forced switch" to reap several more years of monopoly profits than they would have earned otherwise. Under generic substitution laws, a pharmacist will not be able to substitute lower-priced generic Namenda IR (known as memantine) for Namenda XR. As a result, once patients have switched to Namenda XR, it will destroy the market for the generic form of Namenda IR because of the dramatically increased burden, cost, and time needed to arrange for patients who have been switched to Namenda XR to switch back to the original version.

Thankfully, a few weeks ago, an initial ruling in the case found that Actavis could not move forward with these "forced switch" plans and needed to continue making the original drug, Namenda IR, available. The full court ruling [pdf] is fairly detailed in how Actavis has a monopoly on the market for memantine and is abusing it in anti-competitive ways. The court notes that merely having a patent isn't necessarily proof of a monopoly -- but in this case, Actavis absolutely does have a monopoly. Further, it notes that just because you have a monopoly, it doesn't mean you're abusing it. But... Actavis does appear to be abusing its monopoly position. It didn't help that Forest Labs CEO, Brent Saunders (recently moved up to Actavis CEO as well), was pretty open about this:

Saunders stated, contemporaneously with the adoption of the hard switch by Forest, that the purpose of the switch was anticompetitive: to put barriers obstacles in the path of producers of generic memantine and thereby protect Namenda’s revenues from a precipitous decline following generic entry.... He further stated: “if we do the hard switch and we’ve converted patients and caregivers to once-a-day therapy versus twice a day, it’s very difficult for the generics then to reverse-commute back, at least with the existing [prescriptions]. They don’t have the sales force, they don’t have the capabilities to go do that. It doesn’t mean that it can’t happen, it just becomes very difficult. It is an obstacle that will allow us to, I think, again go into to a slow decline versus a complete cliff.”).

Of course, this particular practice, of trying to force people to avoid generic competition is increasingly widespread. As I was finishing up this post, I came across a similar, if equally disturbing, story about Pfizer directly threatening doctors should they decide to prescribe generic versions of pregabalin, an anti-epilepsy drug, that will also go off patent in 2015. But here's the tricky part: Pfizer holds a different patent on the same drug if it's used to treat pain (rather than epilepsy). Pfizer is claiming that prescribing the generic version for pain use would lead to serious problems -- even though it's the same damn drug.

You will see that, whilst the basic patent for pregabalin has expired and regulatory data protection for Lyrica expired in July 2014, Pfizer has a second medical use patent protecting pregabalin's use in pain which extends to July 2017. Pfizer conducted further research and development on pregabalin leading to the invention of its use in pain and hence was granted a second medical use patent for this indication. This patent does not extend to pregabalin's other indications for generalized anxiety disorder (GAD) or epilepsy.

As a result of the pain patent, we expect that generic manufacturers will only seek authorisation of their pregabalin products for use in epilepsy and generalised anxiety disorder and not for pain, whilst Pfizer's pain patent is in place. Generic pregabalin products therefore are expected not to have the relevant information regarding the use of the product in pain in the PIL (Patient Information Leaflet) and SmPC (Summary of Product Characteristics). In other words, the generic pregabalin products are expected to carry so-called "skinny labels" and will not be licensed for use in pain. In the circumstances described above, Pfizer believes the supply of generic pregabalin for use in the treatment of pain whilst the pain patent remains in force in the UK would infringe Pfizer's patent rights. This would not be the case with supply or dispensing of generic pregabalin for the non-pain indications, but we believe it is incumbent on those involved to ensure that skinny labeled generic products are not dispensed and used for pain.

In this regard, we believe the patent may be infringed, even potentially unwittingly, by pharmacists and others in the supply chain, if they supply generic pregabalin for the pain indication. Without information, guidance and practical solutions from the authorities, Pfizer believes that multiple stakeholders, possibly without realizing, may contribute to patent infringement which would be an unlawful act. This runs contrary to the government's established policy of rewarding additional research by the granting of a second medical use patent.

As Cory Doctorow notes in the article above, Pfizer here seems to be trying to take its own "stupid problem" and make it everyone else's stupid problem:

Weirder still is that Pfizer wants to make their stupid problem into everyone else's stupid problem. The fact that it's hard to enforce this kind of secondary patent is Pfizer's business, not doctors'. Doctors' duty is to science and health, not Pfizer's profit-margins. Scientifically, there's no difference between the two compounds. Doctors who prescribe generics leave their patients (or possibly the NHS) with more money to pursue their other health goals.

If your dumb government monopoly is hard to enforce, maybe you shouldn't be banking on it. But in the world of corporatist sociopathy, where externalising your costs on others isn't just a good idea, it's your fiduciary duty to your shareholders, Pfizer's actions are practically inevitable.

And this brings us back to the problem discussed at the very top of this article. The entire pharmaceutical industry has built its business around the idea of artificially reducing supply -- rather than about providing more benefit (health). That's really screwed up. A good business focuses on expanding the benefit to users, not limiting it to charge more. Our patent policy has created incentives for exactly the opposite -- and that is having a massive impact on the health and well-being of people around the globe.

Filed Under: alzheimers, brent saunders, demand, drugs, economics, epilepsy, forced switch, generic drugs, generics, health, health care, lyrica, monopoly rents, namenda, namenda ir, namenda xr, pain, patents, pharmaceuticals, pregablin, supply, worth
Companies: actavis, forest labs, pfizer

Big Pharma Given Control Of New .pharmacy Domain; Only Available To 'Legitimate' Online Pharmacies

from the guess-who-they-will-be dept

Just over a year ago, Techdirt reported on big pharma's application to run a new .pharmacy domain, and later on an attempt by Canadian pharmacies to prevent that happening. They failed, apparently (found via Intellectual Property Watch):

As the registry operator of the new .pharmacy domain, the National Association of Boards of Pharmacy (NABP), under a contract with the Internet Corporation for Assigned Names and Numbers (ICANN), will soon provide a means for identifying safe online pharmacies and resources. Under the Association’s Registry Agreement, executed with ICANN on June 19, 2014, the new .pharmacy generic Top-Level Domain (gTLD) will be available only to legitimate online pharmacies and related entities located in the United States or other countries. The Registry Agreement also includes a number of safeguards intended to protect consumers around the world.

The question is: what will "only available to legitimate online pharmacies" and "intended to protect consumers" mean in practice? The concern is that these are euphemisms for big pharma shutting out those competitors offering lower-cost products, particular foreign pharmacies, and manufacturers of generics. That fear is not assuaged by the following comment from the NABP in its response to such concerns (pdf)

the .PHARMACY TLD will provide a powerful tool to educate consumers, distinguish legitimate Internet pharmacies from the thousands of rogue Internet drug outlets, and reinforce the value of purchasing medications only from trusted online sources.

Big pharma is clearly as keen as the copyright industries to "educate" consumers about what they ought to be doing. The danger here is that such "education" will include not trusting perfectly safe pharmacies outside the US (in Canada, for example), and not using much cheaper generics. Since NABP now controls this entire domain it will have a free hand to block any outfit that does not subscribe to those views, and thus to attempt to delegitimize them in the eyes of the consumer.

This is something new. Hitherto, there has been no danger of this kind of discrimination against particular classes of Internet users, since registry operators were focused on maximizing profits by getting as many domains issued as possible. That won't be the case for .pharmacy, where the aim is to police the online pharmacy world, and to protect the generous profits of big pharma -- not make a few dollars selling a domain or two. Assuming that happens, we can probably expect other industries to follow suit in creating and controlling new domains, and for the Internet to become less free and neutral.

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Filed Under: .pharmacy, big pharma, domains, generic drugs, online pharmacies, pharmacies, tlds
Companies: icann

Senator Hatch Says Global Fund Advocating For Generic Drugs To Solve Healthcare Crises Is Abusing Funds

from the also-he's-lying dept

We've written a few times about governments around the globe seeking to make use of lower-priced (and often more widely available) generic medicines for responding to serious diseases, rather than sticking with the more expensive name brand. Current international agreements, like TRIPs, allow countries to effectively "opt-out" of promises to respect other country's patent laws for the sake of supplying such medicine and, you know, saving lives. It's pretty clear that breaking the patent on these drugs is quite effective, driving costs down on a massive scale, making this part of healthcare much more cost-effective.

Of course, the pharma companies don't like this at all. So it should hardly be that big of a surprise that Senator Orrin Hatch directly tried to put pressure on Hillary Clinton and the Obama administration to stop efforts to promote more widespread use of generics in the developing world using these methods. The link above highlights that Hatch sent then Secretary of State Hillary Clinton a letter that suggested he's quite upset that the US-funded "Global Fund to Fight AIDS, Tuberculosis and Malaria" was training people in different countries to explore compulsory licenses of drugs or other ways to make use of generics.

Of course, if you just read Hatch's letter (embedded below), you'd be forgiven for being confused. In it, he claims to be outraged that the Global Fund is encouraging various countries to buy more expensive generics of "cheaper" brand name drugs. Huh? In what environment do generic drugs cost more than the brand name? Also, he appears to just be wrong. Part of the data that he based his complaint on comes from a presentation (embedded with the letter) from the Global Fund, in which they have a few graphs showing that (as you would expect if you were anyone but Orrin Hatch) the generic versions are, in fact, cheaper, which is obviously why they were recommending making use of the option.

So, even as Hatch's letter is full of bluster about misspending money, the details actually seem to suggest that they saved money.

In the letter, Hatch also claims that the presentation directly calls on countries to "disregard" the TRIPS Agreement. But, again, the attached presentation appears to tell the opposite story, with a specific call to seek solutions that comply with TRIPs.

Recipients must procure their products in accordance with national and international laws. The Global Fund encourages recipients to apply the flexibilities provided within national laws and in the World Trade Organization's Agreement on Trade-related Aspects of Intellectual Property rights (TRIPS)...

In other words, directly contrasting Hatch's claims, the Global Fund appeared to tell countries to comply with TRIPs, but (correctly) noted that there were some exceptions built within the law that allowed them to seek compulsory licensing and the use of much cheaper generics. Still, there may have been some behind-the-scenes maneuvering as well. As the IP-Watch report notes, soon after all of this, the executive director of the Global Fund, Michel Kazatchkine, resigned. The report suggests this was due to US pressure over Global Fund's daring effort to tell developing countries what their international agreements actually allow. Also: the replacement, Mark Dybul, is a US official, likely to make sure that the Global Fund works in the same manner as Hatch would like -- artificially keeping the big drug makers happily without competition and with artificially high profits, even as healthcare in the developing world might suffer.

Incredibly, Hatch actually seems to be arguing that by suggesting developing countries explore generics, it's putting people at risk because... well, there's a gap in the explanation, but it appears to be due to big pharma companies feeling they need such subsidies to make the drugs in the first place. From the letter:

By advocating for developing countries to disregard the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) through issuing compulsory licenses to gain access to Global Fund grants, we are abusing the system. Access to these products is vital to our success in fighting the war on HIV/AIDS and actions inconsistent with patent law such as these will only hinder our ability to work in partnership with the companies that have provided the intellectual property rights to develop generic versions of their products.

Got it? If you're a developing nation seeking to stem the AIDS epidemic by making AIDS drugs actually available to those with the disease, you are are actually decreasing the success of the war on AIDS because [something, something, something] big pharma will take their ball and go home. Of course, there's no actual evidence to support this, and tons of evidence that shows that developing countries who actually set a compulsory license on drugs related to critical diseases, actually do help deal with serious problems. There is no evidence that this suddenly scares companies into not making the drugs at all. They still make plenty of money in the developed world off of those drugs.

Just to summarize, though, an actual US Senator, Orrin Hatch argued that, by having the Global Fund advocate for better, cheaper generic medicines, as clearly allowed under international agreements, that the Global Fund is somehow paying more for medicines (they're not) and convincing big pharma to fail in the war against these diseases (they're not). It's no secret that politicians aren't always in sync with the truth, but this is significantly more blatant a misrepresentation than is normal.

Filed Under: developing nations, drugs, generic drugs, global fund, healthcare, hillary clinton, orrin hatch, patents, trips

India Moves Even More Of Its Healthcare Away From Western Pharma

from the why-pay-more? dept

A few years back, Techdirt noted that India had 16,000 licensed drug manufacturers in the 1990s, and became a net exporter of pharmaceutical products. Things changed somewhat when India joined the WTO, which forced it to recognize pharmaceutical patents, but more recently it has started moving back towards generics, notably with the compulsory licensing of a kidney and liver cancer drug that was being sold by Bayer in the country for around $70,000 a year.

Now India has made another bold move in the field of healthcare:

From city hospitals to tiny rural clinics, India's public doctors will soon be able to prescribe free generic drugs to all comers, vastly expanding access to medicine in a country where public spending on health was just $4.50 per person last year.

The plan was quietly adopted last year but not publicized. Initial funding has been allocated in recent weeks, officials said.

Under the plan, doctors will be limited to a generics-only drug list and face punishment for prescribing branded medicines, a major disadvantage for pharmaceutical giants in one of the world's fastest-growing drug markets.

That's clearly going to have an immense effect on a country where 40% of the population live on $1.25 or less, meaning that paying for drugs is out of the question. The article quoted above estimates that 600 million people could take advantage of the scheme over the next five years.

But it will also have a major impact on the Western pharma companies, since it will effectively lock their products out of one of the two most important markets for the future. Combined with the compulsory licensing of more modern drugs, the latest move by India is deeply troubling for the world's main drug companies. That's reflected in both Bayer's attempt to contest the compulsory licensing order, and USPTO deputy director Teresa Stanek Rea's extraordinary claim that the move was in violation of TRIPS, clearly not the case.

India's decision to adopt generics across its entire healthcare system also stands in stark contrast to provisions in TPP that will make it much harder for local manufacturers in signatory countries to produce generics legally. As a result, TPP looks more and more like an attempt to lock emerging countries into old and one-sided business models that are stacked against them.

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Filed Under: generic drugs, india, pharmaceutical patents, teresa stanek rea, trips, uspto
Companies: bayer

The USPTO: Where Up Is Down, Expensive Medicine Saves Lives, And Cheap Alternatives Violate International Law

from the not-a-surprise dept

Well, this is unfortunate. We've written a few times about how various countries, under the TRIPS agreement are able to break patents on important medicines in the interest of public health. Most recently, we wrote about how India did this with a cancer drug made by Bayer called Nexavar. Despite the fact that Bayer has more than made back the money it spent bringing Nexavar to market, it's been pricing the drug at an unaffordable $70,000/year. After India allowed a small bit of competition, the price has dropped. We've seen that the USPTO doesn't like this at all and has tried to claim that high priced drugs are good for one's health, but that's beyond ridiculous to anyone who actually thinks.

Of course, "thinking" and "Congress" aren't words that often go together, so it appears that the USPTO is now trying to pull one over on Congress, with USPTO deputy director Teresa Stanek Rea misleading Congress by suggesting that these efforts violate international agreements like TRIPS. Unfortunately, TRIPS says exactly the opposite:

Rea told the committee, saying she believes the issuance of the Indian compulsory license was in violation of the Agreement on Trade Related Aspects of Intellectual Property Rights, an international pact administered by the World Trade Organization which sets minimum standards for intellectual property regulation. Rea said the USPTO is working to stem the tide of IP infringement in foreign countries by the use of a host of training programs and educational efforts aimed at foreign officials and judges along with the placement USPTO overseas IP attaches in Thailand, China, Russia, India, Brazil and Egypt.

Article 31 of the TRIPS Agreement expressly permits compulsory licenses as does the much earlier Paris Convention on the Protection of Industrial Property. The U.S. Itself routinely makes government use of patented inventions pursuant to Congressional authority under 28 U.S.C. Sec. 1498, but also has other laws allowing compulsory licenses in specific circumstances. Compulsory licenses have been allowed globally in the vast majority of intellectual property regimes since the 19th century. And, the patent on Nexavar in India had been granted under a 2005 Amended Patents Act that clearly articulated compulsory licensing rights at the time that Bayer prosecuted its patent and the patent was granted.

Finally, and most to the point, the US signed the Doha Declaration on the TRIPS Agreement and Public Health that pointedly grants countries the right to issue compulsory licenses, to define the terms upon which such licenses are granted – without restrictions, and to define the emergency circumstances that permit licenses to be granted without any prior notice to or negotiation with the patent holder (note: these expedited, no-negotiation procedures were not used in the Natco case). Under the Doha Declaration, countries are permitted to issue compulsory licenses in order to ensure “access to medicines for all” – something that India has attempted to do via the license granted.

It's a shame that the USPTO appears to be so in the tank for big pharma (they get lots of patents, which helps pay USPTO salaries...), that they're willing to mislead Congress on issues like this, even if it means that very sick people around the globe don't get the medicines they need.

Filed Under: generic drugs, india, nexavar, trips, uspto
Companies: bayer

After India And Brazil, Now China Takes Steps To Allow Cheap Versions Of Patented Drugs

from the tipping-point dept

In recent months, Techdirt has reported on an important development in the world of medicine, as both India and Brazil have allowed local companies to produce cheap generic versions of drugs covered by patents. In an even bigger blow to Western pharmaceutical companies, it looks like China is following suit:

China has overhauled parts of its intellectual property laws to allow its drug makers to make cheap copies of medicines still under patent protection in an initiative likely to unnerve foreign pharmaceutical companies.

Even worse for those companies, the proposed legislation would allow Chinese generics to be sold in other countries:

For "reasons of public health", eligible drug makers can also ask to export these medicines to other countries, including members of the World Trade Organisation.

Both ACTA and TPP have clauses that would probably make that more difficult -- another reason why China is unlikely to sign up for either.

As the Reuters article quoted above explains, China has prepared this move carefully, consulting with other countries that have taken this route in order to prevent it being challenged in international forums like the WTO. It is yet another example of China moving up the production chain:

China's stable of generic drug makers has been producing the key ingredients -- or active pharmaceutical ingredients (APIs) -- in medicines for years, exporting them to foreign drug makers, which then sell the patented finished products back to China at prices which the average Chinese citizen often cannot afford.

Pharmaceutical companies in the West will doubtless fight this directly in the courts and indirectly through lobbying of their respective governments, but it's hard to see China backing down, since that would have negative consequences for the health of its citizens and entail an unacceptable loss of face.

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Filed Under: acta, brazil, china, generic drugs, india, pharmaceuticals, tpp

US Gov't Tells Developing Nations That Patents & High Prices Are Good For The Health Of Their Citizens

from the oh-really-now? dept

There have been plenty of studies showing how -- especially in developing nations -- patents for pharmaceuticals serve to keep important drugs (which are cheap to manufacture) out of reach of the patients who need them most. In large part, because of this, various world bodies have accepted the idea that nations may decide to ignore patents in the interest of public health and safety. And that appears to work and be helpful. For example, we were just discussing how such generic copies were helpful in massively reducing the price of key drugs in India. And, no, this did not mean that the original manufacturer was unable to profit. This was on a drug where the company (Bayer) had made many times over its investment around the globe already, yet was still pricing the drug at over $5,000, while the generics were coming in at between $100 and $200.

There have been so many studies on this that you'd have to be either ignorant or deceitful to suggest that such a plan was a problem.

So I'm trying to figure out which adjective should apply to the USPTO, who recently gave a talk to a WIPO committee on the issue of patents and health, in which they argued that such efforts actually did more harm than good, and the way to keep people safe in developing countries was to increase patent protection:

There is no easy solution to these problems. Reducing patent protection is not likely to solve these thorny issues.... To the contrary, the lack of effective patent protection can be one of the many factors which prevent the appropriate medicines from reaching the neediest patients in DC and LDCs. Weakening the patent rights granted to pharmaceutical researchers and manufacturers in certain markets not only removes or reduces the incentive to develop new medicines, but also reduces the incentives for innovative medicine developers to invest in those countries and harness their innovation to solving the public health challenges that disproportionately affect developing countries, and are not being solved in other ways.

This statement is hogwash. First of all, there's nothing stopping these companies from profiting greatly in the developed world with these drugs, as they do already. And the idea that they wouldn't, say, invest in India if they could only get $100 per drug rather than $5,000... well, who cares? Considering how much more of these drugs they'd sell at those lower prices, there would still be plenty of profit to go around. Apparently, the folks at the USPTO have never learned a thing about price elasticity. Second, if a big pharma is too stupid to know how to provide drugs (which are relatively cheap to manufacture) at a reasonable cost for a profit, it seems pretty freaking natural that other companies are willing to step in and offer generics. So, really, why should anyone care if, say, Bayer decides to ignore India because it wants $5,000 for pills that others are willing to sell at $120? We're talking about the health and safety of the public, not Bayer.

Weakening patent protection for innovative medicines is not a productive approach to improving availability of health care, because many other factors other than patents more directly affect the availability of medicines.

The proof of the weakness of that argument is that although most medicines on the World Health Organization’s List of Essential Medicines are not protected by patents, their availability in many markets is still limited. This is particularly true in DC/LDCs. Many other factors affect the availability of all medicines, patented or not.

This is a nice bit of sleight of hand, confusing correlation with causation. No one says that a lack of patents means that such drugs are automatically made available in every market. But it takes a truly demented view of the world to take that fact and assume that such drugs would be more widely available if only those non-patented drugs were in fact covered by patent.

From there, the USPTO proposed a study to show how wonderful patents are in getting drugs to poor countries, to "restore balance to the discussion by evaluating the role of patent protection in providing incentives for research and development...." Funny how they were just talking about drugs that were off-patent not being available... but now they ignore that and it's all about new drug development. But, more seriously, I find it absolutely hilarious that the USPTO wants to talk about "restoring balance." This is an organization that has always pushed for "more patents" at pretty much any cost. The whole software industry is facing a massive crisis of gridlocked development over bogus patents. If we're going to start "restoring balance" to the patent system, let's start at home.

This kind of stuff is really sickening, because it's basically the USPTO saying that poor people around the globe should suffer and die if helping them doesn't produce enough profits for big pharmaceutical conglomerates. I don't know how people taking that position can sleep at night.

Filed Under: developing nations, generic drugs, pharmaceutical patents, uspto, who, wipo
Companies: bayer

Kenya's High Court Rules Anti-Counterfeiting Law Is Unconstitutional Because It Threatens Access To Generic Drugs

from the ACTA,-TPP-take-note dept

Back in 2009, Techdirt wrote about an interesting challenge to a then-new law against counterfeits in Kenya, on the grounds that it might be used to stop perfectly legal generic variants of drugs being imported into the country. That matters, because around 90% of drugs used in Kenya are generics, which means that blocking them would have serious implications for healthcare in that country.

Michael Geist points out that two and half years later, the court has finally delivered its verdict, and it's a great result:

Kenya's High court ruled on Friday that lawmakers must review legislation that could threaten the import of generic drugs, allowing Kenyans to continue accessing affordable medicine.

The judge specifically noted the problem mentioned above:

"The act is vague and could undermine access to affordable generic medicines since the act had failed to clearly distinguish between counterfeit and generic medicines," Judge Mumbi Ngugi said in her ruling.

As a result, Kenyan lawmakers will have to amend the bill to distinguish clearly between counterfeit and generic drugs.

That's not only a huge win for the millions of Kenyans who depend upon generics for their treatment, but it also highlights a key problem for ACTA and TPP, which both seek to grant broad powers to border officials to seize medicines without distinguishing sufficiently between counterfeits and generics.

Here's what the international humanitarian aid organization Médecins Sans Frontières (MSF) has to say about ACTA and generics (pdf):

While it is claimed that ACTA will protect against falsified medicines by allowing countries and companies to take strong measures in trademark disputes, this may in fact impede access to genuine generic medicines.

Meanwhile, MSF comments on TPP as follows (pdf):

the U.S. is requesting that TPP countries grant customs officials the ex officio right to detain shipments of medicines at the border, even in transit, if the goods are suspected of being counterfeits or if they are considered “confusingly similar” to trademarked goods.

Other countries need to follow Kenya's lead and confirm that access to vital generic medicines is a right that cannot be over-ridden by purely commercial considerations. Among other things, that means throwing out ACTA, and re-drafting TPP's dangerously vague sections dealing with counterfeit drugs.

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Filed Under: acta, counterfeit, generic drugs, health care, kenya, tpp