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HOW BIG PHARMA GAMES THE SYSTEM — AND KEEPS DRUGS PRICES HIGH

Layers of market protections and courtroom tricks keep competitors off the
market far longer than rules intended, say generics firms.

Patents, market exclusivity and data protection are being exploited by some Big
Pharma to keep competitors out of the market | iStock
By Helen Collis, Carlo Martuscelli, Ashleigh Furlong and Sarah-Taïssir Bencharif
April 11, 2023 4:00 am CET
7 minutes read
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Voiced by artificial intelligence.

The pharmaceutical market is a strange beast.

It’s governed by a complex system of rules that protect new branded drugs from
unbranded rivals for a limited period of time, in order to keep these cheaper
generic competitors at bay.

But measures such as patents, market exclusivity and data protection — designed
to give pharma companies the chance to recoup investment in a new drug — are
being exploited by some Big Pharma to keep competitors out of the market far
beyond the intended fixed period of around 15 years, argues the generics sector.



Gaming the system is so common that it even has a name: Evergreening. It can add
billions of euros to pharmaceutical companies’ balance sheets, and cost EU
countries significantly in missed savings.


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THE TOTAL ECLIPSE OF MARGRETHE VESTAGER

By Samuel Stolton

Big Pharma strongly denies wrongdoing, but in a 2009 report, the European
Commission highlighted the need for stronger enforcement of competition laws to
prevent evergreening. However, little has changed.

Now, the leaked draft of the EU’s pharmaceutical legislation revision indicates
that the Commission may be gearing up to clamp down on these games.

So as we wait for the Commission to publish its proposal, we’ve taken a look at
the most common ways to game the system — and what Big Pharma's European lobby
group EFPIA has to say about it.


PATENT THICKET

You may think that one drug = one patent. But you’d be wrong. AbbVie, for
example, applied for over 250 patents for their arthritis drug Humira in the
U.S. Rival drugmakers launching generic versions of the medicine found
themselves blocked in court. So while the medicine was launched in 2003, the
first competitors are only entering the market this year. 

While the main patent for a drug covers its chemical composition, there’s a
whole range of possible add-ons that companies can exploit to delay copycat
medicines. These include manufacturing processes, delivery methods or the dosing
of the medicine. 



The resulting patent thicket, as the strategy is called, increases the legal
protections that rivals need to challenge in court, making a launch more risky
and expensive. It’s something of a common practice: Another arthritis drug,
Enbrel, which is sold by Amgen in the U.S. and by Pfizer in Europe, will likely
enjoy 37 years of patent protection through to 2029 in its original American
market.

EFPIA says: The Europe’s Patent Office has high standards and doesn’t offer
patents willy-nilly. Plus, patented processes don’t prevent generics firms
making the drug; they just have to find another way to do it. 


COURTROOM TRICKS 

Add-on patents can be challenged in court. But the fun doesn’t stop there. Just
when it looks like a challenge might succeed, some pharma companies will
complicate matters by filing additional patent applications with the European
Patent Office. Each of these so-called divisional patents are linked to
secondary patents, such as a manufacturing process, and provide the same
duration of protection. 

Unlike others, drugs for rare diseases get a decade of market exclusivity in the
EU | David Borrat/EPA-EFE

Even if the secondary patent is successfully challenged by a generics firm — or,
often, the original company withdraws the patent before the challenge is won
— generics firms also have to challenge the linked divisional patent. This can
take up to seven years.

“We're seeing this increasingly as a strategy to delay generic and biosimilar
competition,” said Adrian van den Hoven, head of Medicines for Europe, the
generics lobby group. It creates legal uncertainty, forcing generics companies
to challenge every divisional patent if they want to enter the market, he said. 

EFPIA says: The issue has been “blown hugely out of proportion,” with
divisionals representing around 10 percent of all new European patent
applications. Divisional patents expire at the same time as the linked parent
patent and cannot replicate the same claims.




SALAMI-SLICING   

Drugs for rare diseases get special treatment: A decade of market exclusivity.
This means that if the European Medicines Agency authorizes a new drug for a
condition affecting no more than five in 10,000 people in the EU for which there
are no effective treatments — or it adds considerable benefit to the existing
treatments — copycat medicines have to wait 10 years to enter the market. 

But can a rare disease be … invented? It depends how you cut it. There are
concerns over Big Pharma’s eye for splitting common diseases into subsets,
artificially creating rare disease groups — to potentially benefit from these
incentives. 

And while this tactic — called salami-slicing — may raise eyebrows now, it’s
likely to be an even bigger issue in the future with the advent of personalized
medicines targeted to individuals, warns Ancel·la Santos, senior health policy
officer at the European Consumer Organisation (BEUC). “The Commission should
close any loopholes, like potentials for abuses,” Santos said.  

EFPIA says: It’s right that diseases are classified by type as well as genetic
deviations, as this is the scientific reality. In any case, when other
treatments are available, incentives will only apply to products bringing a
clear benefit to patients.


PATENT LINKAGE  

The so-called Bolar exemption is designed to put a limit on patent powers. It
allows unbranded pharmaceutical companies to begin preparing copycat medicines
before patents on the original products expire, so they can be ready to enter
the market once time’s up. 

But EU countries have different interpretations for how widely to apply the
exemption. In some, generics firms can start negotiations with health
authorities about prices for the cheaper alternatives even before they
officially launch. In others though — including Germany, Italy and Poland —
patents can block reimbursement authorities from even talking with the generics
companies, a practice called patent linkage. 



A European Parliament resolution from 2017 called on the Commission to end the
practice. They might get their wish. A draft version of the pharmaceutical
legislation clarifies the Bolar exemption to explicitly state that it also
covers pricing and reimbursement decisions.

EFPIA says: The law is that the Bolar exemption doesn't apply to pricing and
reimbursement applications. Some generics firms are already launching products
in Central and Eastern European countries while there are valid intellectual
property protections in place, and expanding the Bolar exemption would encourage
more of this behavior. 


RESISTING COMPULSORY LICENSING

Compulsory licensing — where governments can override patents and allow other
companies to make a drug in an emergency — has long been perceived by the
industry as an existential threat. Big Pharma has lobbied fiercely against
implementation and has so far had a useful ally in EU law — protection of
regulatory data. While compulsory licensing may force pharma to share the recipe
for a drug, it is not obliged to share data from the drug trials, which a rival
company needs to get their version approved. 

Industry has strongly opposed efforts to increase the use of compulsory
licensing. For example, in a 2019 submission to the U.S. government’s annual
blacklist of countries not kowtowing to its IP standards, the U.S.
pharmaceutical sector lobbied successfully to add countries that use compulsory
licensing in a way they didn’t like. 

The EU’s pharmaceutical legislation may change this, allowing the suspension of
data and market protection in cases of public health emergencies.

EFPIA says: The companies that invent a drug should be allowed to bring it to
market since they best understand the technology. Compulsory licensing is a
last-resort option for good reason, and "undue willingness" to employ the
measure undermines investors' confidence and harms innovation.

UPDATED: This article has been updated to clarify the companies that own the
rights to Enbrel.





More from ... Helen Collis, Carlo Martuscelli, Ashleigh Furlong and
Sarah-Taïssir Bencharif



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