Patent Monopoly- Hindrance to Healthcare Prosperity: Poulomi Sen

PATENT MONOPOLY: HINDRANCE TO HEALTHCARE PROSPERITY

Author: Poulomi Sen

RGSOIPL, IIT KHARAGPUR

ISSN: 2582-3655

Abstract

The patent system is a mechanism to grant a monopoly, usually for 20 years, to innovators who invent a product, process, or instrument satisfying the stringent requirements of worldwide-novelty, non-obviousness, utility, and industrial application. Once patent rights are granted, the patent-holders seek to exploit them in the market-place. The patent system has its unpropitious impression on markets, predominantly on the biomedical sector, as patents grant monopoly. Biomedical researches and innovations are sine qua non for the survival of living beings. National constitutions, courts and international agencies firmly believe that access to essential medicines is not a commodity to be purchased by a fortunate few but is a human right recognized internationally that should be accessible to each and every person in this world.[1] Patent monopolies tend to have a negative impact on the healthcare sector by impeding research and creating a hindrance in the manufacturing process of new drugs due to lack of accessibility. This paper intends to discuss how a grant of monopolistic rights over a patented medicinal product can have a negative influence on the healthcare and the biomedical sector.

Keywords: Monopoly, strategic patent, blocking patent, patent clusters, Healthcare technologies

Introduction

When innovations are being controlled by granting patent monopolies, it tends to be deleterious for social welfare and mankind. Some of the adverse effects of patent monopoly are a restricted approach to biomedical and healthcare-related research and high monopolistic prices for drugs and medicines affecting the poor. Biomedical technologies and Healthcare technologies (HCT) are so vital for the public interest that any obstacle affecting the progress of the biomedical sector should be dealt with without any delay. Such adverse effects of monopolistic pricing of patented drugs often can come in conflict with the fundamental right to health which is granted to individuals by virtue of Article 21 of the constitution. The World Health Organization considers the situation as a health rights concern and has opined that “inequality and discrimination in access to essential medicines remain the key public health challenge of our times”[2]. This paper intends to discuss how a grant of monopolistic rights over a patented medicinal product can have a negative influence on the healthcare and the biomedical sector.

Patent System: An overview

Patents are designed in order to create a market for knowledge by assigning propriety rights to inventors which facilitates them to overcome the problem of non-excludability while, at the same time, encouraging the maximum diffusion of knowledge by making it public.[3] Intellectual Property being knowledge-based creations has been taken into account as a tool for biomedical, technological, and economic development, worldwide, owing to the fact that we are surviving in the era of globally competitive information and knowledge-based world. The successful exploitation of Intellectual Property fosters an environment which aids to proliferate innovations and contributes to the economic and technological development. The inventors subsequent to the grant of patent rights tend to exploit them in the market. The possibility of attaining commercial benefits encourages innovation to a large extent. Patents are tools for economic advancement that contributes to the enrichment of society through[4]:

  • the widest possible availability of new and useful goods, services and technical information that derive from inventive activity, and
  • the highest possible level of economic activity based on the production, circulation, and further development of such goods, services, and information.

There are basically 4 types of patents[5]:

  1. Utility patents: A utility patent is a patent that covers the creation of a new or improved product, process, or machine having an industrial application.
  2. Utility model patents: Utility model patents protect incremental inventions, basically satisfying the novelty requirement.
  3. Design patents: Design patent protects an ornamental design on a useful item.
  4. Plant patents: Plant patents protect new kinds of plants produced by cuttings or other nonsexual means. Plant patents do not cover genetically modified organisms and give more importance to conventional horticulture.
PatentRequirementsPatent Obtaining procedureTerm of protection  Subject matterGoverning Act in India
UtilityNovelty, non-obviousness, utility and industrial application, should not attract section 3 of The Patents Act, 1970Lengthy, difficult, costly20 yearsInventionsThe Patents Act, 1970
Utility ModelNovelty, low standards of non-obviousness and inventiveness.Simple and not very costly.6-15 yearsProtects Incremental inventionsNot granted in India
DesignNovelty, originality, ornamentalNot very difficult to obtain14-15 yearsProtects shape, configuration, and appearance in 2D or 3D articles.Designs Act, 2000
PlantDistinct, stable, uniformDifficult to obtain15-18 yearsProtects new kind of plantsThe Patents Act, 1970

                                                 Table 1: Types of Patent[6]

Patent Monopoly

Patent rewards the inventor with monopoly rights, in return for disclosing the information, which allows the patentee to exclude the entire world from selling, using, making the invented product, process or instrument/the machine, or anything asserted in the patent claim. Undoubtedly, the rationale behind granting patents is to prevent unwanted emulation and commercial exploitation. Though such monopoly right uplifts the patent-holder to a dominant position, if we cast light on the other side of the coin, it can be observed how such monopolistic rights block competition and dominate markets. The patent system often fails to strike a balance and make mutual concessions between the legitimate interests of the society and the rights of the patent-holder. The United Kingdom’s Royal Society, an independent academy of science, opined that “intellectual property do benefit people in one part of the world but conspicuously fail to benefit others or even act to their detriment, are not what the patent system is supposed to be about”[7].

Patent Monopoly vis-à-vis Right to Health

The WHO Constitution, 1946 envisages[8]:

The highest attainable standard of health as a fundamental right of every human being”.

Therefore, health is internationally considered to be a fundamental human right adopted by Constitutional Law, which creates a legal obligation on states to ensure the allocation of “Maximum available resources” to its citizens without any discrimination.

As per Article 12, defined in General Comment 14 of the Committee on Economic, Social and Cultural Rights – a committee of Independent Experts, responsible for overseeing adherence to the Covenant, the core components of right to health are[9]:

  1. Availability of scientifically and medically approved health services.
  2. Accessibility of scientifically and medically approved health services.
  3. Acceptability of scientifically and medically approved health services.
  4. Quality of scientifically and medically approved health services

There are three types of process patents related to the medical field[10]:

  1. Medical course of actions that do not necessitate the use of any patented medical products,
  2. Methods for using a patented drug or device, and
  3. Strategies for isolating building devices or chemical compounds.

These medical process patents at the present cover a slew of patents involving biologic, diagnostic, and genetic testing methods.

The 1994 Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) created an almost homogenous international patent system to trigger inventions by remunerating inventors of new medicines with government-granted monopolies for a period of 20 years through patents[11]. During the aforementioned period, the patent holder, on his whims and fancies, can impose any desired rate on the medicinal products and process, despite the resulting blockage in market competition. This enables the pharma companies to charge exorbitantly and markets tend to bear such exorbitant prices for sustaining human life. After the expiry of the patent, the patented product gets exposed in the public domain and the market for the drug opens up to generic drug companies.

Exemptions from Patent in TRIPS Agreement: Certain material exemptions known as “flexibilities” were inserted in the TRIPS Agreement, 1994 which prevents the blockage in accessing certain critical medicines due to stringent patent protections. TRIPS flexibilities have been employed to significantly increase access to medicines in India, Colombia, Indonesia, and over 50 other nations that have produced or procured generic HIV/AIDs medications[12].

 Such flexibilities are mentioned in Article 31 of the agreement which permits the government[13]:

  • To issue compulsory licenses for patented medicines and drugs.
  • To engage in parallel importation of generic medicine manufactured elsewhere.

The compulsory license can be granted by the government, only when price negotiations have failed. Subsequent to the grant of compulsory license, the patented drugs, and medicinal products can be purchased at a much lower price than the original exorbitant price.

Despite such exceptions, Patents are found to be affecting biomedical and pharmaceutical sector to a large extent mainly by:

  • Hindering biomedical research by preventing researchers from accessing patented materials or methods they need for their studies and research.
  • Impeding medical care by exorbitantly raising prices of essential medicines, such as antiretroviral drugs, in low and middle income countries.

It can be concluded that the monopolistic rights of patent holders over his invented medicinal product will violate people’s fundamental right to health as there is a continuous tussle between “protection of patents” vs “access to patents”.

Monopolistic Patent rights affecting Health care

The rationale behind granting patent rights in the healthcare sector is to encourage and stimulate clinical trials to introduce useful medicinal products to combat diseases. The grant of monopolistic rights will in turn be beneficial for the state to ensure maximum health security of its citizens by complying with the “allocation of maximum available resources” requirement.

But unfortunately, records suggest that existing patents over medicinal products increase the cost of medicines in high, medium as well as low-income countries[14]. Apart from affecting the prices, patents tend to enhance the difficulty of creating novel mechanisms, thereby preventing the re-creation of such medicines. Inevitably, patented pharmaceuticals are more expensive than similar pharmaceutical drugs that do not have patent protection.

Therefore the patent system has resulted in a drastic increase in costs in the biomedical and health sector, inevitably decreasing the quantum of innovation both quantitatively and qualitatively. It has been found that every decade; the costs of developing a new medicine from discovery through clinical trials appear to double[15]. As a result, despite the humongous amounts spent in biomedical and pharmaceutical research, the number of drugs produced per year is declining to a large extent.

It is quite evident that states are failing to ensure its citizen’s right to health as the healthcare sector is facing unsustainable cost permitting the creation of only a handful of new products. 

Monopolistic Patent rights impeding biomedical research and innovation

 Monopoly patent rights over biotechnological inventions may obstruct the public access to this very crucial field of research, upon which survival of living beings depend. Access to materials and data such as cell lines, reagents, genetically modified animals, and unpublished information can be restricted if these are owned by other researchers[16]. Even for the purpose of research, in order to access the patented biotechnological inventions, the researcher first has to obtain the permission of the patent holder and then further experiment.

  • If permission is not granted:  The researchers are barred from accessing the patented biotechnological research, thereby hindering further innovation.
  • If permission is granted: Naturally, the price of the invention gets escalated due to the exorbitant royalty which has to be paid to the patent holders in order to get access to their patented products. This further increases the healthcare costs which, at times, is not even affordable by patients, thereby affecting their treatment and survival. Also, the invention gets delayed in the process of obtaining permission from several patent holders.

Since researchers are mostly unable to obtain several permissions from patent holders, the exclusive and conflicting rights of patent holders have the potential to block biomedical and biotechnological R&D. This situation has been termed as an “anticommons” problem[17].

The negative impact of patent rights on biomedical research was first observed with the commencement of the Human Genome Project in the 1990s which resulted in the creation of great tussle between publically-funded scientists and private companies[18].

  • Publically funded scientists: Their motive is to make their work accessible without hindering any further innovation. In order to ensure their research remains in the public domain, they get their research published which further prevents the area from getting blocked by monopolistic patented rights.
  • Private companies: Their sole motive is to maximize profit. Therefore they make sure that every innovation done by them gets patented.

A minimal delay in getting their work published will result in the filing of patents by some private companies, which in turn will block the access to such works.

Example: A day before Mike Stratton was about to publish his paper on cancer genes in the journal Nature in 1995, the private company Myriad Genetics applied for a patent on BRCA1 and BRCA2, which were associated with breast cancer. The patents granted monopolistic rights to the company by which they had the leverage to charge for tests at a cost of $2,500 per patient[19].

It can be concluded that the private ownership of patented biomedical products will refrain the pharmaceutical sector from ameliorating human health slowing down its progress.  Innovations in start‐ups or small firms and SMEs have been obstructed due to[20]:

  • Blocking patents,
  • Expensive licenses,
  • Restrictive license terms
  • Threats of being sued for patent infringement

Marketing strategy of Brand name pharmaceutical companies

Brand name pharmaceutical companies are very well aware of the fact that no one will compromise when the matter revolves around an individual’s health. As a result, no matter how much sky-high the price of a medicinal product gets, people will invest without giving a second thought to opt for ineffective but substitutions. Therefore the brand name pharmaceutical companies keep on escalating the price of their patented products as they manage to convince customers that their product is worth the price. Such wide is the ambit and potential of the marketing campaigns of the brand name companies to block competition and for market exclusivity. Also, other pharmaceutical companies quite naturally, refrain from inventing compounds related to which already many patents are associated as that would result in incurrence of huge costs.

Patent Clusters further blocking innovation

Patent clusters: Patent clusters, often termed as patent flood or patent thicket is an evergreen strategy mostly employed by standard pharmaceutical companies to block competition in the area of their patented product. Patent cluster is basically an overlapping set of patent rights that requires innovators to reach licensing deals for multiple patents from multiple sources[21]. The rationale behind filing patents for integrated parts or products of the original medicated product is to prolong patent protection. Therefore the secondary patents are filed just before the patent protection of the original drug expires, preventing the entry of any similar compound in the market. Companies, in order to block competition, wrap many patents around the original patent, and patent of such incremental inventions can be filed numerous times depending on the number of integrated parts or modifications. Utility model patent enables the filing of a patent for minor improvements; therefore even the slightest modification of the original drug can be patented. Subsequently, secondary patents are filed in areas which revolve around the primary biomedical patented product such as dosing, delivery systems and combinations of such product.

Example: A medicine encompassing a proprietary inhaler or injector that is integrated into the product. These integrated combinations of products will be patented independently. Consequently, even after all the patents on the medicine expire after 20 years or so, the remaining persisting patents on the associated auxiliary device, or parts of the device, can be sufficient to hinder generic entry[22].

A “strategic patent” is one that forbids a competitor from making the same product and also averts them from competing in the same market space. Therefore strategic patent further increases the burden on the competitor who might be a researcher or an inventor, requiring him to put more concrete efforts to fulfill even the bare minimum criterion of “inventiveness.”   Strategic patenting enables the extension of monopolies beyond the designated period and block competitors.

Suggestions

Despite the fact that monopolistic patent rights come in the way of innovation and affects healthcare, it still cannot be denied that the grant of patents in some of the other way stimulates innovation. Therefore, there is a need to find a midway to strike a balance between the rights of the patent holder and the society, so that people’s health is not compromised.

  • The best way to strike a balance between the two is by reforming patent laws by making the patent-eligibility standards and the patent examination process way more stringent. With reform, the patent system may be ‘harmless enough’ so that practitioners can research products and processes dealing with even trivial matters.
  • Enhanced infringement protection should be provided to health care practitioners and researchers for limiting the cost of HCTs, bestowing more exposure to the data and information, potentially leading to better patient care.

Conclusion

The rationale behind the introduction and establishment of the patent system was to create a win‐win situation: between the patent holder and the legitimate interests of the society. The aim was to enhance prosperity for the inventors so that they can get recognition and reputation which will further encourage other medical practitioners to come up with new innovations. But unfortunately, in the pharmaceutical and biomedical industry rights of the society vis-à-vis the rights of the patent holder are not balanced. This is mainly because of the exorbitant prices of patented medicines and healthcare technologies which is literally a matter of life and death. Also, the monopolistic patent rights impede research due to the lack of accessibility of the patented pharmaceutical products. These grey areas of a patent often conflict with the fundamental right to health, which is an internationally recognized human right. Therefore, there is a need to reform patent laws by making the patent eligibility standards and patent examination more stringent in the pharmaceutical and biomedical sectors.


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[2] Human rights and health, World Health Organization, available at, https://www.who.int/news-room/fact-sheets/detail/human-rights-and-health

[3] P. Geroski, Handbook of the economics of innovation and technological change.

[4] Utility model and innovation in developing countries, available at, https://unctad.org/en/Docs/iteipc20066_en.pdf

[5] Utility Model and its need for protection in India, available at, http://www.legalserviceindia.com/legal/article-2338-utility-model-and-its-need-for-protection-in-india.html

[6] Utility Model and its need for protection in India, available at, http://www.legalserviceindia.com/legal/article-2338-utility-model-and-its-need-for-protection-in-india.html

[7] The Royal Society. Keeping science open: the effects of intellectual property policy on the conduct of Science. 2003. Available at,  http://royalsociety.org/document.asp?id=1374.

[8] Human rights and health, World Health Organization, available at, https://www.who.int/news-room/fact-sheets/detail/human-rights-and-health

[9] Human rights and health, World Health Organization, available at, https://www.who.int/news-room/fact-sheets/detail/human-rights-and-health

[10] An Uncertain Future: The Impact of Medical Process and Diagnostic Method Patents on Healthcare in the United States, Margaret Kubick, Northwestern Journal of Technology and Intellectual Property, available at, https://scholarlycommons.law.northwestern.edu/cgi/viewcontent.cgi?article=1127&context=njtip

[11] Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), available at, https://www.wto.org/english/docs_e/legal_e/27-trips_04c_e.htm#5

[12] Medicine procurement and the use of flexibilities in the Agreement on Trade-Related Aspects of Intellectual Property Rights, 2001–2016

Medicine procurement and the use of flexibilities in the Agreement on Trade-Related Aspects of Intellectual Property Rights, 2001–2016

Medicine procurement and the use of flexibilities in the Agreement on Trade-Related Aspects of Intellectual Property Rights, 2001–2016

Medicine procurement and the use of flexibilities in the Agreement on Trade-Related Aspects of Intellectual Property Rights, 2001–2016

Medicine Procurement and the use of flexibilities in the agreement on Trade Related Aspects of Intellectual Property Rights, available at, https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5840629/

[13] TRIPS AGREEMENT, Article 31, available at, https://www.wto.org/english/docs_e/legal_e/27-trips_04c_e.htm

[14] Addressing the challenge of high-priced prescription drugs in the era of precision medicine: A systematic review of drug life cycles, therapeutic drug markets and regulatory frameworks, available at, https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5559086/

[15] Are Patents impeding medical care and innovation, available at, https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2795161/

[16] World Health Report 2012: No health without research, available at, https://pubmed.ncbi.nlm.nih.gov/22897763/

[17] Heller MA, Eisenberg RS. Can Patents Deter Innovation? The Anticommons in Biomedical Research. Science, available at  http://www.sciencemag.org/cgi/content/full/280/5364/698.

[18] Is the Patent System a Barrier to Inclusive Prosperity? The Biomedical Perspective, available at, https://onlinelibrary.wiley.com/doi/full/10.1111/1758-5899.12730

[19] Myriad Genetics: In the eye of the policy storm, available at https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3037261/

[20] Is the Patent System a Barrier to Inclusive Prosperity? The Biomedical Perspective, available at, https://onlinelibrary.wiley.com/doi/full/10.1111/1758-5899.12730

[21]Pharmaceutical Patents in India, available in , https://patentbusinesslawyer.com/pharmaceutical-patents-in-india/

[22] Is Patent “Evergreening” restricting access to medicine/ device combination products?, available at, https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4766186/

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