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

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.

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.

Source: politico.eu-Helen Collis, Carlo Martuscelli, Ashleigh Furlong, and Sarah-Tassir Bencharif

Editor: IPR Daily-Ann