02 June 2013

‘Evergreenwashing’ the Pharmaceutical Patents Review

EvergreenOK, I just invented a new word, so I had better explain it.

You may be familiar with ‘greenwashing’, which is the practice of using marketing spin to create a false impression that an organisation is environmentally friendly.

You may also be familiar with ‘evergreening’, which refers to a variety of techniques and strategies employed – principally in the pharmaceutical industry – to extend the effective period during which a product is covered by patents after initial patent protection has expired.

Thus ‘evergreenwashing’ is my term for the practice of generic pharmaceutical manufacturers using marketing spin to create a false impression that they are the champions of low-cost medicines, whereas originating drug companies are serial abusers using the patent system to unfairly extend their monopolies on blockbuster drugs in order to line their pockets at the expense of the community.

Now, we know that generic manufacturers are not the ‘white knights’ of the Australian pharmaceutical sector.  As I reported back in March, a recent study established that Australians are paying too much for generic pharmaceutical products (by up to 64 times, in one case) compared with consumers in other similar countries.  Furthermore, the vast majority of the $1.3 billion dollars in savings identified in the study would come from measures that would prevent us from overpaying for generic drugs, rather than from any potential cost reductions in patented drugs.

My thoughts on this issue have been prompted by the imminent release of the final report of Australia’s Pharmaceutical Patents ReviewThe Review was announced back in October 2012, released a ‘background and issues’ paper in November 2012, and published its draft report in April 2013.  Last week I was reading through some of the submissions in response to the draft report, when my attention was drawn to a (green) breakout box headed ‘Evergreening must be eradicated’ which appears on page 5 of a submission by Australian generic manufacturer Alphapharm [PDF, 478kB]

Alphapharm on Evergreening

In its breakout box on eradicating evergreening, Alphapharm states:

Since Alphapharm filed its original confidential submission, providing the Panel with case studies of 15 important medicines highlighting the prevalence of the practice of evergreening, there have been two relevant developments that should be considered by the Panel. The first is the Indian Supreme Court’s decision in Novartis AG v Union of India & Others. The second is the publication of a paper concerning a study of evergreening in Australia.

I shall return to the Indian situation later in this article.  However, the second point immediately piqued my interest, because I was unaware of any comprehensive study on evergreening in Australia.  The extent of evergreening, and its cost to the community, is something which, to my knowledge, has never been closely studied.  So, if such a paper existed, it would certainly be very interesting.

Alphapharm’s submission goes on to explain:

The paper on evergreening in Australia is important because it backs up the evidence provided in Alphapharm’s confidential submission corroborating that evergreening is a significant problem for the Commonwealth.

The paper to which Alphapharm is referring was written by Melbourne University’s Professor Andrew Christie, with co-authors Chris Dent, Peter McIntyre, Lachlan Wilson and David Studdert, ‘Patents Associated with High-Cost Drugs in Australia’ (May 15, 2013). PLoS ONE, Vol. 8, No. 4, 2013; U of Melbourne Legal Studies Research Paper No. 636.  A copy of the paper is available at SSRN.

The Melbourne University Study: on ‘Evergreening’?

I read the Melbourne University paper, and it did not seem to me that it was really a study of evergreening, as such.  To my mind, a study of evergreening would need to identify instances in which monopolies on pharmaceuticals has been effectively extended through follow-on patents, establish how often this had occurred, why and in what circumstances it happens, and (ideally) estimate the cost of this ‘evergreening’ to the community.

This is not what the Melbourne University study does, or even what it set out to do.

Professor Christie and his co-authors have analysed all of the Australian patents associated with 15 high-cost drugs.  They did this by identifying the active ingredient in each case, and then searching the Australian patent register for all granted patents covering those active pharmaceutical ingredients. 

They then classified each patent into one of seven categories, or types.  The first five of these are related principally to chemistry, administration and/or efficacy of a drug, being:
  1. the active pharmaceutical ingredient (API) of a drug, i.e. its basic chemical compound;
  2. intermediate or different forms of an API, e.g. an isomer, or a salt or crystalline form, of the drug’s chemical compound;
  3. combinations of an API, or an intermediate or a different form of it, with another drug, e.g. a drug’s chemical compound combined with the chemical compound of another drug;
  4. delivery mechanisms or formulations for an API, or an intermediate or a different form of it, e.g. a trans-dermal patch containing, or a slow-release formulation of, the drug’s chemical compound; or
  5. a process for making or formulating the API, or an intermediate or a different form of it, e.g. a method of preparing or purifying the drug’s chemical compound.
The final two categories relate to second or subsequent medical uses of the drug for treatment of conditions that are either:
  1. related to the original condition, e.g. a method of treating asthma using a drug that was previously subsidised for treatment of obstructive airway disease; or
  2. different from the original condition, e.g. a method of treating obesity using a drug that was previously subsidised for treatment of depression.
Some of these types of patents could be used, in practice, as part of an evergreening strategy.  For example, an improved delivery mechanism for a drug, which makes it significantly more convenient or reduces side-effects, might effectively render the original product obsolete, even after the patent protecting the API has expired.  This assumes, of course, that the subsequent patent is owned by the same originating company that held the original API patent.

In this context, the conclusions of the Melbourne University study are interesting, and perhaps surprising.  What the authors found was:
  1. there was a mean of 49 patents associated with each drug;
  2. three-quarters of the patents are owned by companies other than the drug’s originator; and
  3. the majority of all patents are owned by companies that do not have a record of developing top-selling drugs.
The paper concludes that:

…a multitude of players seek monopoly control over innovations to blockbuster drugs. Consequently, attempts to control drug costs by mitigating misuse of the patent system are likely to miss the mark if they focus only on the patenting activities of originators.

Professor Christie’s Comments

I emailed Professor Christie, seeking his comments on Alphapharm’s use of the Melbourne University study to support its position that evergreening is a significant requiring urgent action by the Australian government.  He very kindly responded in some detail to my questions, as follows.

Alphapharm says that our study “backs up the evidence provided in Alphapharm’s confidential submission corroborating that evergreening is a significant problem for the Commonwealth”.  I haven’t seen Alphapharm’s confidential submission, so I can’t say whether our study backs up Alphapharm’s evidence.

Certainly, our study does not say that evergreening is a significant problem for the Commonwealth. This is because, as you recognise, our study does not make any assertions, or draw any conclusions, about ‘evergreening’.  (If we were to talk about evergreening, we would have had to define it first – which is something we don’t do. We don’t do it because we are not doing a study ‘on’ evergreeening – at most, we are doing a study that may be ‘relevant to’ the evergreening debate, depending on how one defines that term.)

What our study does do is identify the patents associated with high-cost drugs, the type of inventions for which those patents are granted, and the type of person to whom those patents are granted. We then draw the following conclusion: “Our findings show that a multitude of players seek monopoly control over innovations to blockbuster drugs.  Consequently, attempts to control drug costs by mitigating misuse of the patent system are likely to miss the mark if they focus only on the patenting activities of originators.”

You can see that we recognise the limited nature of the conclusions that can be drawn from our study in our submission to the Pharmaceutical Patent Review [PDF, 255kB].  In that submission we state: “Our data show that follow-on patents are being granted to the API originator and to the competitors of the API originator (both other originators and non-originators).  While our data cannot directly answer the question of whether the API originator’s follow-on patents are being used to inappropriately extend the API originator’s protection, it does show that the existence of the API originator’s follow-on patents does not prevent competitors from engaging in follow-on innovation (or from patenting the novel, inventive and useful outcomes of that follow-on innovation).” 

We made this submission because the terms of reference for the Review require the Review to consider whether there is evidence that the patent system is being used to extend pharmaceutical patent monopolies at the expense of new market entrants and, if such evidence is found, to provide an assessment of the subsequent impact on competition, innovation and investment.  We believe that our study does provide data relevant to that issue.

The Indian Connection

Alphapharm’s reference to the Indian Supreme Court’s decision in Novartis AG v Union of India & Others relates to section 3(d) of India’s Patents Act, which states that:

the mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant.

Explanation.For the purposes of this clause, salts, esters, ethers, polymorphs, metabolites, pure form, particle size, isomers, mixtures of isomers, complexes, combinations and other derivatives of known substance shall be considered to be the same substance, unless they differ significantly in properties with regard to efficacy

The Indian Supreme Court decision in the Novartis case confirmed that ‘efficacy’ in section 3(d) means therapeutic efficacy.  Improvements in other characteristics, no matter how practically important (such as, in this particular case, more beneficial flow properties, better thermodynamic stability, and lower hygroscopicity) do not satisfy the requirements for a patentable invention under India’s section 3(d).

Alphapharm is pushing for a similar provision to be introduced in Australia.  I am not sure where I stand on this, because I have not given it a great deal of thought.  Alphapharm, however, again quoted Professor Christie in support of its position, this time from a radio interview on The Law Report, ABC National Radio, ‘Big pharmaceuticals no winner in patent stoush’ (broadcast 16 April 2013).  In particular, Alphapharm’s submission cites the following exchange:

Damien Carrick (ABC interviewer): I understand that in that Indian case Novartis argued that, look, this new version is in tablet form, which the previous incarnation wasn't, and it's something like 30% easier for the body to absorb than the earlier compound. Those do sound like major improvements.

Andrew Christie: Well, they are improvements, but what the Indian Supreme Court said was the improvements have to go to the therapeutic efficacy. It is not enough that the drug may last longer on the shelf, it's not enough that the drug could be made with a lower concentration because the body would absorb it more quickly, you needed something that actually improved outcomes for patients. And if you didn't have improved outcomes for patients, it didn't pass this extra standard.

I also asked Professor Christie about his views on this, to which he responded:

My view on this is personal (i.e. not necessarily shared by my co-authors) and not based on the findings of our drug patent study. It seems to me that there is much merit in a provision that precludes the grant of a patent for the mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance.  I also think that, where the known substance is a pharmaceutical, there is much merit in interpreting the ‘enhancement of efficacy’ requirement as being a requirement relating to therapeutic efficacy.

Conclusion

What we might conclude from a combination of The Grattan Institute report, showing the high prices Australians are paying for generic drugs, and Alphapharm’s submission to the Pharmaceutical Patents Review, is that generic drug manufacturers in Australia want products off-patent as early as possible, so that they can start gouging the Australian taxpayers for overpriced generic versions of the off-patent drugs!

That might be an overly harsh assessment.  But one thing I am sure of is that generic manufacturers are no more in the game for the good of the consumer than are the drug originators.  Both types of company are employing their respective business models in pursuit of the same ultimate goal – profits.

Not that there is anything wrong with that.  It is how our economic system works, and in many ways it works well (or at least better than most of the known alternatives).  But we should not be fooled into thinking that one side of the commercial debate places the interests of the Commonwealth any higher on the agenda than the other.  We need to review all of their claims critically, and be on the lookout for ‘evergreenwashing’!

Image Copyright (c) 123RF Stock Photos

4 comments:

Wayne Condon, Griffith Hack said...

Mark,
This is an interesting, pragmatic perspective. Obviously profits are taken at many levels in the pharmaceutical supply chain ( be they originator or generic supplied ) - manufacturer, wholesaler, pharmacist. It cannot be denied, however, that the public, through the PBS, is given access to cheaper pharmaceuticals once a patented pharmaceutical comes off patent. If that patent life is extended ( whether legitimately or questionably) then there is a cost to the consumer. It is important that any changes which are made to the system ( legal or political ) recognise the balance which has to be struck between the originator and generic parts of the sector.

Mark Summerfield said...

Thanks for your comment Wayne.

Of course you are correct. Quite aside from anything else the price of a drug covered under the PBS automatically falls by at least 16% as soon as a generic equivalent is introduced. With competition from multiple generic manufacturers, the price falls should be greater.



However, I have never quite understood how 'evergreening' can occur unless some real benefit is delivered by the innovation covered by a follow-on patent. If an initial formulation of a drug works adequately, then once the patent (or patents) covering that product have expired, then generic equivalents of that original product can be sold. If a new formulation has been developed and patented, then anyone who does not want to pay a higher price for the new formulation can instead choose to stay with the original product, or a generic equivalent.


Clearly, if the new formulation offers a real advantage, then it is more likely that people would prefer it over the original. But in that situation, it is surely also more likely that the patent on the improved formulation is defensible.


On the other hand, if a new formulation offers no significant advantage over the original product, a more pertinent question is: why are doctors prescribing it? This is not a problem with the patent system specifically, although no doubt the very same claims used to persuade doctors of the benefits of a new product are also used to persuade patent examiners (and courts) of the presence of an inventive step.


Obviously originators employ their own form of marketing spin, and provide myriad incentives for doctors to prescribe their latest products. But if we cannot trust medical professionals to adopt a more critical approach and cut through the spin, then I do not think there is much hope that a few tweaks to the patent system will make a big difference.


Perhaps Andrew Christie is right, and there is a good case for excluding entire classes of 'improvements' from patentability, regardless of how impressive or persuasive the evidence of their benefits may be.

ak said...

Hi Mark
Excellent writeup.
Re "But in that situation, it is surely also more likely that the patent on the improved formulation is defensible"

I am not so sure about this.. Improvement may be very marginal- change from liquid to solid, changes in delivery method etc - patent may still be granted, but possibly, overlap the parent? Are there any case laws on this? Bit of grey area, I think

Mark Summerfield said...

Hi ak.

It is not possible that doing something taught in the original patent could infringe the follow-up patent. If this were so, then the follow-up patent would be invalid for lack of novelty. If this is what you mean by 'overlap', then it cannot happen. There is a great deal of case law confirming that the basic test for novelty is essentially a 'reverse infringement' test. If following the instructions in a earlier document would infringe the claims of the later patent/application, then those claims are not novel.

If there is a difference, however marginal, then you are right that it is possible that a patent may be granted. But marginal changes that provide no substantial advantages may not be considered inventive. Even so, if there is no substantial advantage, then there is no apparent reason why people should not just continue to use the original, unmodified, product.

It is likely that pharmaceutical companies sometimes use marketing techniques to try to convince consumers, and the doctors who prescribe their drugs, that they really need to move on to the 'new, improved' product, when actually they are not going to see any improvement in outcomes.

I think it would be unfortunate to tinker with the patent system in order to solve a problem which really results from educated professionals being overly susceptible to marketing. But, as Professor Christie argues, there is a case to be made for doing so.

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