When medicines run out of patent

Press, 25 January 1986, Page 18

When medicines run out of patent

The Government has before it a recommendation from the Industrial Property Advisory Committee that the patent term for medicines remain at 16 years. Pharmaceutical manufacturers believe the recommendation is a threat to the flow of new and improved medicines to New Zealand. PETER MILLS, a consultant writer to the pharmaceutical industry in New Zealand, presents the case for a longer life for patents.

Medicines are at risk. The flow of new “wonder drugs,” which have cured and comforted millions of sick people worldwide since the therapeutic revolution began about 40 years ago, is in danger of drying up. The threat to the continuing discovery and development of new mediciqes is an unsatisfactory business climate which is forcing the medicine makers away from basic research into more rewarding fields. During the 19505, between 300 and 400 new medicines were introduced on to the world markets every year. Of these, 36 on average were completely new chemical entities. In recent years, product intro- . ductions have slowed to around 60 or 70, of which an average of just 14 are new chemical entities. Many major pharmaceutical companies are diversifying out of medicines into lower risk products, while some smaller firms are winding up their research efforts completely. Skyrocketing development costs combined with reduced opportunities for making a profit on new medicines are undermining the incentive for companies to support a sustained research programme. In New Zealand, just as much as in the home countries of the major pharmaceutical manufacturers — the United States, Britain, Switzerland, and West Germany — the poor returns to be made on new medicines mean that fewer and fewer are being released for prescribing. Much of the blame for the unfavourable business climate for innovation can be laid at the door of the regulatory bodies, the Government institutions whose job it is to approve both the safety and effectiveness of new medicines and allow them to be released on to the market. These agencies, especially in the United States, are setting such exacting standards and placing such a high emphasis on risk avoidance that the outcome is often that large numbers of patients are denied help from an effective treatment for many years. Pharmaceutical companies,

when at last they receive marketing approval for their products, have few years left before the patents expire on these products and competitors are free to bring out their own versions. In New Zealand, patent law gives an innovator 16 years of protection before other manufacturers can copy the idea or product and start making money from it themselves. The patent term is presently under study by the Industrial Property Advisory Committee (1.P.A.C.), a Govern-ment-appointed body headed by a Wellington barrister, Tom Gault. I.P.A.C. made its first report to the Minister of Justice two years ago, and has since heard a variety of opinions from groups with a commercial interest in patents. A second report from I.P.A.C. late in 1985 took account of these opinions and also looked at the recommendations of the Australian I.P.A.C. and at recent developments on patents in the United States. Some of the groups which made submissions to I.P.A.C. in New Zealand wanted the patent term kept at 16 years. Others, including pharmaceutical manufacturers, pressed for an extension. The pharmaceutical companies believe that 16 years is too short in view of the very long time it now takes to develop a medicine for the market after its initial discovery. Twenty-five years ago, in 1960, a pharmaceutical company couldexpect to have a new product on doctors’ prescribing lists within three to five, years of the product’s discovery. These days, ten to 12 years is a more realistic wait. The reason for this long delay is the paint staking development and approval process which is required before a medicine can be marketed. Animal tests of both safety and effectiveness usually take three to four years. The product is tested in human subjects for a further six years or so. The results of these tests — which can run to many thousands of pages — are then scrutinised by Government officials and appointees who have the authority to

grant approval for marketing. It takes them around two years jo sift through the mountain of test data before they decide that the new medicine is safe and effective and can be registered for prescribing. This is just as true in New Zealand as in the country where the original research on the medicine is conducted. A study by Professor J. D- K. North of the Auckland University School of Medicine found that two years is the average delay, in New Zealand between completion of research and registration, a similar period to that required in the United States. This is not the end of the story, however. Pharmaceutical companies want their medicines listed on the New Zealand Government’s Drug Tariff, which is a list of medicines for which the Government pays the total cost, apart from the $1 prescription charge introduced in February, 1985. Medicines which are listed on the Drug Tariff are much more widely prescribed by doctors than medicines for which the patient has to pay a part or total charge beyond the 11 prescription fee. The process of seeking Drug Tariff listing can consume a further valuable two years of patent life, according to Professor North. Research and development, marketing approval, Drug Tariff listing — they all eat dramatically into the time a pharmaceutical manufacturer has in which to enjoy profits from his new medicine before the patent expires and imitators bring their own versions on to the market. Studies show that the effective average patent life of medicines in New Zealand is just. 5.8 years, from a theoretical patent term of 16 years. In spite of this, the Industrial Property Advisory Committee in New Zealand recommended late last year that the patent term for all industrial products, including medicines, remain at 16 years. "There is an acceptance by I.P.A.C. that the pharmaceutical manufacturers have a case,” said the Commissioner of Patents, Ken Dalefield. “But how do you satisfy the needs of all manufacturers? The decision was a fair compromise, we think.” The decision went against current trends in both the United States and Europe. E.E.C. countries have a common 20-year patent term. The United States allows 17 years, but times this from the date of granting of the patent instead of from the time the application is filed, effec-

tively adding a further three years to patent life. Mr Dalefield admitted that 16 years is shorter than in these and some other countries, but said that New Zealand is seeking harmonisation with Australia, whose own I.P.A.C. recently recdmmended the retention of 16 years. “We’ve got to compare ourselves with Australia, rather than with Europe.” He points out that I.P.A.C. had recommended a four-year maximum extension of patent life for medicines, where it was shown that the marketing of the medicine had been held up by clearance procedures. “The committee recognised that pharmaceutical companies had a problem with regulatory delays and that’s why we recommended the extension.” The companies believe that up to 10 years extra time may be needed to compensate for Government delays. They also want a possibe 10-year extension where a pharmaceutical company has had insufficient income during the period of actively working the patent. Professor North of the Auckland School of Medicine supports this claim. He calculates that a four-year extension to compensate for delays is unrealistic. For some medicines, this would leave no more than four years of marketing time as a reward for more than a decade of research. Pharmaceutical companies link that brief patent term in New Zealand with a marked decline in their profitability, a withdrawal of less profitable medicines from doctors’ prescribing lists, and the shelving of some new medicines. They say that between 1979 and 1981, pharmaceutical manufacturers in this country took 23 prescription products off the market and abandoned plans to introduce 33 new products — because of poor profit forecasts. They believe that a diminishing supply of new medicines will eventually damage the New Zealand health system by increasing the need for hospitalisation of patients. “Technological progress in the pharmaceutical sector has had a cost-decreasing effect,” the pharmaceutical companies state in a combined submission to I.P.A.C. “It shifts treatment of many diseases from the cost-intensive, hospital in-patient sector to a less cost-intensive area of patients being treated whilst at home or even. without loss of working days.”

The companies point to evidence such as the effective treat-

ment of respiratory, diseases with antibiotics and the use of medicines for asthma, chronic >< bronchitis, arthritis, heart: s' l disease, and diabetes. »J The short effective patent life2S; for medicines in New Zealand *'', has created an unfavourable" 4 1 image of this country overseas, local pharmaceutical companies. '^ 1 believe. They say New Zealand is seen as a poor investment and an unsuitable country for launching medicines which have?, marginal profitability prospects. They say that a stronger patent'!-' system in this country would attract more investment capital'V and would ensure that New Zea-.J" land continues to-receive the' benefits of expensive overseas.-O' pharmaceutical research. Countries with a weak or non-*-’*? existent patent system are mostly '*- denied the benefits of foreign 7 \ research. ' Italy, which had no patent l -. 1 protection for medicines until'** 1 -' recently, has only a small research-based pharmaceutical (l?; ’ industry. There are a multitude — ■ of small manufacturers producing more or less identical products. . The Italian pharmaceutical in-*, dustry has not developed to the-’;’ same extent as the Industries of”" neighbouring countries such as Switzerland and West Studies have shown that the-V highly-fragmented Italian Indus-'”*-try has produced very little price 7 '*' advantage to the consumer. ■“*- In Thailand, medicines are'--denied patent protection. Many local manufacturers survive by 7 ®' copying the products of multi--'' national research, going to great'-''' lengths to duplicate the shapersize, and colour of the original' 7 A 1 product. , As the copyists have grown in"'l- - the incentive for' 7 *' overseas companies to release* Atheir own products on the Thar'S’ market has dwindled, to extent that foreign pharmaceutlcal companies are now drawing. Eventually no new foreign--* ll developed drugs will reach Thai--‘4? land, except in the form of?’ copies of the originals. These"*; often appear to be convincing*s- - but have no guarantee-?; of effectiveness or safety. ' Vl> New Zealand, while far from . such a situation, is already dis-’* 4 : covering that its poor market-’' environment is leading to a dim-''*’” inished flow of medicines de->' rived from overseas research. Unless the trend is halted, this*' country could find itself ex->’* eluded from access to the innovative and cost-saving medicines--* ’ which New Zealanders have'* come to expect as their right. -vS'