Patents in Pharmaceuticals

Patents in pharmaceuticals have been met with challenges over the years. Most noteworthy are the pricing issues surrounding patent protection of pharmaceuticals. Under the Trade Related Aspects of Intellectual Property Rights, signed into law in 1994, governments can allow a generic drug-maker to produce a patented medicine. Therefore, as most of us know, you can choose to take the generic version of a drug as opposed to the actual brand name, which is quite popular these days due to lower co-pays and expenses when purchasing generic versions of any given drug.

For this reason, patents in pharmaceuticals are common, and serve the actual drug companies, at the general public’s expense. When a new drug is on the market, that sole drug could be the only solution for those suffering from a certain disease. Therefore, the drug-maker may increase the price of the drug, charging a substantial amount of money. The reason for charging such high prices initially is because it costs anywhere up to $2.6 billion to develop and market a new drug. While the patent is pending, the drug company can charge higher prices to recoup the expenses. However, this can be done only to a point. Then, Congress steps in to protect citizens. The drug will be protected by a patent; therefore, only that pharmaceutical company can manufacture, market, and profit from the sale of the drug.

Patents vs. Exclusivity

  • The USPTO office grants patents during the lifetime of the drug’s development. Patents can also range based on the type of drug, meaning that more than one patent can be provided for that particular drug, depending on how many ways it is being created and used. Exclusivity, however, is the exclusive right for that pharmaceutical company to manufacture and sell that particular drug, with or without the existence of a patent. The Food and Drug Administration (“FDA”) grants such exclusivity.
  • Exclusivity is a specific statutory provision that is granted and given to a company submitting a new drug application. The purpose of this statute is to promote a balance between creativity in drug innovation and generic drug competition.
  • Patents have a 20-year lifespan from the date in which the patent application is filed.
  • Exclusivity is provided based on the type of drug being made and sold. For example, drugs that help those suffering from a disease affecting less than 200,000 people in the United States receive 7 years of exclusivity. Drugs referred to as ‘new chemical entities’ earn 5 years of exclusivity.
  • Patents can expire prior to the drug’s approval or be issued after the drug’s approval, even if the drug actually has exclusivity. Therefore, some drugs can have both protections while others have just one or even no protection.
  • Exclusivity cannot be tacked onto to the life of the patent.
  • Exclusivity outside of the U.S. is usually shorter, and those governments can in fact negotiate the price of drugs.
  • India and Brazil have compulsory licenses, which provides local businesses with an ability to make drugs that haven’t yet faced generic competition.

Patent Application Denial in the Pharmaceutical Industry

Even the greatest drug may not be patent worthy because it was previously disclosed in the past. What does this mean? It simply means that it was disclosed in some way, whether it was mentioned in an old research article, expired patent, or included in some type of chemical structure found online in the public domain somewhere. Furthermore, some of those old ideas for great drugs may not have been clinically tested, which is required by the F.D.A. prior to approval. Such clinical testing takes time and a significant amount of money. Unfortunately, some drug makers or creators of such drugs don’t have the time or the money necessary to invest in these requirements.

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