Does patent law help or hinder medical innovation?

By Mark Witten / Illustration By Peter Ryan

From the Fall-Winter 2012 issue of Nexus.

Patent law is necessary for the invention of new medicines. But in order for patients and the health-care system to benefit appropriately from these inventions, the courts have a duty to ensure broad societal benefits are realized in exchange for granting pharmaceutical companies the exclusivity of monopoly patent protection. 

In his keynote speech at the 2012 Patents Colloquium, hosted November 30th by the University of Toronto Faculty of Law, the Honourable Justice Ian Binnie, LLB 1965, described the “patent law bargain” as the “big notion” in the Patent Act—one which gives judges huge policy scope to set limits on what is patentable, and allow the public fair access to new medicines. “You can’t say that anything under the sun can be patented. The costs to the public of such a sweeping generalization would be unimaginable,” said Binnie.

His remarks highlighted the broad policy implications of patent law and set the stage for one of the hot topics at the Patents Colloquium, “Does patent law help or hinder the business and science of drug development?”

Panel lead Tim Gilbert, LLB 1988, founder and principal of Gilbert LLP, said that without the exclusivity of patent law protection, investments for drug development won’t get funded. However, while there is general agreement about patent protection for genuine innovations, the disagreements, complexity and costly litigious disputes with respect to less valid patents hinder drug development and delay access to new medicines that improve quality of life for patients.

“You can’t say that anything under the sun can be patented. The costs to the public of such a sweeping generalization would be unimaginable,” said Justice Ian Binnie.

Gilbert, one of the few advocates who represents both generic drug manufacturers and leading brand companies, maintained that open dialogue between judges and parties on opposite sides of the issues in forums outside the courtroom can lead to more agreement and certainty about what the patent rules should be, and reduce barriers to innovation. “Fashion your own resolutions,” he advised.

The recent Supreme Court of Canada decision that struck down Pfizer Canada’s Canadian patent for Viagra reaffirmed the fundamental importance of public disclosure in fulfilling the patent bargain. In his judgement, Mr. Justice Lebel said that patent holders should not be allowed to “game” the system in this way. The court ruled that the drug company failed to describe which of the preferred chemical compounds (Sildenafil) was the ingredient that actually worked for the promised purpose. The lack of public disclosure about the invention made it more difficult for society to benefit from this new knowledge.

The intent of patent law is to promote innovation, but advocates for both the generic and brand companies agreed that a key challenge today is to ensure the law helps more than it hinders.

Ildiko Mehes, vice-president and general counsel for Teva Canada, argued public disclosure is also essential to bring the transparency and openness of the legal system to a relatively new intellectual property system, known as data exclusivity, which affects drug development. “We need to create a system of appropriate checks and balances. The process should be publicly available and open to scrutiny,” she said, noting that improving market access for both generic and brand companies at the provincial level is vital for the Canadian public to benefit fully from innovations in drug development.

Mehes suggested that in addition to the patent system, tax incentives provide another underutilized means of promoting medical advances, which can lead to a better health-care system and health outcomes for patients.

Patent law becomes an impediment to the business of innovation when there is too much uncertainty and too little predictability in patent decisions, stated panelist Alonzo Weems, general counsel and corporate secretary for Eli Lilly Canada. And this lack of certainty fuels litigation costs and leaves less money for brand companies to invest in drug development.

Panelist Marta Gross, a partner at Procter Goodwin who practices patent law in New York City, observed that generic and brand companies in the U.S. are increasingly fashioning their own patent bargains outside the courtroom. “Our case law in the United States hasn’t provided any certainty. The trend in the last three or four years is towards more settlements as a way of getting certainty,” she said.

The bargains being struck in cases where there is uncertainty about whether a drug patent can be successfully challenged is to “split the baby” and settle on an early market entry date that gives patients access to the generic drug before the patent was scheduled to expire. Gross maintained that the Federal Trade Commission is vigilant in scrutinizing these settlement agreements to ensure that the public interest is served and not injured through anticompetitive activities or payments.

As much as it might be desirable from a business perspective to reduce the uncertainty and volatility in patent law, the unknown can’t be eliminated entirely. “In Canada patent law is by its very nature an uncertain area of law, compared to tax or contracts law, and you can’t wish that away,” explained panelist Alex Stack, LLB 1998, patent counsel for Mylan Pharmaceuticals.

One way to increase certainty and market stability would be to winnow out a greater number of very weak or invalid patents accepted at the application stage. A selective pruning of bargain basement applications could help to prevent patent games from clogging the system.  “The patent office can’t always distinguish between important and trivial patents,” said Stack, who argued there should be an opportunity to challenge and ask patent officials to take a second look at filings for highly questionable patents.

Panelist Patrick McGrade, vice-president of corporate and legal affairs for GlaxoSmithKline Inc., cautioned against overly narrow definitions of innovation that fail to adequately consider the benefits of a new drug for the patient. “The science of drug development is not a whole bunch of moonshots. What’s best for patients is to foster innovation, and incremental innovations impact patients hugely,” he said, citing the example of a new medication to treat depression, which teens are much more likely to take as prescribed because it doesn’t cause weight gain as a side effect.

The patent law drug development panel and keynote speech by the Honourable Ian Binnie were two of many thought-provoking discussions and presentations at the 2012 Patents Colloquium. This annual seminar, attended by judges, pharmaceutical industry professionals and intellectual property lawyers, was sponsored by Teva Canada through its generous gift to the Faculty of Law to establish a cutting-edge patent law program for scholars and law students.