Lawson March Conference on Pharma Law 2010 in Bnagkok

1. 2010 Update: MoPH Policy on
Compulsory License for Patented Medicines
By
Edward J. Kelly
Managing Director LGP Asia Co Ltd
18 November 2010
1
PHARMA LAW 2010
Update Thailand

2.  An exceptional use of a patented invention
 Imposed upon patent owner by the government
(non-voluntary)
 A nationalization by the state of a valuable private
property interest
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COMPULSORY LICENSE

3. Patents and the Pharmaceutical Industry
Business Model
 Substantial Cost and Time to Research and
Develop a new drug
 10-15 years*
 $1 - $1.3 Billion for a new drug or biologic*
 New drugs approved by US FDA in 2009 = 26*
 Only 2 out of 10 marketed drugs ever produce
revenues that match or exceed R&D costs
 Est. R&D spending by Pharma in 2008= $ 65
Billion
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4. IP Ecosystem or Value Chain
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MANAGE
CREATE
PROTECT
COMPETITIVECOMPETITIVE
ADVANTAGEADVANTAGE
PROFITPROFIT
GROWTHGROWTH
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2
3
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EXPLOIT

5. 4
 Patent is a property right given by the government
 Patents are owned and rented just like real property
 Patents allow you to put a fence around your
invention, to stop others from taking your property
 IP is best viewed as a right of the owner (exclusivity)
 Competition law best viewed as a right of the
consumer – more choice/lower prices
IP Protection vs. Competition Law

6. 5
TRIPS Article 31: Other Use of Patent w/o
Authorization of Owner
(b) Such use may only be permitted if, prior to such
use, the proposed user has made efforts to obtain
authorization from the rights holder on reasonable
commercial terms and conditions [unsuccessfully]
…This requirement may be waived by a Member
in the case of a National Emergency or other
circumstance of extreme urgency or in cases of
public non-commercial use . . .

7. 6
Potential Grounds for Challenge
 “non-commercial use”?
 Due process?
 Royalty payments?
 Questions related to quality of CL products
 Reconsider implications of the policy – substitution
of a dependence on India for prior dependence on
the West

8. 8

9. GPO For Profit Enterprise

10. Political Precedent
No TRIPS-compliant country has ever granted
a compulsory license solely on the basis
invoked by MoPH
– to merely reduce government spending on
medicines and
– increase spending on other national budget
priorities
Common Element of every CL ever imposedCommon Element of every CL ever imposed
or threatened by others :or threatened by others :
• The temporal element: NO TIMEThe temporal element: NO TIME
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11. A Question of Legitimacy
Due Process: Procedural pre-conditions of
Section 50 of the Patent Act not followed.
– No meaningful consultation with patentee
– No royalty agreed
– No limits on scope or duration
– No judicial review
– No TRIPs compliance
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12. TRIPs Compliance
“Public non-commercial use”
– GPO is a for profit state enterprise
– Made profit of 1.1 billion Baht in 2007
Adequate remuneration
– taking into account the economic value of
the authorization
Scope and duration is limited
Judicial review
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13. A Question of Legitimacy
Policy conflict: BOI incentives for R&D vs.
Nationalization of private property
Conflict of Interest: GPO is primary beneficiary
of CL policy while also performing central policy-
making role in considering when CL will be
invoked
– The question of quality of the medicine
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14. A Question of Legitimacy
Transparency of motive
Transparency in implementation
– Interpretation of Patent Act is completely
different from interpretation taken in 2000-01
Consideration of alternatives
– Offers from patent owners would accomplish
goal of reduced government spending at the
same time as guaranteeing high quality
supplies to Thai patients
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15. A Question of Legitimacy
– First strike policy tool rather than policy of last
resort
– By a country with a questionable record of
respect for IPR
– Imposed by a military-installed government
– In a middle income country
– Where healthcare spending is a relatively low
percentage of GDP
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16. 16
Political Pressure from Trade
Partners

17. Payment of Royalty

18. Low price is not the
only consideration
Safety
Efficacy
Supply chain distribution
Run out of stock

19. No Good Deed Goes Unpunished
Sanofi #2 MNC by market share
Employs 350+ Thais
Trained staff to world class standard
Taxpayer & CSR
Pharmacovigilance
Professional development/education
Pasteur’s Tech Transfer to GPO for vaccine
development
REWARD? Patent rights for top selling products
nationalized (and more!)
Effect on long-term competitiveness?
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20. Quality Differentiation of Clopidogrel Product
2004 Publication
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Questions of Quality

21. Quality analysis of generics has shown large
variation
Most of the copies were not similar compared
to Plavix®
– Their amount of impurities was HIGHER
– The content of clopidogrel was LOWER
Most of the copies are not of equivalent quality
compared to the innovator drug product
Plavix®
Quality Differentiation of Clopidogrel Product
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22. Equivalence
Therapeutic equivalent
Bio-equivalent
Chemical equivalent
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23. In 2003, 18 marketed products claiming to be generics of
clopidogrel were analyzed in Louvain University using the
validated methods to control Plavix®
The quality of these 18 products is assessed and
compared to the quality of the original drug product Plavix®
Samples were analyzed at different time points: first at
time point zero and then after 3 months in their original
packaging at 40°C and relative humidity of 75% to check
the influence of these stress conditions on the impurity
profile of the product
Quality Differentiation of Clopidogrel Product
2004 Publication
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Quality Issues

24. Quality differentiation of docetaxel product
Vial J, et al., Quality of docetaxel generics versus Taxotere: A comparative study. Poster RDPA 2007.
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25. Conclusion:
Quality differentiation of docetaxel products
“This comprehensive study indicates that a
noteworthy proportion of generic docetaxel form
ulations are of poor quality with insufficient quant
ity of active drug in each vial, potentially impactin
g both efficacy and safety”
Vial J, et al., Quality of docetaxel generics versus Taxotere: A comparative study. Poster RDPA 2007.
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26. CL Conclusions
Lessons Learned
– A CL is valuable only in the threat to use, not in
actual use
• Value of dialogue among all stakeholders
– Legal process may be hijacked by political actors:
“law is what we say it is”
• Importance of Judicial review
– Short term interests must be balanced with long
term concerns
– No country acts alone
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27. Conclusion
Governments must provide a safe and predictable
Patent System to:
– Encourage inventors, companies, institutions and
investors to invest resources in R&D for innovation
so as to remain competitive and to continue to
discover new drugs
• Many diseases and afflictions remain to be
conquered
– Foster dissemination of information for the benefit
of the world community
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28. QUESTIONS & FOLLOW UP
-Edward J Kelly – Managing Director
LGP Asia Co. Ltd
- ekelly@lgpatlaw.com
- 02 207 8690
- THANK YOU!!