2010 Update: MoPH Policy on Compulsory License for Patented Medicines

By

Edward J. KellyManaging Director LGP Asia Co Ltd

18 November 2010

1

PHARMA LAW 2010 Update Thailand

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

2 COMPULSORY LICENSE

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

3

IP Ecosystem or Value Chain

4

MANAGE

CREATE

PROTECT

COMPETITIVE COMPETITIVE ADVANTAGEADVANTAGE

PROFITPROFIT

GROWTHGROWTH

1

2

3

4

EXPLOIT

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

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 . . .

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

GPO For Profit Enterprise

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 imposed Common Element of every CL ever imposed or threatened by others :or threatened by others :

• The temporal element: NO TIMEThe temporal element: NO TIME

10

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

11

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

12

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

13

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

14

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

15

16

Political Pressure from Trade Partners

Payment of Royalty

Low price is not the only consideration

Safety Efficacy Supply chain distribution Run out of stock

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?

19

Quality Differentiation of Clopidogrel Product2004 Publication

20

Questions of Quality

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

21

Equivalence

Therapeutic equivalent

Bio-equivalent

Chemical equivalent

22

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 Product2004 Publication

23

Quality Issues

Quality differentiation of docetaxel product

Vial J, et al., Quality of docetaxel generics versus Taxotere: A comparative study. Poster RDPA 2007.

24

Conclusion: Quality differentiation of docetaxel products

“This comprehensive study indicates that a noteworthy proportion of generic docetaxel formulations are of poor quality with insufficient quantity of active drug in each vial, potentially impacting both efficacy and safety”

Vial J, et al., Quality of docetaxel generics versus Taxotere: A comparative study. Poster RDPA 2007. 2

5

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

26

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

27

QUESTIONS & FOLLOW UP

-Edward J Kelly – Managing DirectorLGP Asia Co. Ltd

- ekelly@lgpatlaw.com

- 02 207 8690

- THANK YOU!!