Topics - Innovation

Intellectual Property Patents: The vehicle for innovation

The pharmaceutical industry has consistently invested in science, knowing that the fruits of R&D can add years to life, and life to years. In 2011 alone, the industry invested €27.5 billion in R&D in Europe. The intellectual property system, notably patents, provides key incentives for taking on the risks of researching and developing new medicines. The rewards of this system are new and better medicines that benefit patients, scientific progress and society as a whole.

As a consequence of a deeper understanding of the complexity of diseases, the potential of R&D has increased, but so has the difficulty and scale. Recent advances in science and technology have also contributed to the emergence of powerful new research tools, such as nanotechnology, pharmacogenomics, and combinatorial chemistry, which makes pharmaceutical innovation both more promising – and more challenging – than before.

The intellectual property system, and especially patents, is intended to give the investors who decide to take on such risks to develop new or improve existing drugs the possibility to recoup related costs, though without any certainty and only for a limited and legally defined period of time. Once recouped, the innovator can continue to break new ground, while the “old” medicine can be copied and continue to make a contribution to health and society.

How do patents work?

A patent is a legal right, which prevents others from benefiting from the patented invention without the patent owner's permission within a specific period of time. However, patents are not automatically granted. They are subject to expert scrutiny, generally from the European Patent Office (“EPO”) which assesses the patentability of the invention, ensuring it is new and non-obvious. The patent review process can last up to 44 months on average and just over half of patent applications pass examination and are finally granted. Even then, the patents are not necessarily secure since a patent may be challenged all along its lifetime, be it pending or already granted. In that respect, the ECJ has at several occasions recognized that it is in the public interest to eliminate any obstacle to economic activity which may arise where a patent was granted in error.

The legal lifetime of patent is 20 years from the application, of which around 10-12 years are needed to go through all stages up to market approval. In acknowledgement of the length of the R&D process in some instances, Europe also provides SPC’s which extend the period of exclusivity of a product covered by a patent.

While patents can be difficult and long to obtain, they have been shown to encourage innovation by creating strong incentives to invent first-class products that improve upon and differentiate themselves from previous products. This results in rewards for companies, but also in the continuous provisions of always improved products for patients over many generations.

The global dimension

The IP system is regulated at global level through treaties such as the TRIPS Agreement administered by the World Trade Organization (WTO) and other treaties under the regulatory body of WIPO (World Intellectual Property Organization). IP is a complex and evolving field and there has been much debated about new issues, such as the protection of commercially confidential information. There is also a vigorous debate over how IP contributes to development. While some have argued that developing countries face difficulties in IP systems, WIPO statutes have pointed to the steady growth in patent applications from emerging markets.

Patent expiration: "We have patents to stimulate development"

"We also face the fact that we have patents and when they expire we are not going to make any more money. We have patents to stimulate development and once they go off we should try and use low prices of generics as quickly as possible and as many as possible, as long as you reach the target for the patients. On that we don’t say enough from my industry, but we fully embrace that policy. The consequence of the patent expiring, is a patent cliff and loss of billions from one day to another."

Richard Bergstrom at the EFPIA Annual Lecture (2011)