UK R&D Scoreboard 2006 - GSK Lifts UK R&D, But Size Does Matter

The UK Department of Trade and Industry (DTI) has just released the figures for the 2006 R&D scoreboard.

The R&D Scoreboard 2006 provides information on the top 800 UK and top 1250 global companies based on R&D investment. The meaning of R&D for the Scoreboard is found in the UK in the Standard Statement of Accounting Practice (SSAP 13), which defines the concept based on the different definitions used by the Organisation for Economic Co-operation and Development (OECD) Frascati manual on expenditure for research and development. For global companies the International Accounting Standard (IAS 38) is used, also based on the Frascati manual.

The SSAP provides the definition of expenditure falling into one or more of the categories of pure or basic research, applied research, and development. The third category is particularly relevant to associated measurements of patent activity, in that it covers the "use of scientific or technical knowledge in order to produce new or substantially improved materials, devices, products ..."

72 UK companies made it into the Global 1250, with an increase in UK R&D expenditure (including 245 foreign owned companies) to £19.2bn (£17bn in 2005). This has been attributed to greater disclosure as well as an increase in R&D, which is particularly strong in pharmaceuticals in the UK. The previous decrease in UK 800 expenditure (1% decrease in 2005) has been replaced by an increase of 4% in 2006. GlaxoSmithKline (GSK) reported one of the larges, at £297million.

But others have criticised the increase as "distorted," pointing to the new accounting rule that insists on greater levels of disclosure in sectors not traditionally driven by or associated with R&D, such as banking. DTI senior industrialist and lead author of the report, Mike Tubbs (pictured right), in a report in The Independent, said "For the first time we had R&D from these companies. We knew they did R&D but we did not know it was that much." But a report in The Times suggests instead that "Britain is losing ground."

The Scoreboard for the Global 1250 shows that the pharmaceutical sector (along with software) is one of the fasting growing sectors with highest profitability. But it is second place in R&D, just behind technology hardware, putting 6 pharmaceutical companies in the top 20 (compared to none just 10 years ago). However, the number of patents granted per £10million is much lower than those for technology hardware and electronics.

The patent-to-R&D ratio for 12 sectors

According to the Scoreboard, around a quarter of the Global 1250 companies are mid-sized (sales of £50-500 million) with pharmaceutical companies making up 3/4 of these. Pharmaceuticals are the dominant sector in the UK, with the UK having the second largest proportion of pharmaceutical companies of all the top 7 R&D countries (with US having the greatest). Because the UK is particularly strong in pharmaceuticals, the report states that this explains why the UK does not have any companies in the top 20 for 2005 US patents.

Although the centenarian, GSK, is now the second-largest pharmaceutical company in the world (behind Pfizer), but a report in today's IP-Watch suggests that there is a distinct market advantage for small and medium-sized pharmaceuticals (SMEs) when it comes to neglected diseases and diseases in developing countries. Reporting on a seminar at the headquarters of the World Intellectual Property Organization (WIPO), co-organised with the Stockholm Network, IP-Watch notes the importance of "creative licensing deals" and cooperation with larger pharmaceutical companies. On patenting, Nikolaus Thumm, senior economic counsellor of the Swiss Federal Institute of Intellectual Property, told the meeting that there is a need to correct the "common misunderstanding" that the stronger the protection, the more innovation.

Free Public Workshop - London, 13 November 2006

Criminal Enforcement Directive

Let the Punishment Fit the Crime?

The Patenting Lives network will be conducting a free public workshop on the proposed European Directive on criminal measures aimed at ensuring the enforcement of intellectual property rights (Criminal Enforcement Directive).

The workshop will commence with a discussion by a panel of experts, looking at the possible implications of the Directive for patentable technologies and patent practice.

Expert Panellists

Gwilym Roberts, Partner, Kilburn & Strode Patent Attorneys

Julian Heathcote Hobbins, Senior Legal Counsel, FAST (Federation Against Software Theft)

Phillip Johnson, Barrister, DTI Legal Services, Legal Adviser to the UK Patent Office

(Chair Johanna Gibson)

The event will commence at 6pm, 13 November 2006, and will be held at the Centre for Commercial Law Studies (CCLS) in the QMIPRI Seminar Room, John Vane Science Centre, Charterhouse Square, Queen Mary University of London (map).

The workshop is FREE but numbers are limited, so please register by email to Johanna Gibson.

This is the first in a series of Patenting Lives public workshops on current issues in patent law. Stay tuned for more to come.

For more details on the Patenting Lives project and network, please visit patenting lives or the patenting lives blog

Competition Inquiry into Johnson / Pfizer Deals

The European Commission has commenced a competition inquiry into Johnson & Johnson's planned acquisition of Pfizer's consumer health interests.

The Commission's Competition Directorate will decide at the end of next month whether the sale can proceed or whether a full-scale investigation is warranted. If the latter route is taken, this will delay the process by a further 90 days.

The proposed deal was announced in June this year and will result in Johnson & Johnson having a substantial monopoly over consumer health products. Jonathan Todd, speaking for the Commission's Competition Directorate, was quoted in an article in The Times saying, "Our concern is whether or not there may be an adverse effect on consumers, pricing and competition."

Earlier this month it was reported that US anti-trust regulators forced Johnson & Johnson and Pfizer to agree to sell Zantac (to Boehringer-Ingelheim Pharmaceuticals, for US$509.5M), after there were concerns that this product overlapped with some Pfizer products.

Meanwhile, as reported in the Financial Times last week, Lloydspharmacy has asked the Office of Fair Trading (OFT) in the UK to investigate Pfizer's exclusive agreement with UniChem to act as a single distributor for its drugs in the UK. UniChem is part of Alliance Boots, which also runs the large rival pharmacy chain, Boots.

Pfizer claims that the deal is to control the supply chain in a fight against counterfeit drugs, but after the expiration of patent protection for several of its key sellers - including Zythromax (antibiotic), Diflucan (antifungal), and Zoloft (antidepressent) - the agreement seems to be equally about limiting competition from cheaper, generic versions. Other British pharmacies and drug distributors are concerned that this will lead to an anti-competitive monopoly, adversely affecting consumers with higher prices. According to a recent report in the Financial Times, Pfizer's drugs account for around 15% of the UK's £10.3 billion pharmaceutical market. Furthemore, pharmacies will be forced to use UniChem as the exclusive provider of Pfizer's branded drugs, leading to concerns that Pfizer will be able to control the discounts available to retailers as well.

James Harding, in an opinion piece in the The Times, suggests that public scrutiny will exonerate Pfizer, but he is correct to note that important questions being asked, "Is Pfizer just hyping up the counterfeits argument in order to cut out competition and take control of pricing?" and "Will UniChem provide as reliable a service to other pharmacies as it does to its own Boots stores?" In other words, the Pfizer-UniChem agreement will in effect control each level of the chain, right down to the deals with individual retailers themselves. By "taking a risk," Harding seems to think Pfizer is exonerated. But surely that is the nature of the entrepreneurial business models - taking risks pays much higher dividends. It is not clear that the risk of Pfizer grazing a knee if UniChem stumbles will be a sufficient check and balance against the potentially anti-competitive nature of this deal.

The British Association of Pharmaceutical Wholesalers (BAPW), the main trade body in the UK, is likely to make a similar complaint with the OFT. The Chairman of BAPW, Ian Brownlee, said to The Times, "With a single supplier the delivery system cannot ensure that pharmaceutical products are there in the dispensary when they are needed. Profit is being put before patient safety with a breathtaking arrogance." UniChem is one of its members.

EU Council Adopts EC Regulation on Paediatric Medicines

The Council of the European Union (EU) announced today that it has adopted the EC Regulation on medicinal products for paediatric use.

Today's press release states that the new Regulation aims to improve child health, as considered in more detail in earlier background material accompanying the original proposal. The Regulation sets out specific requirements for the authorisation and use of medicines in children, in response to a concern that around 50% of medicines used to treat children are in fact not tested or authorised on children. The improvement to the health of children in Europe is said to be likely to come from better research, development and authorisation of paediatric medicines. The new Regulation creates a new system through various strategies, which are stated as aimed at achieving better availability of paediatric medicines throughout the Community and removing obstacles to trade of medicinal products within the Community.

As well as dealing with the appropriate standards of research, clinical trial, and authorisation, the Regulation also looks to improve information on the use of paediatric medicines. Obligation in this area are to be accompanied by certain incentives created in the Regulation.

Of particular interest is the incentive with respect to medicines still protected by monopoly (patent or supplementary protection certificate (SPC)). The Regulation introduces new obligations to submit (as part of the procedure for market authorisation) results of clinical studies in accordance with a paediatric investigation plan or proof of a waiver where the medicines of no paediatric use. These obligations are accompanied by an incentive in the form of the extension of exclusive rights (an additional 6 months) on the basis that it takes longer to test and authorise paediatric medicines. In the case of SPCs, extensions are available only for products authorised in all Member States and for which marketing authorisation procedures are complete.

In the drafts leading to final text, discussions rejected proposals to exclude extensions for products that have already received the protection of data or market exclusivity for the same paediatric use in the EU. Similarly, the Commission rejected earlier drafts seeking to amend the proposed text to exclude an extension of the SPC for products that have already benefited from patent protection covering the paediatric use. The Commission claimed that such exclusions would compromise the policy objective of encouraging greater research into medicines for children. Nevertheless, in keeping with this rationale, importantly the extensions are available as an incentive only for research entered into after the new Regulation has entered into force.

However, in May this year, the European Court of Justice (ECJ) ruled out SPCs for new formulations of known active ingredients, in the Massachusetts Institute of Technology (C-431/04). This was despite an earlier opinion of the Advocate-General. The Court ruled: "Article 1(b) of the Regulation must be interpreted so as not to include in the concept of 'combination of active ingredients of a medicinal product' a combination of two substances, only one of which has therapeutic effects of its own for a specific indication, the other rendering possible a pharmaceutical form of the medicinal product which is necessary for the therapeutic efficacy of the first substance for that indication." This may limit the incentive in respect of extensions of SPCs for new uses (paediatric) of known products.

Regarding off-patent paediatric medicines, the Regulation introduces a new kind of marketing authorisation, referred to as the Paediatric Use Marketing Authorisation (PUMA). Such medicines must have been appropriately tested for paediatric use. The Regulation also includes provisions on the funding of research into the use of off-patent medicines for paediatric purposes.

Medicinal products for the treatment of serious diseases affecting fewer than 5 in 10 000 people in the Community are often referred to as "orphan drugs," because of their limited interest to the pharmaceutical industry. The Orphan Drug Regulation currently provides for 10 years market exclusivity, in order to provide incentives to bring such treatments to market, which the new Regulation is expected to extend to 12.

The Regulation also creates a new scientific committee, an expert committee within the European Medicines Agency (EMEA). This Committee will be primarily responsible for the assessment and agreement of paediatric investigation plans and waivers (described above).

The new Regulation amends 3 European instruments - Council Regulation (EEC) No 1768/92 creating supplementary protection certificate; Regulation (EC) No 726/2004 for authorisation and supervision of medicinal products for human and veterinary use (establishing the EMEA); and the Clinical Trials Directive 2001/20/EC. The original proposal text and amended text are available. The text of the adopted Regulation is likely to be published in the Official Journal in the next couple of weeks.

Novartis and the Challenge to Indian Patent Law - Global Pharmaceutical Policy

At the recent 23rd Assembly of the International Federation of Pharmaceutical Manufacturers & Associations (IFPMA), held in Geneva, it was announced that a new code of marketing ethics is to be launched next year, according to a report in IP-Watch. But current events possibly raise questions as to how effective any code might be in the face of what is sometimes described as the litigation "business model."

Presenting a keynote to the meeting, Mr Fred Hassan (pictured at right), Chairman and CEO of Schering-Plough and the new President of IFPMA, declared that IFPMA has made significant progress on marketing and clinical activities. He noted the voluntary guidelines developed and used in the US, and explained that implementation is now more important than strategies.

On clinical trials, Mr Hassan noted the IFPMA initiative in delivering public information. Earlier this year, IFPMA launched the second stage of the Clinical Trials Portal, developed with IBM. According to the background information provided by IFPMA, the aim of the service is to facilitate public access to pharmaceutical clinical trial data. The portal will operate as an internet search engine, allowing patients to locate information to clinical trials, both completed and in progress, and is sponsored by originator (as opposed to generic) pharmaceutical companies around the world. The portal searches the listings (registries) of on-going clinical trials and the results of completed clinical trials. IFPMA maintains that the presentation of results is "in a standard, non-promotional, summary format."

The 1st Stage of the Clinical Trials Portal was launched in September last year, but the Stage 2 upgrade allows greater functionality, including search criteria in French, German, Japanese, and Spanish, as well as the original English of Stage 1. The 2nd Stage also offers a more advanced search function as well as the use of the MedDRA and MeSH medical dictionaries to provide multilingual synonyms.

In his keynote, Mr Hassan importantly identified 4 significant obstacles to improving health care: "barriers to access," "barriers to innovation," regulatory systems, and the "barrier to openness, transparency and accountability." To overcome the first obstacle, Mr Hassan argued for improved access to health education and information as well as new interventions. On the latter, however, the critical obstacle was seen to be administrative, including that of regulatory delays (in the approval and registration of new drugs), and practices with respect to patent monopolies were not really addressed. Indeed, in comments on "barriers to innovation," intellectual property was described as "the engine of innovation." Mr Hassan argued that "only a handful of countries contribute the innovation that drives improved health care throughout the world. The US carries a disproportionate load." The new President looked to "Private entrepreneurship and risk-taking, in open markets" as the mechanism to improve innovation and resource allocation and said the "the protection of intellectual property" is "absolutely critical."

Indeed, earlier this year, in response to the first report of the World Health Organization (WHO) Commission on Intellectual Property Rights, Innovation and Public Health (CIPIH). The Report, entitled Public Health: Innovation and Intellectual Property Rights, generated a strong response from IFPMA, which expressed concern that the Report "surprisingly recommends that developing countries should make use of compulsory licensing," and criticised the Report as underestimating the role of patents. Ellen 't Hoen, from Medicins sans Frontieres (MSF) Access to Essential Medicines Campaign, however, welcomed the report. Writing in the WHO Bulletin, she described the report as presenting "a wealth of evidence and analysis in support of the view that the current system of drug development is fundamentally flawed and leaves huge health needs unmet."

Mr Hassan succeeds Dr Daniel Vasella (pictured left), Chairman and CEO of Novartis and IFPMA President 2004-2006.

Novartis has come under criticism lately, in its challenge to Indian patent law. Novartis had obtained exclusive marketing rights for 5 years for its cancer drug, Glivec (marketed as Gleevec in the US) a temporary monopoly until the Examiner submits a report on the invention (Patents Act, Chapter IVA). However, because it was decided that the invention was not an invention, the exclusive marketing rights were withdrawn. The application failed for lack of inventive step (obviousness) because it was a new form of a known substance. The refusal (analysed in an article by Manisha Singh Nair) was made on a number of grounds. But a substantial basis was provided by Section 3(d) of the Indian Patents Act, which provides that "the mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance" will not be sufficiently inventive to warrant patentability. In other words, India is refusing to allow Swiss-type claims.

Under the 2005 amendments to Indian patent law (to become TRIPS compliant), every application for exclusive marketing rights is treated as a request for examination. Further, any person or group may now file a pre-grant opposition. In this case, the Cancer Patients Aid Association and several generic pharmaceuticals (including Natco) did so in the Chennai patent office, on behalf of cancer patients.

In response, Novartis filed in May 2006, claiming that Indian patent law is unconstitutional and also contravenes international trade rules, taking the complaint to the Madras High Court, which sits in Chennai. A press officer from Novartis, speaking to IP-Watch, described the action as evidence of "Novartis' strong commitment to defending international intellectual property standards and its right to obtain patents for its innovative compounds under the World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)." Daniel Vasella also spoke to IP-Watch, saying that the litigation was "a question of principle," and that unless Novartis pursues this it "would undermine the whole system."

According to Reuters, Novartis is claiming that Section 3(d) is not TRIPS-compliant. However, Article 27(1) of TRIPS arguably does not go so far as to mandate the protection of new use, or to define what a country must protect as an invention. It simply says, "all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application." The exclusions relate to subject matter (methods, plants and animals) and such exclusions are included in the European Patent Convention (EPC), Article 52. On the other hand, a Swiss-type claim is a known product. It could be argued that this therefore forms the state of the art, and therefore Swiss type claims may be refused by countries on the basis that they are not new. Indeed, Swiss type claims are dealt with under Section 2(6) of the UK Patents Act 1977, further indicating that they are a matter of novelty. The Indian Act, however, excludes "new use of a known substance" in Section 3, "What Are Not Inventions."

The Berne Declaration (BD), a Swiss non-governmental organisation, has made a statement that section 3(d) is in compliance with TRIPS. Further, BD states that each member is entitled to introduce a patent regime compatible with its socio-economic context provided they are compliant with the minimum standards of TRIPS (Art 8), a view supported by the 2001 Doha Declaration on TRIPS and Public Health (Doha). The BD cites the WHO CIPIH Report as supporting this view. On page 34, the report states: "countries may devise their patent systems to seek teh best balance, in their own circumstances, between benefits and costs. Thus developing countries may determine in their own ways the definition of an invention, the criteria for judging patentability ... provided these are consistent with the relevant articles of TRIPS." Further, the report importantly states that, "Under TRIPS they may also exempt from patentability ... new indications of known products which amount to a therapeutic method."

Ellen 't Hoen said to IP-Watch, "This has South Africa written all over it" and has said in an MSF press release, "If Novartis' challenge against the Inidan patent law is successful, a key safeguard that can protect the production of affordable medicines will be lost." As the Times of India has reported, the cost of one month's supply of Glivec is Rs 1.10 lakh (Rs 110 000), whereas a generic equivalent is available for Rs 1100.

Civil society organisations in Switzerland, led by BD, have sent an open letter to Mr Vasella, in which 22 organisations and personalities demanded the withdrawal of the legal action. Those endorsing the letter includeed MSF Suisse, medicuba, Association of European Cancer Leagues (ECL), CO-OPERAID, and, in a private capacity, Mrs Ruth Dreifuss, former Swiss cabinet minister and Chairperson of the CIPIH, WHO. But in response to the letter, John Gilardi of Novartis has told swissinfo that "It's important that we applaud the efforts India has made to improve its intellectual property protection, but this is about ensuring that a patent for Glivec, which is recognised in over 40 countries, is also recognised in India." According to the article, Mr Gilardi claimed that Indian patent law clearly exceeded the flexibilities available. Along the lines of Mr Hassan's statement that intellectual property laws are the "engine of innovation," Mr Gilardi told swissinfo "Without a reward for innovation, there will be no innovation."

The IFPMA meeting also included a keynote presentation by Pascal Lamy Director-General of the World Trade Organization (WTO) (pictured at left, speaking at the 6th Ministerial Conference, Hong Kong, NGOs Roundtable Forum). Mr Lamy has recently spoken on the "bilateral disease" of free trade agreements, and the EU's troubling emphasis on bilateral deals. In his address to IFPMA, Mr Lamy said "I am convinced that there is no acceptable alternative to completing the Doha Round." As recently reported in the Financial Times (12 Oct, "WTO head flags trade rules"), Mr Lamy told the meeting that the WTO had not received a single notification of a developing country issuing a compulsory licence, suggesting that the current flexibilities are too complex to be used in practice. "To be frank," he said, "I see that as a problem."

The WHO CIPIH Report has also noted the "emerging development" of the "growning number of bilateral and free trade agreements which include higher standards of protection that erode these flexibilities" considered earlier. And even EU business is wary of bilaterals. Speaking at UNICE, Michael Treschow, President of the Confederation of Swedish Enterprise, recently told the Financial Times (18 Oct, "Ericsson chief warns EU") that "It is not countries that do business with countries but companies that do business with companies." Peter Mandelson, European Commissioner for External Trade, defended bilaterals and rejected stories of his "clash" with Africa-Caribbean-Pacific (ACP) countries in an address to the European Socialist Party Conference on Economic Partnership Agreements, last Thursday. This is despite recent press that ACP countries will reject trade deals with the EU. In an article in FT Europe, Dame Billie Miller (pictured at right) Barbados trade negotiator, criticised Mr Mandelson's emphasis "economic partnership agreements" as pure trade negotiations. She said, "For us the development dimension is critical. We made our concerns known but the Commission has continued to talk the talk."

Pascal Lamy hosted an online chat last Wednesday, attracting around 150 questions on the Doha Round and the future of the WTO. The many questions in the transcript include discussions on multiculturalism in trade, life patents, controls on bilateral agreements, and the future of the Doha Round.

Lamy Warns Against Bilateral "Disease"

Pascal Lamy has warned that bilateral and regional talks may be an obstacle to a resumption of the Doha Round of negotiations.

Speaking yesterday at "Why Do Companies Care About Europe," organised by the Confederation of European Business (UNICE), the Director-General of the World Trade Organization (WTO) warned that the increased emphasis on regional negotiations and bilateral trade agreements may undermine attempts to resume multilateral negotiations. In an Associated Press report, Lamy is quoted as warning, "All efforts (should be) on getting a multilateral deal. In the case of a failure, the poorest will be hit hardest."

In an address to the International Trade Committee of the European Parliament yesterday, Lamy said that the WTO would try to put more pressure on countries pushing such policies, to re-start the negotiations. Such countries include the US, Australia, Japan, India, Brazil, and of course, the EU. As a report today says, "Mandelson's bilateral plans will harm poor." In his speech, Lamy said that the failure of the trade talks would be like "a slowly developing disease that would progressively sap the strength of the multilateral trading system built up over the past 50 years, damaging its economic lungs, its political heart, and its systemic bone structure."

Lamy will be hosting an online chat today, 16.30-17.30 Geneva time - WTO in Crisis: Which Way Forward?

EU Trade Pacts - UK Calls for Attention to Development

According to a report today in the Financial Times, UK ministers have written to the European Commissioners for Trade and Development urging greater consideration of development issues when pursuing trade pacts with developing countries, ahead of today's trade meeting in Luxembourg. This comes when India and the EU agreed last week to work towards a new bilateral trade and investment deal by 2009.

In an open letter to Louis Michel, EU Commissioner for Development, and Peter Mandelson, EU Commissioner for Trade, the two ministers - Ian McCartney, UK Trade Minister, and Gareth Thomas, Development Minister - have said, "We are concerned about the current state of the negotiations and want to see these agreements deliver real benefits to ACP [Africa, Caribbean and Pacific] countries."

In particular, as seen in yesterday's post, free trade agreements are being criticised as merely obliging developing economies to accept foreign competition and intellectual property laws in ways that may be detrimental to domestic policies and to economic development. Similar issues are raised in the UK letter to the Commission, revitalising the "Singapore Issues" that have been marginalised in international trade talks. The so-called "Singapore Issues" have been seemingly insoluble due to disagreements over vital development concerns, particularly at the World Trade Organization (WTO) 5th Ministerial Conference in Cancun, 2003. Development remained on the agenda at the 6th Ministerial Conference in Hong Kong, 2005, but since the recent collapse of the Doha Round, development issues are increasingly vulnerable to being silenced through bilateral agreements.

In a recent speech at the London School of Economics and Political Science (LSE), Peter Mandelson said that the EU remains committed to sensitive and "deep" free trade agreements. And in a comment in India's Financial Express, Mandelson reiterates his commitment to the "sensitive issues," saying that the EU-India agreement "would have to be deep and substantive ... We also need to improve the enforcement of rules on the protection of intellectual property rights."

But an article in today's Guardian newspaper, suggests that such agreements may not necessarily be sensitive to development. In the article, Angela Balakrishnan refers to the Commission letter leaked last May, which revealed pressure from Peter Mandelson on the UK Prime Minister, Tony Blair, "to take a more moderate line in Britain's pro-poor country approach to trade liberalisation." As Balakrishnan notes, the Commission accused the UK government of being influenced by celebrities and non-governmental organisations (NGO) in its policies.


Or perhaps it's just a campaign of distraction.

FTAs - A Threat to Public Health

Representative Henry Waxman and Senator Edward Kennedy have requested the Government Accountability Office (GAO) to investigate the impact of trade negotiations and policy on public health and access to medicines in developing countries.

In a press release, the request for an investigation of the Administration's trade negotiations is called for in the context of the "negative effects on developing countries' access to medicines." Referring to the Trade Act of 2002 (US Trade Promotion Authority Act), which obliges the government to respect and promote public health in all countries as part of US trade practices and policy. The Trade Act of 2002 grants the US President authority to negotiate bilateral trade deals with other countries, the approval of which is streamlined (fast track authority) with Congress unable to amend such agreements, merely to approve or reject. Such fast track authority was used in Uruguay Round of negotiations leading to the establishment of the World Trade Organization (WTO) and the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). Renewed in 2002, the fast track authority will expire in July next year unless extended by Congress.

The letter to the Comptroller General of the GAO refers to the three objectives dealing with intellectual property in the Trade Act of 2002 - IP protection, market access, and public health - and argues that, taken together, these outline the "clear vision for trade negotiations related to intellectual property." Further, "we would like to learn to what extent the third objective, to respect the Doha Declaration on TRIPS and Public Health, has been pursued."

The letter to the Secretary of Health and Human Services, US Department of Health and Human Services, refers specifically to a letter from William R Steiger (pictured at right), HHS Special Assistance for International Affairs, sent to the Acting Director General of the World Health Organization (WHO) insisting upon the withdrawal of the study, "The Use of Flexibilities in TRIPS by Developing Countries: Can They Promote Access to Medicines?" The study, prepared by Sisule Musungu of South Centre and Cecilia Oh of the WHO, criticises the impact of US trade policy on international public health and access to medicines.

The action by the two politicians comes at the same time that the Thai Network of People Living with HIV/AIDS (International HIV/AIDS Alliance Thailand) is campaigning against the Thai-US free trade agreement (FTA) in the US. The campaign was launched earlier this month and will continue until 29 October throughout major US cities. In a recent report in the Bangkok newspaper, "The Nation," Nimit Tienudom, Director of the AIDS Access Foundation described the campaign as informing US citizens about the impact of US trade policy on access to HIV/AIDS treatments. In an earlier article in the same newspaper, Tienudom criticised the Thai-US FTA: "Under the current law and trade agreements we have, there still are ways out such as the compulsory licensing measures ... If we accept the FTA, all doors will be shut."

These are concerns not only in agreements with developing countries, but also in those with countries like Australia. The Australia-US FTA (AUSFTA) has been criticised widely, particularly in the US objection to Australian health policy as a barrier to trade. The Pharmaceutical Benefits Scheme (PBS) is the specific focus of that objection (and is the subject matter of a side letter to the AUSFTA). As a result, public health and medicines were major aspects of the negotiations and of the campaigns both for and against the AUSFTA. Significantly, the imposition of the US economic model in this area of domestic policy was seen seriously undermining government capacity and democratic principles in Australia. Annex 2-C (Pharmaceuticals) to Chapter 2 (National Treatment and Market Access for Goods) establishes a joint Medicines Working Group, which many commentators have criticised as introducing US-style pricing for medicines and undermining public health policies of affordable medicines. Further, Article 17.10 (Measures Related to Certain Regulated Products) and mandating of 5 years data exclusivity may delay access to affordable generic versions of brand-name drugs.

FTAs have also been criticised for rendering traditional and indigenous knowledge increasingly vulnerable to appropriation through the intellectual property protection of the bioprospecting activities of pharmaceutical companies. In particular, the DR-CAFTA has been described in the Latinamerica Press as paving the way for biopiracy, having "opened the door to foreign ownership of the right to exploit the region's abundant and diverse tropical flora."

The international network, bilaterals.org, has just published its very useful background paper, "Overview of Bilateral Free Trade and Investment Agreements." The paper was prepared for the FTA Watch "Fighting FTAs" international strategy workship, held in Bangkok in July this year.

Biologics - What's in a Name?

The World Health Organization (WHO) Expert Committee on Biological Standardization will meet at the end of this month in Geneva and will consider, among other issues, whether generic biotech drugs can carry the same clinical name or nonproprietary name as the brand-name drugs. Biotech drugs - also known as biologics or biopharmaceuticals - are some of the most expensive products on the market and form part of the arsenal against HIV/AIDS, cancer, and diabetes.

The WHO has established Guidelines on the Use of International Nonproprietary Names (INN) for Pharmaceutical Products, The WHO Programme on INN released a Review in June this year, which noted that INNs have not been assigned to blood biologicals and immunoglobulins, but have been used for some fusion proteins, gene therapy products, and transgenics. Skin substitutes are considered outside the system and vaccines are also currently not included in the system. However, the Expert Committee on Biological Standardization has made recommendations resulting in the assigning of some names.

In a recent report in The Independent, Danny Fortson describes political pressure for large-scale production of generic biotechnology drugs as a "fresh financial threat" to the pharmaceutical industry. But many commentators are concerned that this perceived "threat" is really simply an anxiety over protecting de facto monopolies in biological medicines. Such political pressure in the US comes recently from a new US Bill, aiming to improve access to lower cost drugs in the important area of pharmaceutical development.

US politicians, Representative Henry Waxman (of the Hatch-Waxman Act, establishing a system for generic drug approval in the US), and Senators Charles E Schumer and Hilary Clinton, have introduced the new bill, known as the "Access to Life-Saving Medicines Act." The aim is to establish procedures to facilitate approval of generic versions of biotech drugs. The press release notes the absence of statutory procedures for biotech drugs, leading to the potential problem of indefinite monopoly pricing, despite the expiration of patent protection.

The Bill has been strongly supported by the Generic Pharmaceutical Association (GPhA), which has stated "Introducing competition into the biopharmaceutical field would also yield tremendous cost savings for consumers ... We applaud Rep. Waxman and Senator Schumer for their true leadership."

Meanwhile, industry associations have maintained their objections, arguing that complex biopharmaceuticals cannot be copied in ways similar to traditional medicines, and so the application of traditional approval routes will not be appropriate. For instance, the VFAbio (Biotechnology within the German Association of Research-Based Pharmaceutical Companies) has urged that "such generics cannot exist."

In January 2006 the European Medicines Agency (EMEA) adopted its first positive opinion for a biosimilar, when it declared Omnitrope (Novartis) to be comparable to Genotropin (Pfizer), for which market authorisation was granted by the Commission in April (Omnitrope was later approved by the Food and Drug Administration (FDA)). In April the EU finalised its policy and legal framework for biosimilars when the EMEA adopted guidelines on the approval process for similar biological medicines.

However, the consultation on the draft guidelines attracted similar arguments, with the European Association for Bioindustries (EuropaBio) in its submission arguing that the application of the term "comparability" (from traditional manufacturing processes) to the biotech medicinal product is inappropriate. Similarly, the submission of Emerging Biopharmaceutical Enterprises (EBE) (European Biopharmaceutical Enterprises) emphasised that "Because no two cells are exactly alike, each biological medicinal product is distinct and cannot be copied exactly by a different company," while the Biotechnology Industry Organization (BIO) noted in its comments that "in important respects all protein products are unique, that each must be treated as such, and that tests performed by an innovator to demonstrate quality, safety and efficacy of its own product may not be relevant to a claimed-similar product." But Greg Perry, Director General of the European Generic Medicines Association (EGA) stated at the Biosimilars conference in London, that "The current level of biological science and recently enacted pharmaceutical legislation in Europe mean that the next generation of affordable medicines is no longer a distant dream, but rather a soon to be realised reality."

The EGA will be holding the 5th Annual Symposium on Biosimilars, "Biosimilar Medicines: Off the Starting Blocks," in London, May 2007. More details will be available early next year.

Lamy Speech to IFPMA - Public Health is a Trade Issue

This week, the Director-General of the World Trade Organization (WTO) praised efforts to improve access to medicines in developing countries, in his address to the International Federation of Pharmaceutical Manufacturers and Associations (IFPMA).

The Director-General, Pascal Lamy, delivered a keynote speech to the 23rd Meeting of IFPMA in Geneva, Wednesday night, in which he said "trade can work to improve health conditions which we know is essential to economic and social development."

A couple of months ago, IFPMA took part in a Geneva Forum, "Towards Global Access to Health," although the IFPMA participation was concerned largely with counterfeits as a health threat. Others may argue that this is more an issue of the "trade threat," and one which has been used strategically to control the entry of less expensive imports into certain markets.

The World Health Organization (WHO) defines a counterfeit drug as a one which is "deliberately and fraudulently mislabeled with respect to identity and/or source." However, consumer groups and other civil society actors have raised concerns that industry is using the "menace" of counterfeit drugs as a means by which to hinder the import of cheaper medicines. For instance, in the Philippines, Republic Act 8203 has been criticised for codifying such obstacles in response to intense lobbying. Recently, attorney Elpidio Peria has recommended amending the law to remove the clause, "an unregistered imported drug product," from the definition of counterfeit drug in the law.

Recognising the problem of the variable definition of counterfeit drug, WHO recommends a uniform definition of counterfeit drug as an essential part of effective exchange of information on these issues as well as appropriate and meaningful responses to public health.

WTO - Update on Article 31bis

The World Trade Organization (WTO) has just updated its information on intellectual property and public health to provide more information on the 2005 decision to amend the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS).

WTO members approved an amendment to TRIPS, 6 December 2005, putting in place the 2003 decision on patents and public health, sometimes referred to as the waiver on public health. The 2003 decision aimed to facilitate access of developing countries to cheaper generic medicines, particularly in circumstances where the country lacks the infrastructure to produce the medicines itself under a compulsory licence. However, it has been criticised as too administratively complex and burdensome to be a truly effective means to remove obstacles to access.

The new provision, Article 31bis, will be formally in force when a minimum of 2/3 of WTO members ratify the change. The deadline of 1 December 2007 has been set in order to achieve this, until which time the waiver continues to be in force.

The WTO has set up a page recording countries that have accepted the amendment. To date, only 2% of countries have ratified the change (3 countries out of a possible 149). These are the United States (a matter of days after 6 December), Switzerland, and El Salvador (both in September this year).

Patent Filings = Innovation? Audi's Advertising Agency Thinks So

(Also posted on Patenting Lives blog)

Not quite directly related to concerns of intellectual property aspects of medicine, but certainly concerned with patent law, and so interesting I could not resist blogging it. The latest Audi commercial features "patent filings" as a slogan. The campaign hinges on a link between filings (not even granted patents, but just filings) and prestige and innovation.

It's the latest campaign for the Audi A6, entitled "A6: Patent No VOR5PRU7NGDUR6CHT3CHN1K" (catchy, yes?). The advertisement features a man and his dog walking along a deserted country road in the middle of the night. He hears a sound in the sky and looks to the stars, a fast-moving object speeds through the sky, interspersed with quick images of patent specification documents. The advertisement reaches the climax slogan, "To date, NASA has filed 6509 patents. In development the A6, Audi filed 9621" ... as an A6, after orbiting the earth, plunges out of the sky and into the ocean.

Now that's compelling advertising.

A Market in Transplants

An Associate Professor from the Yale University School of Medicine has recommended payments for living organ donations.

Amy Friedman (Organ Transplantation and Immunology) advocates a regulated system for the payment of organ donors in a recent article, published in the British Medical Journal (BMJ). Friedman suggests that there are tangible benfits of living donor transplantations not only for the recipient but also their family members, and hospital staff (in their ability to "fulfil" the tasks of their employment), and ultimately taxpayers (otherwise obliged to support various treatments required without transplantation, such as dialysis). Arguing for this kind of economy for transplantation, Professor Friedman notes that living donors are nevertheless prohibited from receiving valuable consideration for their gift. However, if a living donor subsequently requires a transplant, then they will receive a kind of "tangible benefit" in that they are moved to the top of waiting lists for organs from deceased donors.

Friedman argues that this moral recognition of a reward suggests the basis for other types of reward, including monetary. On this point, she raises the legality of payment in the US for donations of other bodily material, including blood, sperm, and eggs, as well as legalised mechanisms for the "use of the intact, functional body" in surrogate pregnancy and prostitution in order to derive a kind of societal benefit.

In this area, payment to research volunteers is especially relevant when considering the "risk" in the relationship. Particularly in the context of the recent controversy in the UK regarding the Northwick Park drug trials, the adequacy of information and the validity of the consent to participate raises important questions. The information provided to volunteers is critically important to the individual calculation of the risk assumed by those volunteers.

Friedman concludes that the establishment of a regulatory system of payment would improve the equitable access of recipients to donor organs, and would not simply exploit the needy. Rather, it would bring "black economies" and unregulated activities, such as those recently reported in China, "out of the closet."

Friedman suggests, "If military service can be recognised with inducements such as paid education, enlistment bonuses, and financial recovery for injury or mortality, why should the decision to donate an organ be viewed any differently?"

Data Exclusivity Concerns in India

Data exclusivity measures are raising concerns in India. Following lobbying from multinational pharmaceutical companies, it has been reported by Sarah Hiddleston in The Hindu newspaper that the Indian government is expected to amend drug registration laws to bring in data exclusivity provisions, without public debate.

An interministerial committee, convened by Ms Satwant Reddy (Secretary, Department of Chemicals and Petrochemicals) is expected to recommend the protection for data for 5 years in a report due to be released in the next 2 weeks. This will lead to a draft bill amending the Drugs and Cosmetics Act to provide for the new measures.

Article 39.3 of the World Trade Organization (WTO) Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) relates to "Protection of Undisclosed Information" and obliges member states to provide protection for undisclosed test and other data against unfair commercial use. Pharmaceutical companies have lobbied against the checking of generic competitors against originator's clinical data, arguing that this amounts to "unfair commercial use." This kind of reasoning has been rejected by many groups, contending that the provision relates to anti-competitive conduct and industrial espionage, and should not be interpreted as a provision for the creation of further exclusive rights.

According to The Hindu report, representatives from the the Department of Health, the Department of Economic Affairs and the Indian Council of Medical Research (ICMR) are also opposed to data exclusivity measures.

The Department of Industrial Policy and Promotion has responded with the suggestion of seven safeguards, but at least 3 have been criticised as failing to address the issues. In particular, the problem has been described as being exacerbated by the attempt to integrate two different systems and functions - legal and regulatory. As Senior BJP Leader, Murli Manohar Joshi (pictured at left), argued earlier this year, the government must take account of the World Health Organization (WHO) recommendations to maintain the separation between intellectual property rights and drug regulation. In other words, linking patent protection to what are basically questions of market and regulatory approval is creating significant obstacles to public health and greater expectations as to exclusive rights. On this issue, Hiddleston describes this as an "administratively difficult and ethically questionable" link between drug registration and patent protection. Further, it links regulatory systems to technical expertise on the validity of the patent itself.

Hiddleston suggests that appeals to the national interest will be made to justify the new measures, but as she says, "It also says much about where the government's priorities lie."

CAFTA - Dominican Pharma Criticises US Demands

The US requirements in the area of pharmaceuticals in the Central American Free Trade Agreement (CAFTA) have been described as "abusive demands" by the Dominican Association of Pharmaceutical Industries (INFADOMI).

In an earlier post, FTAs and Public Health, it was reported that negotiations had been delayed over issues regarding data exclusivity and the new pharmaceutical products. In an article in Dominican Today, the changes to the definition of "new product" are a threat to local industry and are in addition to those already specified in the document. This is despite an earlier story, where Hans Hertell (at left), Ambassador to the US, suggested that the impasse over pharmaceuticals and free trade was close to being resolved, and that there would be no further requirements in addition to the original requirements for implementation.

USPTO to Reexamine 3 Stem Cell Patents

A request to the United States Patent and Trademark Office (USPTO) to reexamine 3 patents relating to stem cell technology has been granted.

The requests came from California-based consumer group, Foundation Taxpayer and Consumer Rights (FCTR), and were filed in July on the Foundation's behalf by the Public Patent Foundation (PUBPAT).

The patents are owned by the Wisconsin Alumni Research Foundation (WARF) whose researchers include James Thomson (pictured at left), who led the team which, in 1998, made the first successful isolation of human embryonic stem cells. Thomson later founded Cellular Dynamics International (CDI), a private biotechnology company based in Madison, Wisconsin. Last year, the State of Wisconsin granted CDI a US$1M Technology Development Grant and a US$1M Technology Development Loan.

The 3 patents in question are US Patent 5,843,780 (780 communication); 6, 200, 806 (806 communication); and 7, 029, 913 (communication forthcoming). The requests from FCTR were accompanied by the declaration of Jeanne F Loring, Adjunct Associate Professor at the Burnham Institute, and include references to prior art not considered at the time the patent was granted. This raises a "substantial new question" (SNQ) of patentability and grounds for a complete reexamination of the patent claims on the basis of prior art.

The requests also included reference to public harm, but the USPTO communication is clear that this is beyond the scope of reexamination. Nevertheless, John M Simpson, Stem Cell Project Director of FTCR, has welcomed the announcement and condemned WARF's patent policy, described in the press release as "WARF's aggressive assertion of patents." Simpson claims that WARF has "a history of putting profits before public benefit." An earlier press release quotes the Juvenile Diabetes Research Association (JDRF) as saying that WARF patents pose a "major inhibition to productive scientific research."

Should WARF really have a monopoly on the toolbox?

FTAs and Public Health

The US and Dominican Republic have just missed the 1 October deadline for implementing the Central American Free Trade Agreement (CAFTA). US officials have rejected the most recent draft of the Dominican Republic implementation of the Agreement, on the grounds that the patent laws are insufficient.

Judit Rius Sanjuan, Staff Attorney for the Consumer Project on Technology (CPTech) has reported that according to government and private sector sources, more time is needed to negotiate issues on pharmaceutical patents (as well as other concerns, such as textile rules of origin). An informal extension to 1 November is now believed to be in place, although this is also unlikely to be met.

One of the areas of negotiation in the CAFTA is the protection to be provided by the Dominican Republic for data generated by drug originators for the purposes of marketing approval. Such data indicates the efficacy and safety of the drug, and is important for determining equivalence for generics subsequently entering the market. However, the protection would protect the data under "data exclusivity" provisions in the Agreement. Without marketing approval, a drug cannot enter the market (time on the market therefore running "against the clock" of the patent protection). The CAFTA requires participants to provide 5 years of data exclusivity from the date a pharmaceutical product is submitted for marketing approval (for agricultural chemicals, the period is even longer, at 10 years). These provisions would give originators somewhat extended protection against generics over and above that provided by patent protection, in what is arguably anti-competitive and contrary to innovation in drug development.

Another concern in the agreement is the relationship between patents and marketing approvals. In response to issues surrounding the implementation of the Agreement in Chile, the Pharmaceutical Research and Manufacturers of America (PhRMA) has argued that Chile is giving marketing approval to drugs that are copies of products still under patent. As a result, the United States Trade Representative (USTR) has commenced a Special 301 Out-of-Cycle Review of Chile to monitor its progress on intellectual property protection, citing as a major concern ongoing issues around data exclusivity and the protection of test data submitted by pharmaceutical companies during the approval process.

A recent debate in the Financial Times raises concerns about the impact of free trade deals on competition in the generic drugs market. The article, "Patent or patient?" by Alan Beattie, Andrew Jack, and Amy Kazmin, describes the congressional mandate and "fast-track" trade promotion authority behind "a US drive to strengthen patent enforcement and intellectual property rights protection around the world - a campaign backed by some of the powerful drugs companies." Noting the opposition from public health specialists, campaigners, and developing countries, the article questions the argument that patent protection will bolster innovation.

The authors consider the bilateral negotiations with Thailand and the similar requirements on data exclusivity in the Thailand agreement. In the article, the Deputy Director of Research and Development at Thailand's Government Pharmaceutical Organisation (GPO), Achara Eksaengsri, thinks the bilateral terms would have a highly detrimental impact on public health, particularly in treating HIV/AIDS.

Also in the article, Pedro Chequer, former head of Brazil's national AIDS programme, describes "intense lobbying" and "threats of direct retaliation" when Brazil declared it would issue a compulsory licence to produce Kaletra, a second-line AIDS treatment. Bilateral negotiations may weaken these flexibilities current available.

In a letter to the FT, responding to the article, Kathleen Jaeger, President and CEO of the Generic Pharmaceutical Association (GPhA), says, "The FTAs are establishing a lopsided global system of pharmaceutical IP rights." She goes on to say that this limits generic competition not only overseas, but also in the United States: "The USTR must not leave our healthcare system vulnerable to prolonged brand drug monopolies."

Meanwhile, in Europe, Peter Mandelson, Commissioner for External Trade, has rejected the proposal from Angela Merkel, German Chancellor, for a free-trade area between the EU and the United States. Mandelson argued that such a deal would "trigger an outcry" from the rest of the world.

Brazil Draft Resolution on Access to Medication

Brazil tabled a draft resolution on access to medication today, at the Human Rights Council (HRC) in Geneva.

The newly established HRC is currently meeting in Geneva for its second session, 18 September to 6 October.

The resolution "requests the Secretary-General, based on consultations with Governments, United Nations organs, programmes, specialized agencies and international and non-governmental organizations, to conduct a study on the possible impacts of intellectual property rights on the access to medication," particularly in areas of extreme emergency, including HIV/AIDS, malaria, and tuberculosis. It is proposed that the results of the study would be presented as a report to the HRC at its 4th session.

Importantly, the resolution looks to the exploration of "new and innovative financing mechanisms," arguably relevant not only in the research and development of new medicines but also in the transfer of technology and the improvements to infrastructure and facilities in developing economies. On this point, the recent WHO report is evidence of the necessity to develop new frameworks for R & D and transfer. And a recent article in PLoS Medicine, by Michael Westerhaus and Arachu Castro, suggests that the WTO rules to improve global publich health have really achieved little change in the area of HIV/AIDS.

The HRC is set to consider the resolution this afternoon.

Thanks to Hossam Bahgat, Egyptian Initiative for Personal Rights (EIPR), for this information from Geneva.

WHO Plans Public Health Consultations

The World Health Organization (WHO) is holding public consultations with stakeholders on global public health and intellectual property, and will stage the first meeting of the intergovernmental working group in early December.

In September, WHO established a secretariat on Public Health, Innovation, Essential Health Research and Intellectual Property to convene and facilitate an intergovernmental working group. The working group was requested by Member States in a Resolution adopted at the World Health Assembly (WHA) in May this year.

In a report in IP Watch, Tove Iren S Gerhardsen has spoken with Elil Renganathan, operational head of the project. Renganathan suggests that the December meeting will be like a "mini-World Health Assembly." The first consultations are planned for November, and will include non-governmental organisations (NGOs), academics, experts, and the members of the public.

In 2003, WHO set up the Commission on Intellectual Property Rights, Innovation and Public Health (CIPIH), "Against the background of an ongoing international debate concerning the
relationship between intellectual property rights, innovation and public health, in
international organizations and more generally among governments and civil society
organizations" (CIPIH Report). In April this year, the CIPIH published the report, Public Health, Innovation and Intellectual Property Rights, analysing the interaction between these 3 critical areas. The report was considered by the intergovernmental working group of WHO's Executive Board, 28 April, and then by all member states (192 countries) at the 59th WHA, 22-27 May 2006.

At the 59th WHA, the Resolution on Public health, innovation, essential health research and intellectual property rights: towards a global strategy and plan of action, was adopted. The Resolution called for the establishment of the intergovernmental working group in order to devise a global strategy and plan of action. The intergovernmental working group and secretariat are to respond to the recommendations of the WHO Report.

The details of the meeting are likely to be announced by WHO mid to late October. IPmed will report the details.