Patenting Strategies of the EU Pharmaceutical Industry -Crossroad between Patent Law and Competition Policy. Research Papers in Law, 1/2011

From the Introduction. The pharmaceutical sector inquiry carried out by the European Commission in 2008 provides a useful framework for assessing the relationship between the patent system on the one hand and competition policy and law on the other hand. The pharmaceutical market is not only specifically regulated. It is also influenced by the special characteristics of the patent system which enables pharmaceutical companies engaged in research activities to enter into additional arrangements to cope with the competitive pressures of early patent application and the delays in drug approval. Patents appear difficult to reconcile with the need for sufficient and adequate access to medicines, which is why competition expectations imposed on the pharmaceutical sector are very high. The patent system and competition law are interacting components of the market, into which they must both be integrated. This can result in competition law taking a very strict view on the pharmaceutical industry by establishing strict functional performance standards for the reliance on intellectual property rights protection granted by patent law. This is in particular because in this sector the potential welfare losses are not likely to be of only monetary nature. In brief, the more inefficiencies the patent system produces, the greater the risk of an expansive application of competition law in this field. The aim of the present study is to offer a critical and objective view on the use or abuse of patents and defensive strategies in the pharmaceutical industry. It shall also seek to establish whether patents as presently regulated offer an appropriate degree of protection of intellectual property held by the economic operators in the pharmaceutical sector and whether there is a need or, for that matter, scope for improvement. A useful starting point for the present study is provided by the pharmaceutical sector competition inquiry (hereafter “the sector inquiry”) carried out by the European Commission during the first half of 2008. On 8 July 2008, the Commission adopted its Final Report pursuant to Article 17 of Regulation 1/2003 EC, revealing a series of “antitrust shortcomings” that would require further investigation1.

Essays on Competition in the Pharmaceutical Industry

Chapter 1: Patents and Entry Competition in the Pharmaceutical Industry: The Role of Marketing Exclusivity Effective patent length for innovation drugs is severely curtailed because of extensive efficacy and safety tests required for FDA approval, raising concern over adequacy of incentives for new drug development. The Hatch-Waxman Act extends patent length for new drugs by five years, but also promotes generic entry by simplifying approval procedures and granting 180-day marketing exclusivity to a first generic entrant before the patent expires. In this paper we present a dynamic model to examine the effect of marketing exclusivity. We find that marketing exclusivity may be redundant and its removal may increase generic firms' profits and social welfare. Chapter 2: Why Authorized Generics?: Theoretical and Empirical Investigations Facing generic competition, the brand-name companies some-times launch generic versions themselves called authorized generics. This practice is puzzling. If it is cannibalization, it cannot be profitable. If it is divisionalization, it should be practiced always instead of sometimes. I explain this phenomenon in terms of switching costs in a model in which the incumbent first develops a customer base to ready itself against generic competition later. I show that only sufficiently low switching costs or large market size justifies launch of AGs. I then use prescription drug data to test those results and find support. Chapter 3: The Merger Paradox and R&D Oligopoly theory says that merger is unprofitable, unless a majority of firms in industry merge. Here, we introduce R&D opportunities to resolve this so-called merger paradox. We have three results. First, when there is one R&D firm, that firm can profitably merge with any number of non-R&D firms. Second, with multiple R&D firms and multiple non-R&D firms, all R&D firms can profitably merge. Third, with two R&D firms and two non-R&D firms, each R&D firms prefer to merge with a non-R&D firm. With three or more than non-R&D firms, however, the R&D firms prefer to merge with each other.

Essays on competition in the pharmaceutical industry

Chapter 1: Patents and Entry Competition in the Pharmaceutical Industry: The Role of Marketing Exclusivity. Effective patent length for innovation drugs is severely curtailed because of extensive efficacy and safety tests required for FDA approval, raising concern over adequacy of incentives for new drug development. The Hatch-Waxman Act extends patent length for new drugs by five years, but also promotes generic entry by simplifying approval procedures and granting 180-day marketing exclusivity to a first generic entrant before the patent expires. In this paper we present a dynamic model to examine the effect of marketing exclusivity. We find that marketing exclusivity may be redundant and its removal may increase generic firms' profits and social welfare. ^ Chapter 2: Why Authorized Generics?: Theoretical and Empirical Investigations Facing generic competition, the brand-name companies some-times launch generic versions themselves called authorized generics. This practice is puzzling. If it is cannibalization, it cannot be profitable. If it is divisionalization, it should be practiced always instead of sometimes. I explain this phenomenon in terms of switching costs in a model in which the incumbent first develops a customer base to ready itself against generic competition later. I show that only sufficiently low switching costs or large market size justifies launch of AGs. I then use prescription drug data to test those results and find support. ^ Chapter 3: The Merger Paradox and R&D Oligopoly theory says that merger is unprofitable, unless a majority of firms in industry merge. Here, we introduce R&D opportunities to resolve this so-called merger paradox. We have three results. First, when there is one R&D firm, that firm can profitably merge with any number of non-R&D firms. Second, with multiple R&D firms and multiple non-R&D firms, all R&D firms can profitably merge. Third, with two R&D firms and two non-R&D firms, each R&D firms prefer to merge with a non-R&D firm. With three or more than non-R&D firms, however, the R&D firms prefer to merge with each other.^

Book review: "English for telecoms and information technology" by T. Ricca and M. Duckworth; "English for legal professionals" by A. Frost; "English for the pharmaceutical industry" by M. Buchler, K. Jaehnig, G. Matzig, and T. Weindler; "English for cabin crews" by S. Ellis and L. Lansford; and "English for negotiating" by C. Lafond, S. Vine, and B. Welch.

This review examines five books in the Oxford Business English Express Series, including "English for telecoms and information technology" by T. Ricca and M. Duckworth; "English for legal professionals" by A. Frost; "English for the pharmaceutical industry" by M. Buchler, K. Jaehnig, G. Matzig, and T. Weindler; "English for cabin crews" by S. Ellis and L. Lansford; and "English for negotiating" by C. Lafond, S. Vine, and B. Welch.

Cost of innovation in the pharmaceutical industry.

The research and development costs of 93 randomly selected new chemical entities (NCEs) were obtained from a survey of 12 U.S.-owned pharmaceutical firms. These data were used to estimate the pre-tax average cost of new drug development. The costs of abandoned NCEs were linked to the costs of NCEs that obtained marketing approval. For base case parameter values, the estimated out-of-pocket cost per approved NCE is $114 million (1987 dollars). Capitalizing out-of-pocket costs to the point of marketing approval at a 9% discount rate yielded an average cost estimate of $231 million (1987 dollars).

Curricular training report: pharmaceutical industry & spin-off company

O presente relatório expõe as atividades desenvolvidas durante o estágio curricular, frequentado na Bluepharma - Indústria Farmacêutica S.A. e na TREAT U, Lda. uma Spin-off da Universidade de Coimbra, no âmbito do Mestrado em Biomedicina Farmacêutica da Universidade de Aveiro. Esta foi uma experiência de 6 meses que teve duas componentes, uma multidisciplinar e outra monodisciplinar, as quais me permitiram desenvolver os conhecimentos e aptidões adquiridas ao longo do curso de mestrado e de as aplicar ao mundo real. Para além do desenvolvimento de competências profissionais, esta experiência possibilitou também a aquisição e desenvolvimento de várias aptidões, quer a nível pessoal como social. Nos primeiros dois meses desta minha experiência adquiri um conhecimento essencialmente teórico em várias áreas da indústria farmacêutica (financeira, desenvolvimento de negócio, assuntos regulamentares, investigação e desenvolvimento de medicamentos, garantia da qualidade, etc.) através da minha passagem pela Bluepharma. De seguida, na minha experiência de quatro meses na TREAT U, foi-me dada a oportunidade de realizar de forma mais independente, as funções inerentes ao cargo de assistente da gerência, com especial enfoque para atividades de gestão de projeto (incluindo assuntos regulamentares), tais como, apoio na preparação do plano de desenvolvimento não clínico e na preparação do pedido de aconselhamento científico. Este relatório começa assim por descrever os objectivos do estágio e uma breve descrição das instituições que me acolheram para a sua realização. De seguida, os conhecimentos adquiridos na vertente multidisciplinar do estágio e depois as atividades desenvolvidas no âmbito monodisciplinar. Por fim, apresenta uma análise das dificuldades e desafios encontrados bem como os esforços realizados para os ultrapassar.

The simple economics of risk-sharing agreements between the NHS and the pharmaceutical industry

The Janssen-Cilag proposal for a risk-sharing agreement regarding bortezomib received a welcome signal from NICE. The Office of Fair Trading report included risk-sharing agreements as an available tool for the National Health Service. Nonetheless, recent discussions have somewhat neglected the economic fundamentals underlying risk-sharing agreements. We argue here that risk-sharing agreements, although attractive due to the principle of paying by results, also entail risks. Too many patients may be put under treatment even with a low success probability. Prices are likely to be adjusted upward, in anticipation of future risk-sharing agreements between the pharmaceutical company and the third-party payer. An available instrument is a verification cost per patient treated, which allows obtaining the first-best allocation of patients to the new treatment, under the risk sharing agreement. Overall, the welfare effects of risk-sharing agreements are ambiguous, and care must be taken with their use.

Exploraty Multivariate Statistical Methods Applied to Pharmaceutical Industry CRM Data

Dissertação apresentada como requisito parcial para obtenção do grau de Mestre em Estatística e Gestão de Informação