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According to Tufts University in 2003, a new chemical entity (NCE) costs on average US$897 million to develop, including cost of post-approval research (rising from US$803 M in 2001). New formulations and indications for existing NCEs are also costly. To justify its considerable investment, the pharmaceutical industry must have a period of exclusivity in order to be able to recoup the costs for successful drugs, cover the costs of failed developments, and, if possible, make a profit for shareholders and investors. Without this protection, future investment in innovative development is unlikely.

There are a number of types of intellectual property (IP):

• Copyright
• Designs
• Trade Marks
• Patents
• Know-how
• Regulatory exclusivities
• Plant breeders’ rights (of relevance to natural products and phytochemicals)

Of these, patents, know-how and regulatory exclusivities are the most relevant to the development of pharmaceuticals. Sometimes when natural products are involved, and where the plant has been cultivated to enhance the quantity or quality of the desired product, plant breeders’ rights may be of relevance, but such cases are relatively infrequent.

Patents
A patent is a time-limited monopoly (usually 20 years) covering a specific country or territory. Getting a patent requires a detailed and complete description of the invention, which is published at a fairly early stage of the patenting process. This has both advantages and disadvantages - for example, an advantage is that it becomes public knowledge that the invention will be protected; a disadvantage is that details of the invention becomes public knowledge at an early stage - but this is part of the bargain that, in return for the protection, the invention can be used once the protection has expired.

To get a patent the subject matter has to be new, technically useful and unobvious. ‘New’, means that the invention must not have been made available publicly anywhere in the world. To establish this novelty, inventors and/or patent attorneys need to make thorough searches of the literature, including the patent literature.

Most countries grant patent rights to the first person to file the patent application at a patent office - however, in the US the patent rights go to the first to invent rather than the first to file.

The criterion of ‘technically useful’ is not generally difficult to fulfill. It does not require demonstration of clinical utility - an assertion of pharmacological activity is generally sufficient.

‘Obviousness’ is subjective and arguable, and some ways of establishing unobviousness are:

• having an unobvious chemical structure
• demonstrating unexpected properties (for example a surprising effect such as increased activity or decreased toxicity)
• finding a solution to a problem with an unknown cause

Getting a patent

There are a number of questions to be answered in the process of getting a patent:

• What is there that is patentable?
• How is a patent application filed?
• When is a patent application filed?
• Where should the patent application be filed?
• How many patent applications should be filed?

What? A patent for a new chemical entity (NCE) is the gold standard - to get around such a patent a competitor has to find an equivalent chemical entity and spend all the money necessary to get health registration for this equivalent.

Patents for subsequent inventions based on an NCE can extend the effective monopoly for the product, or at least for some forms of that product. These subsequent inventions include new forms or formulations of the NCE, new uses for the NCE and new chemical processes or intermediates. Subsequent inventions can also be useful in defending things which the originator does not want to do itself, but does not want others to do.

How? There are a number of stages involved in getting a patent, each with a range of different decisions required. The overall process can take a considerable time. The process starts with a patent attorney drafting the description. The patent attorney will require as full a technical description of the invention as possible from the inventor, and will ask questions. There will then be a number of iterations of drafts and comments. Completing these iterations as quickly as possible will help avoid a competitor filing first. This is also the stage where inventors need to make the decision whether to file a patent with a broad or a narrow specification.

Twelve months after the filing of the initial application, the complete specification is due. The complete specification is an expanded form of the initial specification, and includes any additional work completed since the initial filing. This is a real decision point for the originator and there are many factors involved in making this decision.

Once the inventor files the complete specification, the international and/or national patent offices examine the patent application for novelty, technical utility, obviousness and various formal requirements. This process usually requires considerable negotiation with the patent examiners and often limitation of the patent claims (which define the monopoly sought). Hopefully, it will result in the grant of a patent. In some countries, third parties can oppose this granted patent.

When? There are different opinions within the pharmaceutical industry on when to file a patent application - some argue correctly that a delay in filing the initial application will delay the expiry of the granted patent and that therefore the initial application should be filed as late as possible. However, this risks a competitor filing an overlapping patent application (so blocking the originator), an inadvertent disclosure by the inventor, or a third party publication which will damage the novelty of the invention.

Where? The complete specification will be filed in those countries where protection is required. Rather than having to make individual filings in every country, the Patents Cooperation Treaty (PCT) enables inventors to file one application as the equivalent of filing in all countries belonging to the treaty (which is most countries of the world). The PCT, however, does delay the examination of the patent application, but also delays the expensive business of translation of the application into many languages and the payment of national/regional fees.

After the PCT stage the application enters the national or regional phase. As there is a cost for each country or region, and each granted patent in each country will attract renewal fees (usually on a yearly basis and usually on the anniversary of its filing), this is the time to decide just where protection is really needed. Other than the traditional pharmaceutical markets of the US, Japan and Europe, the choice of markets depends on the importance and subject matter of the invention. For example, some countries, such as India and China, have rapidly growing populations and economies, but other countries with large populations may have slow-growing economies. Countries such as Australia, Canada and New Zealand have small populations, but sophisticated pharmaceutical markets. Disease demographics and the location of competitors’ headquarters should also play a significant part.

While patent protection is effective in most countries, there are some countries where the legal system is just not developed enough to make the enforcement of patents possible or worthwhile.

How many? Several patents may provide more protection than the sum of the individual cases - for example, one may block an alternative to another. Getting around, or attempting to invalidate, a lot of patents is considerably more effort than dealing with only one or a small number of patents.

Litigation
Patent litigation is not something to be undertaken lightly, and not to be undertaken at all unless there are substantial funds to hand. Small enterprises that lack the financial resources to enforce a patent may be tempted not to patent their inventions in the first place, but simply keep them secret. However most small enterprises hope to grow, and judicious choice of a large partner could help provide the relevant funds and effort.

Know-how and regulatory exclusivities
During the development of any drug, a great deal of information will accumulate, both for health registration purposes and through the general handling of the drug. It is important that the developer keeps such information secret as once it is published in detail competitors can use it to help obtain their own health registration. All major markets recognize the value of this regulatory data. These countries have statutory exclusivity periods during which the regulatory authorities will not allow a copyist to cross-refer to the originator’s data. Some countries may provide market exclusivity to ‘orphan drugs’ - drugs for which there is only a small market.

Conclusion
This is a game. The originator tries to weave as strong and complex a web of protections as possible around the product while the potential copyist tries to find a way around or through that web. For important products, the stakes in monetary terms are extremely high. For the originator the effectiveness or not of the web can make the difference between independent corporate survival and the need to merge.

To weave this web, R&D workers and their patent attorneys need to be aware of the possible protections available, and must remain vigilant over many years to make sure that all, or at least most, opportunities are taken up. It is surprising how often patent protection can be obtained for a development that on the face of it seems unpatentable. It is however quite certain that if a patent is not applied for it will not be granted. If a patent is applied for it may not be granted, but the very existence of the published patent application may cause third parties to hesitate or desist.

The web is likely to consist of strong protections and weaker protections. Part of the strength of the web is that those outside the originator are uncertain as to which is which. In some instances, there is a strong element of bluff.

A danger with a web of protections is that the management of the originator may believe that the web is stronger than in fact is the case. The management should be aware of the weaknesses of the web, but will doubtless present to the outside world that they have many important protections which last for a long time and that they are prepared to fight anybody who tries to break through the web.

Suzanne Elvidge is Head of Publishing at Bridgehead International. Christopher Craig is a European Patent Attorney, and an Associate at Bridgehead International.

This is taken from the forthcoming report Intellectual property strategies for pharmaceutical development by Christopher Craig, published by Bridgehead International - for further details email reportsales@bridgeheadinternational.com