Ownership of knowledge — the role of patents in
`pharmaceutical R&D
`Carlos Maria Correa1
`
`Abstract Both the public and the private sectors contribute to research and development (R&D) in pharmaceuticals. The public sector
`originates many of the discoveries of new drugs. The private sector, which focuses on development, is heavily reliant on patents.
`Though patents are presumed to reward genuine inventions, lax rules on patentability and shortcomings in procedures permit
`protection to be obtained on a myriad of minor developments. These patents, though weak and possibly invalid in many cases, are
`used to restrain competition and delay the entry of generic competition. Developing countries should design and implement their
`patent laws so as to prevent strategic patenting and promote competition and access to medicines.
`
`Keywords Patents/legislation; Pharmaceutical preparations; Research; Diffusion of innovation; Drug industry (source: MeSH, NLM).
`Mots clés Brevet/législation; Preparations pharmaceutiques; Recherche; Diffusion des innovations; Industrie pharmaceutique (source:
`MeSH, INSERM).
`Palabras clave Patentes/legislacién; Preparaciones farmacéuticas; Investigacion; Difusién de innovacion; Industria farmacéutica
`(fuente: DeCS, BIREME).
`
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`Bulletin of the World Health Organization 2004;82:784-790.
`
`Voir page 786 Ie résume’ en frangais. En la pégina 786 figura un resumen en espafiol.
`
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`
`Although governments are responsible for a significant portion
`ofglobal spending on research and development (R&D), since
`the 19805 a steep decline in the share of government firnds for
`R&D is a trend common to all major industrialized countries
`and many other Organisation for Economic Co-operation and
`Development (OECD) countries. In the largest OECD coun-
`tries (with the exception ofItaly), the private sector performed
`between 62% and 70% of total national R&D (1).
`Private and public sources also coexist in pharmaceutical
`R&D. The division oflabour in pharmaceutical R&D between
`the two sectors is related, at least in principle, to the nature of
`the knowledge that is fostered (2). In most cases, the discovery
`of important new drugs is made by public institutions, which
`later license their development and exploitation to private
`firms. Some 70% ofdrugs with therapeutic gain mre produced
`with government involvement (3). Basic research that led to the
`discovery ofpotential “drug leads” has almost always been pub-
`licly funded at universities, in-house government facilities, or
`research institutes in Europe, North America, and Japan. Since
`the beginning ofthe 20th century, publicly funded research has
`led to major drug lead discoveries in, for example, tuberculosis,
`other infectious diseases and cancer. More recently, publicly
`funded research has led to the discovery of antiretrovirals for
`the treatment of human immunodeficiency virus/acquired
`
`immunodeficiency syndrome (HIV/AIDS). Publicly funded
`genome research has also produced many drug leads (4). In the
`United States, the federally funded biomedical research sup-
`ported by the National Institutes ofHealth (NIH) plays a vital
`role in new drug development, feeding into the R&D activities
`of the private pharmaceutical industry that operates under
`patent protection (2). In addition to this direct and important
`contribution, governments ofmany developed countries grant
`tax credits and other incentives for R&D (1).
`However, private industry invests the largest part of
`global funds for pharmaceutical R&D. Unlike the public sec—
`tor, industry’s research agenda is dominated by profit—making
`objectives. Most of industry’s resources are concentrated on
`applied R&D, though funds are also devoted to basic research.
`In 1999, for instance, 24.5% of R&D spending was on basic
`research in the United Kingdom, 36% in the United States, and
`18.4% in Canada (5).
`Given the objectives and nature of industry’s activities,
`they rely heavily on the acquisition and enforcement ofpatents
`worldwide. A common belief is that patents are normally ac—
`quired to protect new drugs, and thereby recover the substantial
`R&D investments made for increasing the range of available
`therapies; but the number of patents annually obtained to
`protect genuinely new pharmaceutical products is very small
`
`‘ Director, Centre of Interdisciplinary Studies of Industrial and Economic Law, University of Buenos Aires, Av. Figueroa Alcorta 2263, lst floor, 1425 Buenos Aires,
`Argentina (email: ceidie@derecho.uha.ar).
`Ref. No. 03-010801
`(Submitted 18 December 2003 7 Final revised version received: 23 June 2004 7 Accepted: 24 lune 2004)
`
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`Carlos Maria Correa
`
`Special Theme — Bridging the Know-Do Gap in Global Health
`Patents in pharmaceutical R&D
`
`and declining, whereas thousands of patents are applied for
`or granted concerning pharmaceutical—related inventions. The
`number of patents acquired in relation to “upstream” inven-
`tions, that is, scientific discoveries rather than specific technical
`solutions, is increasing. This kind of patenting detracts from
`public domain knowledge that could be used “downstream” by
`many researchers to explore multiple inventive opportunities;
`it deprives society of the benefits that the widespread use and
`dissemination of basic scientific ideas could generate (2). The
`problems raised by this form of privatization of science have
`been explored by an extensive literature (6, 7). Patents, on the
`other hand, are ordinarily acquired for a myriad offollow-on,
`merely incremental, or minor developments.
`
`Innovation in pharmaceuticals
`Innovation in pharmaceuticals relies increasingly on the knowl-
`edge gleaned from preceding innovations and on generally
`available techniques (8, 9). As in other sectors, innovation “has
`shifted away from models based on absolute novelty and first
`improvement towards a model in which innovation is no lon—
`ger driven by technological breakthroughs but by the routine
`exploitation of existing technologies” (10). Innovation in this
`sector follows, therefore, an essentially “cumulative” model of
`innovation, as opposed to the “discrete” model, where the pros—
`pects ofvariations and improvements of inventions are substan—
`tially bounded.
`Many of the new chemin entities of pharmaceutical
`use do not entail a genuine therapeutic progress; they are “me
`too” drugs, developed as a result of the great deal of emula—
`tion of successful drugs undertaken by rival companies (11).
`Pharmaceutical innovation also includes a large number of
`improvements or minor changes to existing drugs, and the
`identification of new uses of known products. Incremental in-
`novation is often motivated by the objective of attending the
`commercial benefits derived from existing products, particu-
`larly when original patents expire and new patents may be used
`to prolong market exclusivity.
`According to a report ofthe National Institute for Health
`Care Management (NIHCM) in the United States, from 1989
`to 2000 the United States Food and Drug Administration
`(FDA) approved 1035 new drug applications. Ofthese, a third
`(35%) were products with new active ingredients, or new mo—
`lecular entities (NMEs). The other 65% used active ingredients
`that were already available in a marketed product. Over half
`(54%) were incrementally modified drugs, or new versions of
`medicines whose active ingredients were already available in an
`approved product. The rest (11%) contained the same active
`ingredient as identical marketed products (12).
`Priority NMEs, the most innovative type of new drugs,
`were rare in the 12-year period 1989—2000: just 153 (15%) of
`all new drug approvals were medicines that used new active in-
`gredients and provided significant clinical improvement. Drugs
`providing moderate innovation comprised another 28% of
`approvals. The other 57% ofapprovals were for drugs showing
`only modest innovation, at best: 46% made some modification
`to an older product containing the same active ingredient,
`while the remaining 1 1% were identical to marketed products.
`As a result, the NIHCM reports, priority NMEs — the most
`innovative drugs — contributed little to the increase in new
`products, and most growth came from products that did not
`provide significant clinical improvement, especially modified
`versions of older drugs (12).
`
`Patenting cumulative innovations
`The cumulative nature of innovation has important repercus—
`sions on the patent system. Though theoretically conceived to
`reward inventions marked by considerable originality, the patent
`system is plagued with grants covering incremental, minor — in
`some cases trivial — developments. They are not the product
`of inventive efforts, but rather the outcome of “taking a speedy
`path down a trail that was obvious to many” (8, p. 128). In
`2001, the United States Patent and Trademark Office granted
`over 171 000 patents, almost twice the number granted ten
`years earlier. This increase cannot simply be attributed to an
`increase in RSCD productivity, but to the flexibility of the
`patent system to permit the protection offollow-on and other
`developments (13, pp. 1933—4).
`Moreover, there is increasing evidence about poor pat-
`ent quality. (A poor—quality patent is one that is likely to be
`invalid or contains claims that are likely to be overly broad
`(14).) “Non-obviousness” or “inventive step” (one of the key
`patentability requirements) is assessed against a standard that
`many follow—on and routine innovations do not find difficult
`to meet, based on the fiction ofwhat “a person with ordinary
`skill in the art” would have been able to derive from prior art.
`Weaknesses in patent procedures, in addition, favour the grant-
`ing of patents over trivial or minor developments (14’, 15),
`despite the significant resources invested in developed countries
`to fund patent offices (16).
`Large firms have rapidly learned how to exploit lax
`patentability standards and the shortcomings in the patent
`examination process. They apply different strategies to use
`patents offensively as means to encumber or block potential
`competitors. Thus, “hankering” strategies aim at mining every
`step in a manufacturing process with parents claiming minor
`modifications; “findng’ refers to a situation where a series of
`patents blocks certain lines or directions ofR&D; “rm-rounding”
`takes place “when an important central patent can be fenced
`in or surrounded by other patents, which are individually less
`important but collectively block the effective commercial use of
`the central patent, even after its expiration” (17); and Wading”
`is based on the acquisition of many parents on minor or incre-
`mental variations on technology developed by another com—
`pany (18, 19). For other anti-competitive practices, see (20).
`As noted by the NIHCM, “drug manufacturers patent a
`wide range ofinventions connected with incremental modifica—
`tions of their products, including minor features such as inert
`ingredients and the form, color, and scoring oftablets. In many
`cases, these patents discourage generic companies from trying
`to develop a competitive product” (12). Moreover, backed by
`substantial budgets for patent acquisition and litigation, phar-
`maceutical companies have been able to delay substantially the
`entry ofgeneric competition by “evergreening” many of their
`patents (21—23). According to United States lawmaker Waxman
`(one of the authors of the United States Drug Price Competi—
`tion and Patent Restoration Act of 1984, commonly known
`as the “Waxman—Hatch Act”) brand-name companies “have
`used creative lawyering to try and extend the period of their
`monopolies long past the time intended by Congress” (24’).
`Poor-quality patents acquired to encumber or delay ge-
`neric competition are generally aggressively used against com—
`petitors. They are likely to be invalidated totally or partially,
`however, ifsubject to a more serious scrutiny by judicial courts
`
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`Special Theme — Bridging the Know—Do Gap in Global Health
`Patents in pharmaceutical R&D
`
`Carlos Marla Correa
`
`than the examination made at the patent office, as shown in a
`study by the United States Federal Trade Commission on drug
`entry and patent expiration (25).
`
`Conclusions
`
`Patents have become a key factor in the RSCD process in phar-
`maceuticals. Although, in certain contexts, they provide the
`incentives to develop new pharmaceutical products from which
`society may benefit, by their very nature they limit the diffusion
`of the innovations that they are intended to promote. When
`the innovation process is cumulative, strong protection for the
`first—generation producer limits the scope ofsecond—generation
`producers, and slows down follow—on innovation.
`Patents often establish barriers to entry that are unjusti—
`fied in terms of the technical contribution effectively made.
`Low standards ofpatentability have allowed a significant expan-
`
`sion of patent coverage. Strategic patenting diverts resources
`into litigation and restrains legitimate competition. While this
`is taking place in both developed and developing countries
`alike, it is particularly worrying in the latter since competition
`laws are in many cases non-existent or poorly implemented,
`and domestic firms are generally too small to bear the costs and
`risks of litigation. Developing countries have struggled in the
`past few years to confirm their rights to use the flexibilities
`allowed by the Agreement on Trade—related Aspects ofIntellec—
`tual Property Rights (TRIPS), particularly in relation to parallel
`imports and compulsory licences.fl Without abandoning these
`efforts, they should pay more attention to the way in which
`patents are examined and granted, in order to avoid abuses
`and the negative eEects on access to medicines that patents on
`noninventive developments entail. I
`
`Conflicts of interest: none declared.
`
`Résumé
`
`Propriété intellectuelle - Le role des brevets dans la R & D en pharmacie
`Le secteur privé, comme le secteur publique, contribuent aux
`progrés mineurs. Ces brevets, quoique faibles et éventuellement
`activités de recherche et développement (R & D) dans Ie domaine
`invalides dans de nombreux cas, sont utilisés pour restreindre Ia
`pharmaceutique. Le secteur public est a I'origine de la découverte
`concurrence et retarder l'entrée en compétition des génériques.
`d'un grand nombre de nouveaux médicaments. Le secteur privé, qui
`|| convient que les pays en développement concoivent et mettent
`en oeuvre leur Iégislation sur les brevets de maniere a prévenir Ia
`axe ses efforts sur la développement, dépend fortement des brevets.
`Bien que ceux—ci soient supposés récompenser de véritables
`prise de brevets stratégique et a promouvoir la concurrence et
`I'accés aux médicaments.
`inventions, Ie laxisme des Iois sur la brevetabilité et les défauts de
`procédure permettent d'obtenir la protection d'une multitude de
`
`Resumen
`
`Propiedad de Ios conocimientos - Funcién de las patentes en la I+D farmacéutica
`desarrollos de poca importancia. Estas patentes, aunque poco
`Tanto el sector publico como el sector privado contribuyen a la
`investigacién y el desarrollo (|+D) de preparaciones farmacéuticas.
`consistentes y posiblemente carentes de validez en muchos casos,
`Muchos de los descubrimientos de medicamentos nuevos tienen
`se usan para restringir Ia competencia y retrasar la introduccién de
`lugar en el sector publico. El sector privado, que se centra en el
`medicamentos genéricos. Los paises en desarrollo deben disefiar
`desarrollo, depende en gran medida de las patentes. Aunque se
`y aplicar sus Ieyes en la materia de manera que prevengan las
`supone que éstas recompensan auténticas invenciones, Ia laxitud
`patentes estratégicas y promuevan la competencia y el acceso a
`Ios medicamentos.
`de las normas acerca de la patentabilidad y Ios tallos de Ios
`procedimientos permiten obtener proteccién para innumerables
`
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`‘ See World Health Assembly Resolution WHA56.27 (2003) which recommends Member States "to use to the full the flexibilities" contained in the TRIPS Agreement.
`
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`

`Carlos Maria Correa
`
`Special Theme — Bridging the Know-Do Gap in Global Health
`Patents in pharmaceutical R&D
`
`References
`1 . National Science Board. Science and engineering indicators 2002. Arlington
`(VA): National Science Foundation; 2002.
`2. Macroeconomics and health: investing in health for economic development.
`Report of the Commission on Macroeconomics and Health. Geneva: World
`Health Organization; 2001.Available from: htpp:llwww.who.int
`3. United Nations Development Programme. Human development report. New
`York: Oxford University Press; 1999.
`4. Fatal imbalance. The crisis in research and development for drugs for
`neglected diseases Geneva: Médecins Sans Frontiéres; 2001.
`5. A comparison ofpharmaceutical research and development spending in
`Canada and selected countries. Ottawa: Patented Medicine Prices Review
`Board; 2002.
`6. Barton JH. Research-tool patents: issues for health in the developing world.
`Bulletin of the World Health Organization 2002;80:121-5.
`7. Eisenberg RS. Bargaining over the transfer of proprietary research tools: is
`this market failing or emerging? In: Dreyfuss R, Zimmerman D, First H,
`editors. Expanding the boundaries ofintellectual property. Oxford: Oxford
`University Press; 2001.
`8. Merges R, Nelson R. 0n limiting or encouraging rivalry in technical progress:
`the effect of patent-scope decisions. In: Nelson R, editor. The sources of
`economic growth. Cambridge and London: Harvard University Press; 1996.
`9. Long C. Patents and cumulative innovation. Washington University Journal
`of Law and Policy 2000;2:22946.
`10. Foray D. Production and distribution of knowledge in the new systems of
`innovation: the role of intellectual property rights. Science, Technology
`Industry Review 1992;16:1 19—52.
`11. Casadio Tarabusi C, Vickery G. Globalization in the pharmaceutical industry.
`International Journal of Health Services 1998; 1 :67—105.
`12. National Institute for Health Care Management. Changing patterns of
`pharmaceutical innovation. Washington (DC): NIHCM Foundation; 2002.
`Available from: http://www.nihcm.org
`
`13. Barton J. Reforming the patent system. Science 2000;287:193341.
`14. To promote innovation: the proper balance of competition and patent law
`and policy. Washington (DC): Federal Trade Commission; 2003.Avai|able
`from: htpp:llwww.ftc.gov
`15. Keeping science open: the effects of intellectual property policy on the
`conduct ofscience. London: The Royal Society; 2003. Policy document 02/03.
`16. Intellectual property: information on the US Patent and Trademark Office's
`past and future operations. Washington (DC): General Accounting Office;
`2002. Report to Congressional Requesters.
`17. Granstrand O. The economics and management of intellectual property.
`Towards intellectual capitalism. Northampton: Edward Elgar; 1996.
`18. Sankaran SK. Patent flooding in the United States and Japan. The Journal of
`Law and Technology 2000; 1 :393-428.
`19. Glasgow LJ. Stretching the limits of intellectual property rights: has the
`pharmaceutical industry gone too far? The journal of Law and Technology
`2001;2:227-58.
`20. Sampath PG. Designing national regimes that promote public health
`objectives Maastricht: UNUlINTECH; 2003.1NTECH Discussion Paper.
`21 . Drug patents under the spotlight sharing practical knowledge about
`pharmaceutical patents Geneva: Médecins Sans Frontiéres; 2003.
`22. Correa C. Trends in drug patenting. Buenos Aires: Corregidor; 2001.
`23. Hutchins M. Extending the monopoly: how ”secondary" patents can be
`used to delay or prevent generic competition upon expiry of the basic
`product patent. Journal of Generic Medicine 2003;1:57-71 .
`24. Seltzer J. Changes to aid generic drugmakers afoot in Congress Reuters, 30
`October 2003.
`25. Generic drug entry prior to patent expiration. Washington: Federal Trade
`Commission; 2002. Available from: htpp:llwww.ftc.gov
`
`Round Table Discussion
`
`Pharmaceutical R&D needs new financial
`
`paradigms
`John H. Barton1
`
`I endorse Professor Correa’s sound recommendations on patent
`law. The patent system is at its most successful when it covers a
`significant discrete product or process. It is at its least successful
`when it covers something much broader or much narrower.
`Patents on broad scientific principles are generally bad, because
`in the words of the United States Supreme Court, they “may
`confer power to block offwhole areas ofscientific development,
`without compensating benefit to the public” (I). At the other
`end of the continuum, patents on very minor improvements
`create a monopoly out ofproportion to the technological benefit
`of the improvement. Moreover, such parents may impose exten-
`sive and costly legal negotiations on those who wish to have the
`freedom to launch a new product. Thus, national patent oflices
`should apply appropriate doctrines ofutility or ofthe scope of
`patentable subject matter to avoid the problem of overly broad
`patents, and appropriate doctrines of inventive step to avoid
`the problem of overly incremental patents.
`I want to emphasize that the patent law provisions that
`Correa describes are only part of a much larger body of issues
`
`affecting the balance between drug development incentives and
`drug access. In the United States, the 1984 Waxman—Hatch
`Act explicitly extends a drug’s regulatory monopoly (with some
`very technical provisions that have been used to obtain longer
`exclusivity than was probably intended by Congress and have
`recently been revised). Relevant to middle—income countries
`with the ability to build a generic industry, the TRIPS Agree-
`ment and some other trade agreements restrict the right to use
`an original applicant’s clinical trial data to obtain approval for
`a generic product. Far more important, however, is the issue of
`cost. For the poor and those in poorer nations, access to drugs
`at even generic prices is inadequate, as shown by the estimate of
`WHO’s 3 by 5 initiative to make antiretroviral drugs available
`to 3 million people by 2005: at present only one person out
`of 15 people needing antiretrovirals in the developing world
`is actually receiving them. Solving the legal problems does not
`solve the more diflicult financial problems.
`Finally, the industry is facing an additional problem that
`Correa does not raise: the number of genuinely new pharma—
`ceutical products being approved is falling even as the level of
`research investment by the pharmaceutical industry is growing
`rapidly. The reasons are not clear. One may be a decline in
`basic scientific opportunities, at least for the kinds of disease
`that are of most economic interest to the industry. Others may
`include higher costs ofclinical trials or higher effective regula-
`tory standards. Encouragingly, the area where the number of
`new products is increasing is that in which products derive from
`biotechnology. This overall declining pay—OE ofresearch is very
`
`‘ Emeritus Professor, Stanford Law School, Crown Quad 237, Stanford University, Stanford, CA 94305-8610, USA (email: jbarton@stanford.edu).
`
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`Special Theme — Bridging the Know—Do Gap in Global Health
`Round Table Discussion
`
`important, and the industry may have to find new research para—
`digms. This is a concern for the world as awhole. In addition, if
`the industryis to develop products especially for the developing
`world, it will need new financial paradigms as well. I
`
`Conflicts of interest: none declared.
`
`1. Brenner v. Manson, 383 US 519. United States Federal Supreme Court, 1966.
`
`Patents do not strangle innovation, but
`their quality must be improved
`AmirAttaran1
`
`everyone: competitors who must spend heavily to overturn
`wrongly granted patents; consumers who pay a premium while
`those patents remain in force; and even companies and their
`shareholders, as happened when an invalid Prozac patent was
`finally overturned, wiping US$ 35 billion offEli Lilly’s market
`capitalization (I).
`Ironically, among the least affected are the low— and
`rniddle—income countries. This is simply because the parenting
`of medicines there is rare — no more than a few percentage
`points for the WHO Model List ofEssmtial Medicine: (2). If
`Professor Correa is truly correct in the opinion that most new
`medicines “did not provide significant clinical improvement”,
`then even a major push to patent all new medicines in develop-
`ing countries would only modestly affect public health. There
`will always be a minority of cases where patents cause trouble
`— or maybe even harm — but as the hierarchy ofconcerns for
`developing countries goes, patents should not top the list. I
`
`Conflicts of interest: none declared.
`
`1. Maiello M. Prozac hangover. Forbes 10 May 2004.
`2. Attaran A. How do patents and economic policies affect access to essential
`medicines in developing countries? Health Affairs 2004;23:155-66.
`
`There is no doubt that the patenting of inventions — any
`inventions, not just medicines — is rising unprecedentedly.
`As Professor Correa writes, the resulting thicket of patents
`could “deprive society of the benefits [of]
`widespread use
`and dissemination of basic scientific ideas”.
`Possibilities and facts are not the same thing, however, and
`there is surprisingly little empirical data to show that the patent
`thicket is subtracting from the rate of innovation or society’s
`benefit from it. Maybe that is happening without anyone notic—
`ing, but the available evidence suggests otherwise.
`Correa cites extensively from the NIHCM analysis of
`new medicines, 1989—2000. As he correctly points out, only
`15% of the medicines approved in that period contained new
`active ingredients and were exceptionally medically useful.
`Fully 65% of medicines contained active ingredients that had
`Professor Correa alleges that “lax rules on patentability and
`been commercialized earlier, and 54% were “incrementally
`shortcomings in procedures” encourage non—inventive or
`modified drugs” that bear great resemblance to already existing
`medicines.
`“minor, incremental” drug developments and “strategic” pat—
`enting activities. He thus suggests that parents should not be
`But how do these statistics prove that innovation is being
`granted on medicines that “do not entail a genuine therapeutic
`strangled to death? In fact they prove just the opposite: that in—
`progress”. This is to misread the nature and value of pharma—
`novation is alive and well. Ifan inventor’s rational expectation
`ceutical innovation — as in all scientific sectors, the process is
`is that, more likely than not, the difference between the new
`one of evolution and reflects the principle that “Nature does
`medicine and those before it will not constitute a great leap,
`not make jumps”.a Correa’s policy prescription, based on an
`but only an “incremental” improvement, and the inventor still
`inaccurate diagnosis of the problem and a seriously flawed key
`ploughs money and time into its research and development,
`study, would lead to contradictory and anti—innovation results
`then innovation cerminly does not seem strangled. Actually, it
`for critically needed therapeutic innovation in major global
`seems irrepressible.
`disease threats.
`This is not to say that Correa’s hypothesis about patent
`Correa notes that public sector research provides irnpor—
`thickets harming pharmaceutical innovation is necessarily
`rant building blocks for private research and development, and
`wrong. Obviously, the more patents, the more inventors must
`that pharmaceutical companies invest “the largest part ofglobal
`spend on patent management, licensing and litigation. At some
`funds for pharmaceutical RécD”. In modern drug develop-
`point, the mounting costs must dissuade inventors with shal-
`ment, equipped with an armamentarium of scientific and
`low pockets more than those with deep ones, so that research
`technical skills, the private sector manages the discovery and
`and development accretes in major pharmaceutical companies,
`development processes in a competitive market that presents
`ahead of small biotechnology firms. The extent to which that
`high risks of failure. The United States National Institutes of
`accretion is happening, and if it leads to a net decrease in in-
`novation, is under-researched and not clearly known.
`Health (NIH) reported in 2001 that of the 47 prescription
`Correa is correct that the quality ofpatent mtarnination is
`drugs for which sales exceeded US$ 500 million per year, the
`scandalous. Even in Europe or North America, many dubious
`NIH had contributed to the discovery or development of only
`four (1).
`patents are issued. The resulting lack of legal certainty harms
`
`
`Pharmaceutical innovation is evolutionary
`and incentive-driven
`
`Harvey E. Bale2 81 Boris Azais3
`
`‘ Professor, Institute of Population Health and Faculty of Law, University of Ottawa, Canada. Address for correspondence: Royal Institute of International Affairs,
`Chatham House, 10 St James's Square, London SW1Y 4LE, England (email: aattaran@riia.org).
`2 Director General, International Federation of Pharmaceutical Manufacturers Associations (IFPMA), 30 rue de St Jean, PO Box 758, 1211 Geneva 18, Switzerland
`(email: h.bale@ifpma.org). Correspondence may be sent to either author.
`3 IFPMA Fellow from Merck & Co. Inc., International Federation of Pharmaceutical Manufacturers Associations (email: b.azais@ifpma.org).
`‘ See Geoffrey Fishburn. ’Natura non facitsaltum’in Charles Darwin andAlfred Marshall. Available from: http://www.qut.edu.a ularlehumanlethics/ieps/absfish.htm
`
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`Mylan V. Sanofi - IPR2018-01676
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`Mylan Ex.1071 - Page 5 of 7
`Mylan v. Sanofi - IPR2018-01676
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`

`

`Special Theme — Bridging the Know-Do Gap in Global Health
`Round Table Discussion
`
`Incremental innovation responds to the needs ofbroader
`conditions of safety, eHicacy, selectivity, and utility — which
`translate into significantly better health outcomes (2). Indeed,
`50% ofthe drugs on the WHO Essential Drugs List are com—
`pounds introduced subsequent to the first in a therapeutic class,
`and 25% are approved (after additional clinical research) for
`therapeutic uses other than the initially approved indications,
`exemplifying that the future utility of medicines cannot be
`determined at the time of drug approval (3).
`Correa does not cite a single example of minor, incre-
`mental innovation undeserving of intellectual property in—
`centives. His critique of pharmaceutical innovation rests on
`a study by the National Institute for Health Care Management
`(NIHCM), an affiliate of the United States private health in-
`surance industry, which has serious gaps in its methodology.
`For example, the NIHCM excluded all FDA approvals of
`vaccines and other biological products from its calculations:
`as a result, over 130 vaccines and biotechnology products are
`simply omitted.a Further, the NIHCM analysis is based on the
`FDA’s priority review process, assuming that it translates into
`innovative products (versus those going through the standard
`review). Priority review is merely a managerial tool, which the
`FDA points out is “based on information available at the time
`application is filed [and] not intended to predict a drug’s ul—
`timate value” (4). The value of new medicines emerges most
`clearly once they have been introduced into medical practice.
`Finally, Correa’s proposal leads to the untenable situa—
`tion that improvements on existing therapies would not be
`patentable. Breakthrough innovations (patentable) would thus
`face immediate generic copies of similar but more advanced
`compounds (not patentable). Facing non-patentability or im-
`mediate generic copying, what ince