Association of the British Pharmaceutical Industry (abpi) — Written evidence (ITP0008)

The ABPI welcomes the opportunity to submit this evidence to the EU Justice Sub-Committee’s inquiry on Intellectual Property (IP) and the Unified Patent Court (UPC).

Introduction

1.1 Who we are
The ABPI represents innovative research based biopharmaceutical companies, large, medium and small, leading an exciting new era of biosciences in the UK. Our industry, a major contributor to the economy of the UK, brings life-saving and life-enhancing medicines to patients. We represent companies who supply more than 80 per cent of all branded medicines used by the NHS and who are researching and developing the majority of the current medicines pipeline, ensuring that the UK remains at the forefront of helping patients prevent and overcome disease.

1.2 The importance of IP for biopharmaceutical innovation
Strong IP frameworks act to promote investment in innovation in all industrial sectors. However, the unique nature of the biopharmaceutical industry makes IP particularly important. Because of the need to show safety and efficacy of new medicines through extensive pre-clinical and clinical trials, drug development is a long-term process [1] with a high risk of failure [2]. Estimates of the average costs of bringing an innovative medicine to market vary widely but some estimates are as high as $2.6 billion [3]. By way of contrast, the costs of developing a generic copy of a drug are significantly less as generic companies only incur manufacturing costs, rather than the cost of researching, testing and development. It is therefore self-evident that a framework providing a period of exclusivity from competition from copies [4] is required to sustain innovation in this sector. The patent system is an important part of that framework.

1.3 Recognising the unique features of innovation in the sector, many advanced economies have introduced complementary, targeted incentives to stimulate innovation and those afforded by the EU/UK (Figure 1) have resulted in one of the strongest IP frameworks globally and is one reason why the EU, and the UK in particular, has a thriving innovative biopharmaceutical sector at academic, SME and global company levels.

Figure 1: Application of IP incentives to encourage biopharmaceutical innovation1

Those incentives of particular significance for this inquiry are:

Supplementary Protection Certificates (SPCs): Patents are applied for early in the development process and their 20-year term runs from the date of application. If a product takes 10 years to reach the market, there will only be 10 years of effective patent life in which to recoup the costs of R&D and fund future innovation. Recognising that this is a significant problem, the EU introduced SPCs to compensate in part for this loss of effective patent life by providing up to 5 additional years protection [5]. A reduction in the length of SPC translates to a significant reduction of value for the patent holder as protected time on the market is lost.

Regulatory Data Protection (RDP): Generation and production to the regulatory authority of significant amounts of pre-clinical and clinical data is required to gain marketing approval of an innovative product. The innovative life sciences industry is at an unfair and significant competitive disadvantage if a generic company can rely on or reference the data to get approval for its product rather than generating its own data. Therefore, the EU has introduced a 10-year period from grant of the first EEA marketing authorisation during which a generic company cannot launch a copy product without producing its own similar data [6],[7].

Orphan Drug Protection: Orphan incentives were set up to stimulate research and development of diseases that are:

severe (i.e. intended for the treatment, prevention or diagnosis of a disease that is life-threatening or chronically debilitating),

rare (i.e. affecting no more than 5 in 10,000 people in the EU at the time of submission of the designation application),

address an unmet need (i.e. there must be either no authorised satisfactory treatment of the condition concerned, or, if such a method does exist, the medicine must be of significant benefit to those affected by the condition).

Such provisions are crucial, since for orphan medicines the relatively small patient populations could potentially prevent the recovery of the investment made into the product development. The Orphan Medicinal Regulation provides a suite of measures to promote innovation for these disease areas, one of which is a period of exclusivity of 10 years from first EMA approval [8]. Since the adoption of the Orphan Medicinal Products regulation in 2000, there have been more orphan designations and more authorised Orphan Medicinal Products, with the latter increasing from 49 between 2000-2005 to 60 between 2012 -2016 [9]. While there have undoubtedly been great advances in the treatment of rare diseases, there is still a significant unmet need with many of the 6,000 – 7,000 rare diseases lacking effective medicines. For this need to be met, the policy environment needs to continue to support the orphan medicine business model.

Changing any part of the biopharmaceutical incentives framework risks undermining the innovation process that patients, healthcare systems and society are relying on.

Industry IP priorities for the Brexit negotiations

2.1 Because much of the IP framework critical for this sector’s innovation derives from EU law, the ABPI’s immediate Brexit priority has been to ensure that:

•IP rights already obtained or available in the UK under EU law (and applications therefor) should continue to be in force as a matter of UK law,

•Such rights should be available to be granted immediately upon Brexit for new products.

2.2 We welcome the fact that these priorities appear to have been largely achieved under the European Union “Withdrawal” Act.

2.3 The life sciences industry, in common with other sectors, also supports finding ways for the UK to remain in the scope of the UP/UPC Agreement.

IP provisions in the event of a ‘no deal’

3.1 The ABPI welcomes the technical notices which provide pharmaceutical companies more clarity in the event of 'no deal'. However, one area of significant concern relates to the proposals as contained in the ‘no deal’ technical notice on ‘How medicines and medical devices would be regulated if there’s no Brexit deal’.

3.2 As noted above, currently, the terms of RDP and orphan drug exclusivity run from the date of first authorisation of the product in the EEA. The term of an SPC similarly depends on the date of first EEA authorisation.

3.3 The technical note states that in the event of a ‘no deal’ Brexit: “the start of data or market exclusivity will be the date of authorisation in the EU or UK, whichever is earlier” (emphasis added).

This means that:

Should a company be granted a marketing authorisation in the EU prior to the UK, the 10-year RDP term in the UK would begin before the company can start selling in the UK, thereby eroding the period of effective protection from generic competition by the period equal to the delay between EU and UK authorisations.

For SPCs, while we have seen no reference to the position under the technical notices, the ABPI is concerned that a similar approach will be taken i.e. basing the commercially significant SPC term on the earlier of UK or EEA authorisation. If implemented, this proposal could reduce periods of actual exclusivity in the UK, the value of patents for innovators and therefore the attractiveness of the UK as a market.

Finally, the technical notice states that provisions for orphan medicines will be subject to consultation. As such, the ABPI is concerned with the lack of certainty as to whether the orphan market exclusivity regimes available in the UK will be adversely affected in a similar manner in the event of ‘no deal’.

3.4 There are indications that the reason for taking this approach is to encourage companies to apply for UK marketing authorisation at the same time as they apply for EU marketing authorisation. However, it would be preferable to see this achieved by positive (“carrot”), rather than negative (“stick”), incentives as the ABPI does not believe that this approach will encourage companies to apply for UK market authorisation earlier.

3.5 Equally or more importantly, UK approval may come after EU approval for reasons entirely outside the control of the company. Applications made in the UK and EU on the same day might be processed more quickly in the EU than the UK, for example because the UK wishes to see additional data or simply because of differences in efficiency. Were that to be the case, as currently envisaged, effective protection term in the UK could be less than in the EU for reasons which cannot be influenced by the company.

3.6 Further, at a time when the UK would be seeking to conclude an increased number of international trade deals, this would send a strong signal to the global pharmaceutical industry (and to trading partners) that the UK does not value investment in innovation as much as other countries. This could also disincentivise R&D investment by life sciences companies in the UK. Finally, in the event that the UK has a ‘standalone’ regulator, and there is no connection between the MHRA and the EMA, it would make no sense that the terms of effective protection in the UK are at least in part dependent on the actions of a non-UK body, the EMA.

The commercial environment in the UK is becoming increasingly difficult for pharmaceutical companies. Medicine prices for innovative products are amongst the lowest in comparable European countries and the uptake of these new products is relatively slow, meaning that UK patients often have access to innovative medicine well after their European counter-parts.

Introducing an additional, punitive measure which will only act to weaken the UK’s IP framework and global, pro-innovation reputation comes at a time when the UK government is asking companies to make significant investments to try and safeguard continuity of supply in a ‘no deal’ scenario by stockpiling medicine.

The ABPI therefore strongly urges that the key dates for RDP, orphan and SPC protection should be the date of UK marketing authorisation so that the commercial exclusivity they afford will run from the time of UK marketing authorisation.

We have also raised this in our submission to the MHRA and DHSC consultation on 'no deal' contingency legislation for medicines and devices regulation for the UK and will continue to engage in a constructive dialogue with the MHRA and government on this issue.

November 2018

[1] It generally takes 10 - 12 years between the time a compound is thought to have a possible effect on a disease (which is about the time a patent is usually applied for) and the time it may be launched

[2] Between 5,000-10,000 medicinal candidates are tested to achieve one approved medicine

[3] DiMasi JA, Grabowski HG, Hansen RA. Innovation in the pharmaceutical industry: new estimates of R&D costs. Journal of Health Economics 2016;47:20-33.

[4] It is important to note that there is significant competition between innovators in the sector. This competition operates at a pricing level and, more importantly, increases treatment options for medical practitioners and patients.

[5]SPC term is determined by the period of time which has elapsed between the filing of the underlying patent application and grant of the first EEA marketing authorisation (equivalent to time lost on the market), less five years (subject to a 5-year maximum term).

[6] The precise operation of RDP is slightly more complex than this and we are happy to provide further details if requested.

[7] It is important to note that this term does not commence at patent/SPC expiry but runs from the first EEA approval. It usually expires before SPC expiry.

[8] Unlike SPCs and RDP which essentially only provide protection against generic copy products, for orphan drugs there is some protection against other innovative drugs.

[9] An evaluation of the economic and societal impact of the orphan medicine regulation, Charles Rivers Associates, Nov 2017. Full year data for 2017 and 2018 not available