Is it Useful? A Drug Patent Enigma

Prescription Drug

Obtaining a drug patent isn’t easy:  it requires, on average, 14.6 years and $1.2 billion in pre-approval research and development and clinical testing. In addition, it also requires the developer to meet a set of three internationally accepted conditions. According to the World Trade Organization’s (WTO) Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement, in order to obtain a patent, a drug must:

  1. Be new,
  2. Involve an inventive step, and
  3. Be capable of industrial application.

TRIPS also clarifies that “involving an inventive step” and “being capable of industrial application” are synonymous with “non-obvious” and “useful”, respectively. For being a WTO legal document, it’s actually surprisingly clear: be new, be non-obvious and be useful.

Typically, the patent is issued prior to a drug’s clinical testing, primarily because if a commercially viable drug is developed from the clinical testing, it is vulnerable to theft and copying. In other words, patents are filed upon discovery of a chemical formula, as part of the United States Patent and Trademark Office’s “first to file” rule. Without the patent, innovative pharmaceutical companies would not have an incentive to research and develop this formula into a drug, because this resulting drug would be unprotected. This is also why the process to obtain the patent only has three conditions: innovative pharmaceutical companies need assurance that their investment can be recovered during commercialization because the clinical testing and drug approval process is so onerous.

Unsurprisingly then, most TRIPS-compliant countries have made it straightforward to meet the conditions required to obtain a patent, particularly the usefulness condition. Specifically, in the United States and most of Europe, the usefulness condition merely requires a stated practical and credible utility—a standard easily met when pharmaceutical companies disclose a specific disease against which the proposed drug is useful. And yet, in Canada, there is a strange pattern developing involving the usefulness condition: since 2005, Canadian courts have revoked 18 patents for failing to meet the “usefulness” requirement, including the ADHD drug Strattera and the Schizophrenia drug Zyprexa. To be clear, these patents were already issued by patent examiners in Canada, and therefore, these drugs have been in use by patients for several years. Now the Canadian courts are holding that these patents should never have been issued in the first place.

This is due to a retroactive examination of the usefulness condition under the “promise doctrine” — established in 2010 by the Canadian Federal Court of Appeals— which requires that a patent meet heightened requirements for usefulness: innovators must demonstrate, or “soundly predict”, a “promise” of the patent to prove the usefulness requirement has been met.  Essentially, the promise doctrine states that in order to constitute a useful (and therefore patentable) drug, a drug must not only be useful for some purpose (the standard in the United States and Europe), but it must also deliver exactly the purpose promised in the patent filing.

To illustrate, consider Pfizer Canada Inc. v. Apotex Inc., 2011 FCA 236.  This case dealt with the use of the drug Latanoprost for the treatment of glaucoma.  The patent filing included test results in both animals and healthy humans showing that the drug worked with minimal irritating side effects.  However, no long-term studies had been performed as of the patent filing date.  The Federal Court of Appeals concluded that the patent was invalid because the promised usefulness could not be soundly predicted as of the filing date. To reach this conclusion, the Court stated that glaucoma is a chronic disease, and therefore a skilled patent examiner should have known that it required prolonged treatment. As a result, even though Pfizer’s patent claim made no mention of the drug being intended for ongoing use, the Court concluded that the “promise” of the patent was to treat glaucoma on a chronic basis without causing substantial side effects. Bbecause only single dose studies had been conducted, it could not be soundly predicted that the compound would lack irritating side effects after repeated and prolonged use, and thus, the patent was held to be invalid.

In other words, the doctrine establishes an impractical evidentiary burden since it is impossible to predict at the date of filing how specifically useful a patent is or isn’t going to be. It’d be like if movie goers demanded a movie be pulled from theaters after they saw it because they decided the trailer didn’t fulfill the “promise” of being a good movie. The movie was already made, you already paid for it and you already saw it – you can’t decide now that the preview wasn’t good enough to be made into a movie.

The majority of the retroactive court examinations of the usefulness condition have been initiated by Canadian generic companies seeking to have the courts revoke the patents so that they can copy and market these medicines themselves. But prior to this, there were rarely challenges to the test of usefulness—mostly because it doesn’t make sense to do so. Think about it: If you are a competitor, why would you challenge the patent on another company’s drug that isn’t useful? If the drug has no credible use in the industry, then why would you wish to obtain the right to produce it? Because these challenges are not really about “usefulness,” but rather, the potential profits that Canadian generic producers will earn from producing the drugs themselves. Moreover, in the future, if innovative pharmaceutical companies wish to avoid these retroactive challenges by waiting until the new burden of “usefulness” is fulfilled—perhaps by applying for the patent when the drug is already on the market—then the drug is no longer “new.” In other words, you can’t win.

This Canadian precedent threatens the international intellectual property system that drives drug creation and development not only in the United States, but around the world. To date, innovative pharmaceutical companies have suffered damages of more than $1.1 billion in lost sales from the premature termination of patents in Canada. But these sales, enabled by the existence of the patent, would have allowed pharmaceutical companies to recover the costs of clinical drug development for reinvestment in the next round of innovative medicines. The threat of patent revocation reduces the incentive for innovative pharmaceutical companies to take on the risks of drug development.  Worse, it poses a very real risk to patients and families who rely upon this process for the development of new medicines and cures.

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About the author

Michelle Wein is a research analyst at ITIF, specializing in the connections between international trade, innovation, intellectual property and economic productivity.