Patents and the Pharmacy Industry

Mosf of us would be well versed with the Patent system in general. We have patents in every sector - Technology, Agriculture, Pharmacy etc. Most readers in our profession must already be well versed of the Pros/Cons of the Patent system in Software/Technology. Patents in software are more like ammunition. The more you have, the stronger you are. We don’t seem much cat fight in Software/Technology because not one organization own all the patents for a product. An IBM ThinkPad might be using a cool track pad feature which might be a patent of Dell. Since the finished product comprises of many patents from different owners in the same industry, it is better to play good with each other. You scratch my back, I scratch yours.

But what about the Pharmaceutical Industry? There, one single patent could comprise the product. I was reading this document from Bruce Lehman which touches upon Patents and Pharmaceutical Industries, but couldn’t find an answer to my question.

Say, Glaxo spends a billion in research and comes up with an invention. They patent the idea and market the product. Given that the medical “products” are of a special kind they need to be disclosed. To quote from the linked document:

The pharmaceutical industry has an important characteristic that sets it apart from other
industries that rely on patent protection. In many technology-based industries it is
possible to keep inventions a secret until the moment they are marketed. This enables
inventors to delay patent filings until the last possible moment and, therefore, to
maximize the effect of the 20 year patent term which runs from filing of the patent
application. The culture of medical research, however, emphasizes very early disclosure
of inventions, usually long before a resulting product can be placed on the market. This is
because scientists working in the field of human pathology have an obligation to share
their findings as soon as possible with their peers so that those peers will be able to
benefit from the new knowledge in their own research. And, unlike industries such as
computers and software, the pharmaceutical industry is heavily regulated by government
agencies to assure the safety and efficacy of products which will be sold to consumers. In
the United States the Food and Drug Administration performs this function. Much of the
investment in new drugs is in the clinical trials which are necessary to satisfy safety and
efficacy regulators. The tolerance for a “buyer beware” philosophy in the pharmaceutical
industry is extremely low compared to other industries.

The challenge is, Glaxo spends a billion in discovering a solution. Glaxo would want to make returns out of its investment in the product. The reality is, Glaxo launches the product at price N. Pharmaceutical companies in developing counties, like India, manufacture an equivalent product at price N/10. And that product also gets US FDA approved, which would imply that it is perfectly legal to sell the very same product.

So how does the patent system work in this scenario? How would the system ensure that the inventor gets the returns on the investment made in the research? Or, in other ways, what good is it to acquire a patent for a medical enhancement?