SOLVING AN INNOVATOR'S DILEMMA
June 25, 2010
Since 2005, India has protected most patented medicines and seen a greater than doubling of Western and domestic investment in the pharmaceutical business as a result. However, certain arbitrary decisions by India's Intellectual Property Office (IPO) are limiting further investment, says Roger Bate, the Legatum Fellow in Global Prosperity at the American Enterprise Institute.
- In the past two years, IPO has denied patents, which have been granted in every developed economy in the world, on important cancer medicines made by Swiss drug companies Roche and Novartis.
- Novartis's cancer drug Glivec was even denied a patent by IPO on the grounds that the drug is expensive -- even though drug prices should have nothing to do with granting a patent.
However, the most bizarre decision IPO made is over Gilead's drug Viread, known generically as tenofovir disoproxil fumarate (TDF). TDF is arguably the best HIV drug in the world and has become the standard of care in combination with other drugs. Yet, despite a track record showing that TDF is 50 times more effective than any other formulation of the compound, IPO denied the patent and told Gilead that the drug was not innovative enough, says Bate:
- Nonetheless, Gilead, even without an Indian patent, negotiated with 13 Indian companies to make its anti-HIV drug, TDF.
- Today, Gilead's most successful Indian partner is Matrix Laboratories; in 2009, Matrix sold more TDF than Gilead, producing treatments for more than 420,000 patients in the developing world.
- Matrix's production costs are about half those of Gilead, allowing the company to make a profit at a far lower price -- around $8 per month per patient versus Gilead's $17.
Other Western companies are beginning to follow Gilead's lead, and one hopes the trend accelerates. But arbitrary patent decisions in India don't help the kind of innovation pioneered by Gilead. After all, making new innovative drugs is not enough; we also need new ways of licensing those products for private benefit and the public good, says Bate.
Source: Roger Bate, "Solving an Innovator's Dilemma," American Enterprise Institute, May 20, 2010.
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