The Impact of Patents on Drug Access in Developing Countries

In the debate over access to medicines in developing countries, patents are often blamed for making essential drugs unaffordable. Yet, 90 per cent of the 319 drugs on the World Health Organizations’ list of essential medicines are not under patent. A recent analysis of patent protection in developing countries showed that on average, only 4 of the 319 drugs on the essential medicines list were under patent in any of 65 low income countries.

Increasing the availability of generic medicines through the expropriation of drug patents is often suggested as a preferred method of improving access to medicines in poor countries; however there is little evidence to support the premise that this approach improves drug access. Further, weakened patent protection makes it less likely that new medicines will be discovered and developed to treat or prevent neglected diseases that are prevalent in the developing world.

Those who advocate for the weakening of patent protection and the earlier availability of generics ignore the fact that a strong patent system that encourages research and development is essential for both the research-based pharmaceutical industry and the generic industry to fulfill their roles in reducing the burden of disease. Without strong patent protection there will be fewer new products for generic manufacturers to copy. The legacy of society’s investment in intellectual property protection is the certainty that today’s breakthrough medicines become tomorrow’s low cost generics.

Patents are important to pharmaceutical discovery and development because the costs of drug innovation are very high while the costs of imitation are relatively low. It takes, on average, hundreds of million dollars to discover, develop, and gain regulatory approval for a new medicine. Without patent protection, imitators can get a “free ride” on the innovator’s research and regulatory approval and duplicate a compound for a small fraction of the originator’s costs.

When a manufacturer develops a new drug, a patent provides market exclusivity for a period of time in order to recoup research and development costs. Once the patent expires, a generic manufacturer can reproduce and sell the product. Nominally a patent lasts for 20 years, but since the patent term begins when a compound is first identified and usually many years will pass before clinical trials and other product testing and regulatory approvals are complete and the product is marketed, the effective patent term averages 12 years.

Sources:
World Trade Organization Fact Sheet TRIPS and Pharmaceutical Patents September 2006
Food & Drug Administration Glossary http://www.fda.gov/cder/drugsatfda/Glossary.htm#D
US Patent & Trademark Office http://www.uspto.gov/web/offices/pac/doc/general/whatis.htm

Drug Development Process

“Generic drugs are less expensive [than brand name drugs] because generic manufacturers don’t have the investment costs of the developer of a new drug. Because generic manufacturers don’t have the same development costs, they can sell their product at substantial discounts” ¹. Some of the differences between brand name products and generics are described in the table below:

¹FDA Centre for Drug Evaluation and Research http://www.fda.gov/cder/consumerinfo/generics_q&a.htm

²Adams CP, Brantner VV, Estimating the cost of new drug development: is it really $802 million? Health Affairs, 25, no2(2006):420-428.

³ "Prescription for high price" National Post, page A15, April 27, 2001

⁴ Tufts University Center for the Study of Drug Development

⁵ U.S. Congressional Budget Office "How Increased Competition from Generic Drugs has Affected Prices and Returns in the Pharmaceutical Industry", July 1998.