Research—reducing the cost of medicines
An investigation by two Te Herenga Waka scholars into the blurring of lines between the patent regime and how pharmaceuticals are regulated has been completed.
In 2018, Professor Susy Frankel from Te Kauhanganui Tātai Ture—Faculty of Law and Professor Jessica Lai from the School of Accounting and Commercial Law at the Wellington School of Business and Government were awarded a Marsden Fund Standard Grant worth $622,000 for their project, ‘Mission Creep’ in the Pharmaceutical Industry and its Impact on Innovation and Health.
Their research focuses on how two usually siloed systems—patents and pharmaceutical regulation—cross over with the introduction of regulatory data exclusivity with respect to pharmaceuticals, and the way that affects competition in the market. Both researchers are hopeful their work will result in better-designed laws around patents and drug regulation, which could lead to cheaper medicines for New Zealanders.
Professor Frankel says patents are the established main form of protection for pharmaceuticals. “Importantly, the patent regime is justified as necessary for innovation and includes checks and balances. In contrast, the regulatory review regime is primarily a framework to ensure the health and efficacy of pharmaceuticals,” she says.
“Pharmaceutical company behaviour creates an overlap of the two regimes through the operation of regulatory data exclusivity, which is where information about how pharmaceuticals work [clinical trials] is kept confidential for a defined period. But patents are public documents which serve to promote the dissemination of knowledge and in that way promote innovation,” she says. “The practical reality is that the pharmaceutical industry is gaming the system by increasingly relying on regulatory data exclusivity, which can have a negative impact on innovation and competition—the line between the rational scope of patents and the role of the regulatory system has blurred.”
This mission creep is problematic and even potentially dangerous, says Professor Lai.
Innovation policy has explicitly entered into the foreign terrain of health, which is based on very different assumptions, policy goals, and frameworks to achieve its goals.
Professor Lai
Failure by policy- and law-makers to recognise the full extent of the interrelated nature of the two systems can allow the pharmaceutical industry to have protection in a system not designed to balance incentives for innovation and anti-competitiveness, the pair say.
“One of the points of our project was to get the detailed data and information that illustrates those points—it’s about creating the evidence base for New Zealand policy, which doesn’t otherwise exist.”
Professor Frankel and Professor Lai used a team of Te Herenga Waka research assistants to analyse data from four pharmaceutical jurisdictions: New Zealand, the US, the EU/UK, and Australia.
“We examined policy statements, legislative changes and developments in case law in each jurisdiction to find out how patent standards had strengthened over the last 30 years, and how the development of biologics [pharmaceuticals derived from living organisms as opposed to chemicals] has impacted the pharmaceutical industry’s use of the patent system to incentivise innovation,” says Professor Lai.
“The aim was to unravel the behaviour of pharmaceutical companies, and look at how that plays out in New Zealand,” says Professor Frankel.
We import most of our medicines, so it’s crucial for policymakers to get a better understanding of the way the industry is being gamed so that they can ensure our domestic settings actually help bring pharmaceuticals to the public at a cheaper price.
Professor Frankel
Professor Frankel and Dr Lai have a long track record of collaboration over the years, including co-authoring Patent Law and Policy in 2016. Their Marsden-funded research into the mission creep within the pharmaceutical industry has involved preparing publications, speaking at international conferences, and hosting a symposium on the topic.
“I've always been interested in why and the way that pharmaceuticals are patented—pharmaceutical cases drive a lot of the framing of patent law because it’s a sector that uses patents a lot. So when the pharmaceutical industry starts to say, ‘the patent system isn’t working for us’, that raises challenging issues,” Professor Frankel says. “I also do a lot of work around trade agreements and intellectual property—confidentiality of information within the regulatory system and extending patent law so it covers more things for a longer period of time, are heavily negotiated aspects in New Zealand’s trade agreements. So, for me, this project has been a nice confluence of all those areas.”