The pharmaceutical industry is one of the industries that is most dependent on intellectual property rights. The process required to approve medicines is very long and costly. The average cost of producing new medicinal products has increased significantly. A few years ago these costs amounted to one billion dollars. Today, it is thought to be upward of two billion dollars. In the case of patents, is not unusual searches are made in 100 to 150 countries. In this context, patent costs must be regarded as a cheap insurance premium.
Patent duration is normally 20 years but there is a possibility of a five year extension. The latter because it can in certain cases take around five years, sometimes longer, to gain an approval. Once the patent has expired, competitors will start the production of generics. They often start this process for approval of their marketing activities before the patent has expired. Once the generic preparation is approved, the Dental and Pharmaceutical Benefits Agency stipulates that pharmacies sell the cheapest preparation, regardless of what doctors prescribe. So it is large amounts of money that the maker of the original preparation can loose because of this.
There are similar authorities and regulatory frameworks in other countries. It pays to process to maintain your patent for as long as possible. On the other hand, it can mean a lot for a business with a generic product to invalidate a patent.
One health hazard is that the big companies (Big Pharma) demand that a new drug should be a so-called “blockbuster”, one that is sold for more than one billion dollars per year. For the third world, this could mean certain illnesses cannot be cured as the relevant drug has not been developed unless the producer sees it as selling in a blockbuster volume.
However, there is one possibility for a drug to be approved relatively cheap, as a so-called orphan medicinal product (OMP). An OMP approval provides exclusive rights to sales ten years after approval.
Gulliksson runs, together with technical expertise from the Ström & Gulliksson patent agency a group of pharmaceutical processes for both the large companies (Big Pharma) as well as generic companies. We also assist in the commercialization of drugs, licensing and drafting of contracts for development and research collaborations. Several of our lawyers are also engaged actively on the board of directors of various pharmaceutical companies.