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Effects of Drug Patents and Various Perspectives
There is no denying to the fact that the process of drug discovery and it’s scrutiny to enter the consumer market is so long and investment intensive, that a patent seems the only and rather indispensable way to make-up for the effort in the form of tangible profits, without the fear of competitor(s) intervention. But, the monopoly incurred by the patent to the inventor of the drug, does negatively influence the under developed and developing countries, where a large chunk of diseased people thrive, who find themselves helpless in front of the soaring prices of the lifesaving drugs. For them, the newly launched drug remains yet to be discovered, until the patent expires. These dilemmic effects of patents for drugs have been the hot topics of discussion for more than a century! This article focuses on highlighting the various effects of drug patents in different frames of references ranging from Inventor’s perspective to Patient’s perspective to Competitors’ Perspective to Research’s Perspective.

Inventor’s Perspective:
Having spent over 10 years on the discovery, clinical trials, and federal approvals and crossing all the tiring hurdles for launching the drug, including the long process of filing and approving the patent itself, a patent comes as a huge sigh of relief to the inventor(s). With over 15 years in hand for the right of producing the drug, the effort made in the discovery pays big dividends during the patent period. Upto $800 million of investment turns gradually into billion dollars profits. Such is the charm in being the ruler of the market in producing a lifesaving drug, that inventors leave no stone unturned in getting the extensions on patents even after one and a half decade of monopolism.

Patient’s Perspective:
If we talk about patients, patents might seem a foe to them. The high costs levied by the sole producer of the lifesaving drug(s) take a heavy toll on the budgets of even the middle class people, let alone the poors! A cruel truth of the patent effect is rather that the patent holders avoid supplying the drugs in the poor countries considering the huge costs of shipping adding to the drug cost, and a fear of reverse engineering and IP violation by the pharmaceutical companies of the underdeveloped world. As an instance, Novartis’s Gleevec (the drug which lost recent patent extension battle in India) is an effective cure for some forms of leukemia, costs the patients in patent effected areas as high as $70,000 a year! Whereas Indian generics provide the variant of the same at $ 2500 a year! One can easily see and feel the difference I guess.
But, just a different frame of reference in analyzing the effect of patents on patients shall make you realize that it’s the patents only that are motivating the Pharmaceutical giants to do the cost intensive R&D and come-up with new life saviors for the patients at the brink of death! If the law of patents wasn’t there, no body might have been interested in investing their intellect and money for others to party over it.

Competitors’ Perspective:
For competitors, the patenting of a drug might come has a huge loss not only in terms of the loss of rights for over 15 years, but also in loosing the race for launching the drug first in case of parallel research. Such losses are huge, considering the time and money invested for the research on a drug. But for the dormant competitors (those who spend least on R&D), patents are rather motivation to modify the chemical form of patented drug, and come-out with a generic form that might not violate the rights of the inventor. After the patent expiry, almost every dormant competitor joins the party in launching the generic forms of the then patented drug and thus they bank on the research conducted by the patent holders, though after a long wait of 15-20 years. India has long been called the pharmacy of the poors, owing to the large number of generic producers in the country, which produce the low cost generics to the high cost patented drugs, and supply them to the poor nations (and rather rich too!). The practice of generics in India has always been a thorn in the eye of Pharmaceutical giants. Their concern is apt, but Indian pharmaceuticals aren’t committing a crime either.

Research’s Perspective
I’ve brought this point in notice earlier in the article too—Patents are the triggers to research! The only reason giant pharmas like Novartis, GlaxoSmith, Merck, Pfizer etc have retained the “Giant” status despite huge investment in R&D (which asks for billions of dollars), is the patent effect! The returns out of Monopoly in market obtained out of a patent are in the scale of Multi-billion dollars! And, that’s an enough reason to spend a decade and a billion dollars on conducting research for a new form of life-saving drug , that would be more efficient and unique than the earlier variants in the market. The battle for patents rather hastens the pace of research too.

So, in nutshell, the effects of patents are myriad. But, effectively, patents are necessary part of the system. Their role in motivating the research can never be undermined, though their effect on poor countries is equally alarming. A differential application of patent laws in the developing countries could be a solution, wherein the inventor might be allowed to set-up a unit for production of the drug with exclusive rights, but at subsidized prices. The subsidized drug could be prohibited for export to developed nation(s) and would be exclusively for the citizens of the poor nation In any case, generics will emerge, so a differential policy can rather enable the patent holders to keep the generic producers at bay.

A report on “PATENT TERM EXTENSION and the PHARMACEUTICAL INDUSTRY” can be found on:

It’s a highly enriching piece of information on patent regimes of various drugs, the companies which were active in yester years, current status of the companies, the US patent laws, the process of patenting and the Patent-Industry relationship. Any one interested in this filed of study will find this report really useful.
Thank you
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I would like to post in this topic something more about regulations and patents but from the financial angle. We always ask question of whether the product will be accessible to the poor people so I will present few more aspects of that subject.

TRIPS Agreement or Trade Related Aspects of Intellectual Property Rights Agreement was established in 1994 and situation before that agreement was better because there was no interference with national regulations. Third world countries, in which there was little to none patent legislation, those in need of expensive medical goods could, gave access to either those medications sold at competitive market prices or generic drugs. TRIPS force globalization of Western patent laws. After that membership in WTO or World Trade Organization was conditioned by signing of the TRIPS Agreement. As poor countries was in need of the advantages that membership in WTO brings like trade liberalization and many other benefits they were forced to accept the rules of intellectual property which was much more suited to richer nations.

Then there appeared some interesting solutions. HIF or the Health Impact Fund was global agency that has assignment to reward pharmaceutical companies that make their drugs available to those in need. This reform would exclude poor from the patents system. HIF didn't have task to make people renounce the current patent system but just to provide a alternative way in which pharmaceutical companies could make money from the drugs they produce without hurting poor countries and people.

The main idea or some ideal scenario was that as many countries as possible must cooperate on a long term and contribute to the fund so afterwards, various pharmaceutical companies will start with development of drugs reaching as many people as possible so that in the end companies whose medicines have been most effective get rewarded.
Sasa Milosevic
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