Patent punch-up: drugs makers resist the bitter pill of US law change

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The Independent Online

In a year marked by fierce legal battles and huge stock downgrades, the global pharmaceutical industry is on course for another mighty confrontation.

In a year marked by fierce legal battles and huge stock downgrades, the global pharmaceutical industry is on course for another mighty confrontation.

US drugs law is set for a shake-up, and the ripples will be felt round the world. Big pharmaceutical groups like GlaxoSmithKline and AstraZeneca, already nursing the wounds of legal wrangles, are now preparing to defend their turf against a tide of Washington-led reform.

If their efforts fail, they will suffer badly as their struggle to cling on to intellectual property loses more ground to producers of generic medicines. At the very least, there will be a new wave of lawsuits.

The issue is pharmaceutical patents and the seemingly remorseless progress of generic drugs companies. In 1984, the US Congress adopted the Drug Price Competition and Patent Term Restoration Act, a law known as Hatch-Waxman after the names of its two main sponsors. Amendments to the Act are now being proposed that would close many of the options that drugs companies have to extend the lives of their patents.

The original Act struck a very delicate balance. On one hand there was a desire to break the drug industry's stranglehold on medicines and their prices by encouraging generic producers to enter the market at the earliest stage. This was achieved by letting generic makers use the clinical trial data of the brand-name drug in their Abbreviated New Drug Application (Anda), so they could start selling drugs almost as soon as the brand patent ran out. Before the Act, generics made up 15 per cent of the US market; now they have a 50 per cent share.

On the other hand, the Act recognised the importance of offering big incentives to invest in researching new products. As an industry average, drugs companies reckon on a cost of $800m (£500m) to bring a drug through development and on to the market. That investment is made on the assumption their patents will last long enough to make a decent return, and one of the Act's main benefits for the drugs makers was that it restored to the life of a patent the time spent putting it through the Food & Drug Administration's trials.

But a strong group of politicians is now trying to amend the Act still further in favour of the generic firms. Recent polls in the US suggest medical costs are at the top of voters' worries, and there is clearly political capital to be gained from reform. Last week, a Senate committee passed the amendments and the Bill now passes to the Senate for a full hearing.

If approved, and even drug-industry lobbyists say it stands a good chance, the Bill will create huge headaches for the likes of Glaxo's Jean-Pierre Garnier and other pharmaceutical chiefs. As a result they are desperately trying to make their case, both through powerful lobbying bodies like PhRMA and off their own backs. Their arguments centre on two points. The first is that any change in the balance of Hatch-Waxman will jeopardise their motivation to invest in research. This view is backed up with gloomy predictions of a time in the future where the flow of new drugs is down to a trickle.

Their second argument is that the amendments are too vague. One critical part would stop drug companies filing "frivolous patents" that might include a small change in the formula of a particular drug. That, say the Bill's sponsors, would prevent the companies from extending their patents unnaturally.

The drugs groups have confirmed they are ready for a fight that is expected to be played out over the next month and a half.