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FDA data indicate expenditure by pharmaceutical companies on R&D has doubled since 1996. Why is intensive research yielding so few patented inventions and so few new drugs?
According to the US Patent and Trademark Office, 2005 was another booming year for patenting worldwide. IBM alone received nearly 3000 US patents. Electronics manufactures such as Canon and Hewlett-Packard made up the top 10 of US patent recipients.
Absent from the top 10 list of patent recipients — and from the top 100 — were pharmaceutical companies. In contrast to their electronics industry counterparts, Big Pharma has experienced a marked decrease in technological success. New drug approvals in the US were down to less than half the number of approvals in 1996.
This is not for want of trying. FDA data indicate expenditure by pharmaceutical companies on R&D has doubled since 1996. Why is intensive research yielding so few patented inventions and so few new drugs?
Part of this phenomenon can be explained by the cyclical nature of pharmaceutical research. There is almost never an immediate reward from R&D investment. Rather, it takes years for R&D efforts to pay-off, with effort being bunched together over lean years and the results of that effort being seen in other years. We are going through a high investment, low return period.
This explains some, but not all, of what is going on. While fewer new drugs are being approved lately, patent-based litigation has increased and not just between pharmaceutical companies and commercial infringers or parallel traders, but between the pharmaceutical developers themselves. This part of the problem lies with the patent system.
Technology-intensive industries are enamoured with patents as incremental, documentary evidence that all their work and investment have paid off — at least on paper if not in commerce. The general perception is: the more patents, the better. However, as with research itself, quantity is not necessarily a substitute for quality. The drive to generate more and more patents results in incremental claims, where the patent application drafter divides the invention in issue into minute pieces. This allows for more patents to be squeezed from one inventive effort and makes each of these patents marginally safer, in that if one claim fails, either at the patent office or during litigation, others may survive.
The problem with this approach, as opposed to using broader, smore encompassing claims, is that it can leave gaps in the technology, over which other researchers may claim priority. The result is that two or more inventors can wind up with rights in parts of the same pharmaceutical application.
Claims relating to metabolites are a case in point. Pfizer and Schwarz Pharma are battling it out in London over Fesoterodine, a metabolite of Pfizer's DETROL treatment for overactive bladder symptoms. The question before the High Court is whether Pfizer's original claims in relation to the DETROL invention include the metabolite preparation claimed by Schwarz.
There is no clear answer and this highlights a deeper problem in patenting: what distinguishes one invention from another. The simple, time-honoured answer is that to be a distinct invention, and so not an infringement of someone else's patent, the invention must represent an inventive step over prior technology.
That answer, in its simplest forms, no longer works. Pfizer's product is one chemical. Schwarz's product is another chemical. Pfizer can argue that Schwarz's chemical is produced in the body automatically when a patient takes DETROL and so the Fesoterodine does not represent an inventive step. Schwarz can argue this is an over-simplification, that its work in developing the metabolite as a drug in its own right is an inventive step that is not covered by Pfizer's narrow patent claims.
We will know this summer what the High Court thinks: it's a fact question. In the meantime, the issue of what amounts to an inventive step, especially in relation to pharmaceuticals, needs to be addressed. The UK Patent Office is taking the lead in this area. It has announced a review of the patenting process, in particular of the requirement of an inventive step. This is a legal issue, but it should receive the comments of scientists and pharmaceutical professionals, as well as those of attorneys. We need a concept of inventiveness that can accommodate quality as well as quantity.
Thomas Hays is a patent attorney with Lewis Silkin, UK.