Patent Evergreening: The Wicked Game of Monopoly

Bryan Hong delves into the controversial strategy employed by pharmaceutical companies to prolong patent protection, exploring its impact and the regulatory mechanism to curb such practices.

Patent evergreening is a patent filing strategy adopted by pharmaceutical companies to prolong the patent protection term of their product. Pharmaceutical companies will generally “evergreen” their patent by obtaining a patent for a new formulation of the original drug or for different dosages or delivery methods of the original drug. This “new” patent is known as a formulation patent and though it has minimal increase in therapeutic value, it can extend the patent protection period by increasing the number of new formulations. Apart from formulation patents, market exclusivity of innovator drugs can also be extended through the filling of secondary patents for the original drug. Secondary patents cover peripheral aspects of the original drug such as the packaging, metabolites and manufacturing process which if patented can also be seen as extending the patent term of the original drug.

Patent evergreening has been negatively perceived as it goes against the core objective of the patent system which is to stimulate innovation and healthy competition in the market. Such patent strategy has enabled pharmaceutical companies to continue reaping benefits from its patented drugs beyond the term of the initial patent rather than investing resources in innovating and developing new drugs. This has indirectly and somewhat effectively delayed the entry of generic competitors into the market and helped maintain the price of innovator drugs at a premium years after the initial patent had expired.

In fact, it is observed that most Southeast Asian countries have taken a pro-generic stance against pharmaceuticals due to the pressing demands for more affordable generic drugs. Pursuant to the Trade-Related Aspects of Intellectual Property Rights (“TRIPS”) Agreement mandating member states to observe the minimum standards for the protection of IP rights,  the compulsory licence provision under the said agreement is usually invoked when necessary to allow generic pharmaceutical companies to produce a patented product or make use of a patented process without the consent of the patent owner.

In Malaysia, the application and grant of a compulsory licence are governed under Part X of the Patents Act 1983. Compulsory licences are usually granted by the government in situations whereby the patented products are manufactured in Malaysia and sold in the domestic market at unreasonably high prices without any legitimate reason. For instance, Malaysia had taken such approach against Gilead Sciences’ (“Gilead”) patented Hepatitis C drugs. The lack of generic competitors in the market had provided Gilead the opportunity to market their drugs at $1,000 per pill in a nation whereby the virus had affected 2.5% of the country’s population which came up to about 500,000 people. However, the market share of the innovator drug was hampered by the Malaysian government’s approval over a government-use compulsory licence which allowed the importation of the more affordable Sofosbuvir, also known as Solvadi.

Adopting a similar stance as Malaysia, other countries such as India have also taken a strong stand against the practice of patent evergreening by pharmaceutical companies. This is evidently seen in Novatis v Union of India & Others (2013) 6 SCC 1 whereby the Supreme Court of India dismissed Norvatis’s challenge to the rejection of its patent application for Beta crystalline form of “Imatinib Mesylate” on the ground that the said drug did not produce an enhanced or superior therapeutic efficacy as compared to the known substance “Imatinib Mesylate”. In addition, India has joined the trend of granting compulsory licences to improve drug accessibility in the nation. In Bayer Corporation Vs. Union of India & Others (Writ Petition No. 132 of 2013), India had showed its readiness to grant a compulsory licence when the innovator drugs are prohibitively expensive, and if it is in the public interest to do so.

Moving forward, it is observed that the ever-rising price of medication in Malaysia has led to the call for legal reforms such as those proposed in the Patents (Amendment) Bill 2021 which, among others, allows compulsory licences to be granted by the government regardless of any existing exclusive licence agreement with the patent owner. This welcomed move ought to be further considered by the legislature to strengthen the compulsory licensing provision so as to curb instances of unethical patent evergreening by pharmaceutical companies.

In conclusion, given the adverse socio-economic implication from patent evergreening and the monopoly of drug patents, the practice ought to be regulated by policymakers through among others compulsory licensing to create a pharmaceutical landscape which strikes an equitable balance between innovation incentives and healthcare accessibility.

Bryan is a pupil-in-chambers at Wong Jin Nee & Teo.