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The Use and Abuse of Patents – Evergreening in the Pharmaceutical Sector

Törnvall, Martina LU (2013) JURM02 20131
Department of Law
Abstract
This thesis identifies some of the uncertainties surrounding the application of Article 102 of the Treaty on the Functioning of the European Union (TFEU) to evergreening of pharmaceutical patens. The concept of ever¬greening refers to a multitude of strategies adopted by patent holders with the aim to extend the privileged position that the patentee holds due to this exclusive right. Evergreening is common in the pharmaceutical sector, considering the financial profits that a successful patented drug can generate. Recently, the pharmaceutical industry has undergone some significant changes with several lucrative blockbuster medicines having lost patent protection. Even though an increased amount of money is spent on research and... (More)
This thesis identifies some of the uncertainties surrounding the application of Article 102 of the Treaty on the Functioning of the European Union (TFEU) to evergreening of pharmaceutical patens. The concept of ever¬greening refers to a multitude of strategies adopted by patent holders with the aim to extend the privileged position that the patentee holds due to this exclusive right. Evergreening is common in the pharmaceutical sector, considering the financial profits that a successful patented drug can generate. Recently, the pharmaceutical industry has undergone some significant changes with several lucrative blockbuster medicines having lost patent protection. Even though an increased amount of money is spent on research and development (R&D), the companies seem to have difficulties to launch new medicines. As a consequence, they become increasingly dependent on their existing patents and do their utmost to maximize profits from them. This may lead to evergreening.

The purpose with this thesis is to investigate the legality of evergreening by describing and analysing such behaviour in relation to Article 102. This thesis primarily put focus on one of these strategies: the launch of a second generation medicine. By launching a newly patented version of a product which is close to patent expiry, the risk of generic companies gaining a significant market share is decreased while the originator company maintains comparable sales numbers and avoids a decline in price. Depending on the measures taken around the launch of a second generation product, a pharmaceutical company may be liable under Article 102.

Evergreening involves three fields of regulation: pharmaceutical regulatory law, patent law and competition law which may seem difficult to reconcile since they pursuit different policy objectives. For example, the intersection between intellectual property law and competition law has been the subject of intense debate and when applied to the context of pharmaceutical patents, it becomes even more complex. In this thesis, it will be demonstrated that they may just be different means to the same goal. Nonetheless, it is shown that the relationship is complicated and that the application of competition rules to evergreening can lead to difficulties.

To decide how far a patent holder can go when it comes to evergreening, this thesis takes its stance in the recently decided AstraZeneca: the first case in which a pharmaceutical company was fined for an abuse of its dominant position in relation to evergreening in the EU. The result of this study indicates that evergreening may, depending on the circumstances in the specific case, constitute a violation of Article 102. The concluding chapter elaborates on the reasons to why pharmaceutical companies engage in evergreening and suggests that a reform of the patent system may be a way forward. (Less)
Abstract (Swedish)
Denna uppsats behandlar några av de frågetecken som uppkommer vid tillämpningen av artikel 102 i Fördraget om Europeiska unionens funktionssätt i förhållande till evergreening av läkemedelspatent. Begreppet evergreening syftar till ett flertal olika patentstrategier som har för avsikt att förlänga den privilegierade position som en patenthavare åtnjuter när hans eller hennes produkt skyddas av ensamrätt. Med tanke på de vinster som ett framgångsrikt patenterat läkemedel kan ge generera är det inte konstigt att evergreening är vanligt inom läkemedelsbranschen. På senare tid har läkemedelsbranschen genomgått stora förändringar då flera lukrativa storsäljande läkemedel har förlorat patentskydd. Även om företagen investerar pengar på forskning... (More)
Denna uppsats behandlar några av de frågetecken som uppkommer vid tillämpningen av artikel 102 i Fördraget om Europeiska unionens funktionssätt i förhållande till evergreening av läkemedelspatent. Begreppet evergreening syftar till ett flertal olika patentstrategier som har för avsikt att förlänga den privilegierade position som en patenthavare åtnjuter när hans eller hennes produkt skyddas av ensamrätt. Med tanke på de vinster som ett framgångsrikt patenterat läkemedel kan ge generera är det inte konstigt att evergreening är vanligt inom läkemedelsbranschen. På senare tid har läkemedelsbranschen genomgått stora förändringar då flera lukrativa storsäljande läkemedel har förlorat patentskydd. Även om företagen investerar pengar på forskning och utveckling verkar de ha svårt att lansera nya läkemedel. Till följd av detta blir företagen allt mer beroende av sina befintliga patent och gör sitt yttersta för att maximera vinsterna från dem. Denna situation kan leda till evergreening.

Syftet med denna uppsats är att undersöka lagligheten i evergreening genom att beskriva och analysera dess förhållande till artikel 102. Uppsatsen fokuserar främst på en av dessa strategier: lanseringen av en andra generationens medicin. Genom att marknadsföra en ny patenterad version av ett läkemedel vars patentskydd är på väg att löpa ut minimeras risken för att generikaföretag vinner marknadsandelar samtidigt som patenthavaren behåller sina höga försäljningssiffror och undviker en prisnedgång. Beroende på de åtgärder som vidtas vid lanseringen av en andra generationens medicin kan läkemedelsbolaget missbruka sin dominanta ställning och vara ansvarigt under artikel 102.

Evergreening aktualiserar främst tre rättsområden: läkemedelsrätt, patenträtt och konkurrensrätt vilka kan tyckas svåra att förena på grund av de motstridiga syften som ligger bakom deras existens. Till exempel är förhållandet mellan immaterialrätt och konkurrensrätt sedan länge omdiskuterat, en debatt som intensifieras i läkemedelsbranschen. I denna uppsats kommer det visas att de båda disciplinerna endast är två olika verktyg som arbetar sida vida sida för att nå samma mål. Trots detta går det inte att bortse från att relationen dem emellan är komplicerad vilket gör en tillämpning av konkurrensreglerna på evergreening problematisk.

För att avgöra hur långt en patentinnehavare kan gå tar uppsatsen sin utgångspunkt i det nyligen avgjorda AstraZeneca: det första fallet där ett läkemedelsbolag bötfälldes för missbruk av dominerande ställning på grund av evergreening i EU. Denna uppsats kommer fram till att evergreening kan, beroende på omständigheterna i det specifika fallet, utgöra ett brott mot artikel 102. I det avslutande kapitlet görs en analys av varför läkemedelsbolag ”evergreenar” sina patent och det föreslås att en reform av patentsystemet kan vara en framtida lösning. (Less)
Please use this url to cite or link to this publication:
author
Törnvall, Martina LU
supervisor
organization
course
JURM02 20131
year
type
H3 - Professional qualifications (4 Years - )
subject
keywords
abuse of dominant position, competition law, patent strategies, evergreening, pharmaceutical sector, pharmaceuticals, patents, EU law
language
English
id
3810494
date added to LUP
2013-08-22 07:07:01
date last changed
2013-08-22 07:07:01
@misc{3810494,
  abstract     = {This thesis identifies some of the uncertainties surrounding the application of Article 102 of the Treaty on the Functioning of the European Union (TFEU) to evergreening of pharmaceutical patens. The concept of ever¬greening refers to a multitude of strategies adopted by patent holders with the aim to extend the privileged position that the patentee holds due to this exclusive right. Evergreening is common in the pharmaceutical sector, considering the financial profits that a successful patented drug can generate. Recently, the pharmaceutical industry has undergone some significant changes with several lucrative blockbuster medicines having lost patent protection. Even though an increased amount of money is spent on research and development (R&D), the companies seem to have difficulties to launch new medicines. As a consequence, they become increasingly dependent on their existing patents and do their utmost to maximize profits from them. This may lead to evergreening. 

The purpose with this thesis is to investigate the legality of evergreening by describing and analysing such behaviour in relation to Article 102. This thesis primarily put focus on one of these strategies: the launch of a second generation medicine. By launching a newly patented version of a product which is close to patent expiry, the risk of generic companies gaining a significant market share is decreased while the originator company maintains comparable sales numbers and avoids a decline in price. Depending on the measures taken around the launch of a second generation product, a pharmaceutical company may be liable under Article 102. 

Evergreening involves three fields of regulation: pharmaceutical regulatory law, patent law and competition law which may seem difficult to reconcile since they pursuit different policy objectives. For example, the intersection between intellectual property law and competition law has been the subject of intense debate and when applied to the context of pharmaceutical patents, it becomes even more complex. In this thesis, it will be demonstrated that they may just be different means to the same goal. Nonetheless, it is shown that the relationship is complicated and that the application of competition rules to evergreening can lead to difficulties. 

To decide how far a patent holder can go when it comes to evergreening, this thesis takes its stance in the recently decided AstraZeneca: the first case in which a pharmaceutical company was fined for an abuse of its dominant position in relation to evergreening in the EU. The result of this study indicates that evergreening may, depending on the circumstances in the specific case, constitute a violation of Article 102. The concluding chapter elaborates on the reasons to why pharmaceutical companies engage in evergreening and suggests that a reform of the patent system may be a way forward.},
  author       = {Törnvall, Martina},
  keyword      = {abuse of dominant position,competition law,patent strategies,evergreening,pharmaceutical sector,pharmaceuticals,patents,EU law},
  language     = {eng},
  note         = {Student Paper},
  title        = {The Use and Abuse of Patents – Evergreening in the Pharmaceutical Sector},
  year         = {2013},
}