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 …