Patent Law Changes Could Help or Hurt Drugmakers

Article excerpt

Changes wrought by an international trade deal could extend the patent lives of more than 100 drugs, bringing millions of dollars of extra profits to brand-name firms and putting off the introduction of cost-cutting generic competition. Some generic companies, already heavily invested in getting a chemical copy to market, may wind up paying royalties to innovator firms.

U.S. law on patent terms was changed from 17 years from date of issuance to 20 years from date of filing, under the Uruguay Round Agreements Act (URAA) amendments to the General Agreement on Tariffs & Trade. Congress approved the wide-ranging world economic pact late last year. The purpose was to bring U.S. laws more in line with those of its trading partners. Under a transitional provision, patents unexpired as of June 8, 1995, could get the 20-year protection if that term is longer than 17 years from the date it was originally granted.

Stephen A. Schondelmeyer, head of the Prime Institute at the University of Minnesota College of Pharmacy, estimates that as many as 120 brand-name drugs may have their patent lives extended by anywhere from "three or four months to three or four years." Already, Merck & Co. has claimed that its lipid-lowering Mevacor (Iovastatin) will get an additional 18 months under URAA, prolonging its exclusive run into 2001. It also believes its antibiotic Noroxin (norfloxacin) is eligible for a 23-month add-on, good until February 2000, and Pepcid (famotidine) would get a two-month extension in 2000.

"Longer patent lives increase the expected profitability from research and development expenditures, with a consequent increase in the rate of technical advance," states a white paper prepared by the Progress & Freedom Foundation. The foundation, a think tank with close ties to House Speaker Newt Gingrich, has said it is designing a plan to restructure the Food & Drug Administration. "For the patient, longer patent protection should increase the availability of new products. The down side is that prices for these products will be higher for a longer period of time."

Schondelmeyer is doing a study on what the URAA delays in the introduction of generics could cost consumers. The National Association of Pharmaceutical Manufacturers (NAPM) and the National Pharmaceutical Alliance (NPA), which represent independent generic manufacturers and suppliers, respectively, are sponsoring the study.

One area of particular concern to the brand and generic industries is the effect of URAA on patent term extensions that can be granted to compensate for delays in the FDA approval process. …