Health Warning: It's Boffins vs Lawyers ; Laws Designed to Make Lifesaving Therapies Cheaper Are Driving Drug Companies to Waste Millions in Court, Says Leo Lewis
Lewis, Leo, The Independent (London, England)
Two years ago, before Glaxo Wellcome merged with SmithKline, it was launching a drug in Europe, and was racing against the regulatory filing deadline. The research documents were successfully flown to Stockholm, but the large DHL delivery lorry waiting at the airport wasn't big enough for the hundreds of thousands of pages of legal material. The filing delay held the drug off the market for months.
The legal environment for drugs makers has always been complicated, but now the process of developing and selling medicine is mired in a torrent of legal considerations. The outcomes of major cases affect the way companies make new medicines. Some believe it is only a matter of time before pharmaceutical groups are judged more on the strength of their lawyers than their white-coated boffins.
The issue is particularly acute in biotechnology companies. For many, their existence is based on ownership of "concept" patents, and many thousands of patents are associated with the mapping of the human genome. Analysts believe progress of biotech research will depend on the outcome of the next two years of legal battles.
In a sense, the shift is already well under way. A glance at the share performances of some of the biggest drug-makers shows the importance investors attach to events on the legal horizon. Although last year's HIV showdown between the South African government and 30 major drugs makers, including Roche, Bayer and GlaxoSmithKline (GSK), highlighted the critical importance attached to intellectual property (IP) protection, the most significant issues arise within the industry itself.
The market remains concerned with the pipeline of new drugs, but share prices are increasingly at the mercy of concerns over ongoing or future legal trouble. At the centre are the IP patents the companies treasure so highly, and the attacks on them by generic manufacturers. The challenges to patents on Prilosec and Augmentin battered the stock of their producers AstraZeneca and GSK.
Because of the cyclical nature of medical breakthroughs, the market is experiencing a glut of patent expirations on drugs from the advances in the early Eighties. Generic drugs makers have latched on to the rich pickings from selling off-patent versions of the blockbusters, and their eagerness often ends in court.
Most of the impetus stems from the 1984 US Waxman-Hatch Act, which covers drugs patents. The Act was designed to encourage generic manufacturers to produce their wares - and bring prices down - while acknowledging the importance of leaving enough incentive for the pharmaceutical companies, which spend an average of pounds 500m to bring a product to market, to invest in drug design.
Unfortunately, by encouraging the generics, the Act caused the legal battles. Under it, the first generic maker to …
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Publication information: Article title: Health Warning: It's Boffins vs Lawyers ; Laws Designed to Make Lifesaving Therapies Cheaper Are Driving Drug Companies to Waste Millions in Court, Says Leo Lewis. Contributors: Lewis, Leo - Author. Newspaper title: The Independent (London, England). Publication date: April 28, 2002. Page number: 5. © 2009 The Independent - London. Provided by ProQuest LLC. All Rights Reserved.