Patents, ESRI and reduced income to Irish Economy from Patented Drugs

It has been widely reported that Ireland is the fifth biggest exporter in the pharmaceutical field and that many blockbuster drugs have either recently lost or will soon lose their patent protection with few new drugs having been developed to replace the money-making blockbusters.  For example, Irish-made cholesterol-lowering drug Lipitor (Pfizer) and schizophrenia drug Zyprexa (Eli-Lilly and Company) went off patent in 2011.  The patents for asthma treatment Singulair (Merck) and the erectile dysfunction drug, Viagra (Pfizer), also made in Ireland, expired recently.

This drop-off in exclusivity is referred to as the “Patent Cliff” – revenues fall sharply as soon as the protection ends due to the fact that generic companies can sell their cheaper versions once the patent covering the original drug expires.  This loss in monopoly for the patent owner leads to reduced export value for the Irish-made drugs.

The consequence of the patent cliff is already being felt in Ireland as pharmaceutical companies acquire or merge with each other to cut plant and facilities costs and many sources blame a decline in export values on expiring patents.  However, the Economic and Social Research Institute (ESRI) noted last week that the impact of the patent cliff is being felt mainly in the profits of US multinationals rather than the Irish economy.

Indeed, although Pfizer has shut a manufacturing facility in Cork, put another manufacturing facility up for sale and cut hundreds of jobs in Ireland over the last 18 months due to a decline in sales of Lipitor and Viagra, it announced this year that it would build a $30m facility at Ringaskiddy to suit a new pipeline of niche medicines.  Additionally, a number of highly successful generic manufacturing companies have a presence in Ireland and this could reduce the effect of the patent cliff on the economy.

Patents afford up to 20 years of exclusivity for an invention provided annual renewal fees are paid to keep them in force.  Supplementary protection certificates (SPCs) can be obtained for drugs which are subject to regulatory approval if this approval has taken an appreciable proportion of the patent’s life to complete.  SPCs can extend protection by up to a further 5 years.

Until the expiry of a patent or SPC, the owner has the power to take legal action against anyone who copies, manufactures, sells or imports the protected drug.  In exchange for this monopoly, patent applications, which are published 18 months from filing, must describe the invention in detail.  This publication of the patent application can enable generic companies to be in a position to put a generic drug on the market on the morning after the day that a patent expires.

SPCs for the Republic of Ireland are currently granted by the Irish Patents Office and require an Irish or EU marketing authorisations.  They are not granted centrally by the European Patent Office.  With the upcoming introduction of the new unitary patent, a number of issues relating to SPCs deriving from unitary patents arise.  Will the situation of a bundle of national SPCs remain or will a single SPC be granted centrally?  If a single SPC is granted, where will litigation take place?  We await the outcome.

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