[Ip-health] Patent pools: should pharma share IP with the developing world?

[Judit Rius Sanjuan]

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Patent pools: should pharma share IP with the developing world?

A proposal to change patent protection rules to speed the development of
affordable drugs for the developing world is under debate this week at
the World Health Organisation (WHO) in Geneva. The suggestion is being
put to the second meeting of the intergovernmental working group on
Public Health, Innovation and Intellectual Property, set up in September
2006 to prepare a global strategy and plan of action to bring the
benefits of modern medicines to developing countries.

The call for the creation of patent pools comes from governments of
developing countries and non-governmental organisations (NGOs), and has
been championed by the US NGO Knowledge Economy International (KEI),
based in Washington DC. KEI claims that countries including France,
India, Thailand, the Netherlands and Brazil have indicated they are in
favour of pooling.

Inevitably, such a move is not favoured by the industry, which launched
a pre-emptive strike at the end of last week in the form of a progress
report on pharmaceutical company projects to develop new medicines and
vaccines for ten diseases of the developing world that have been
prioritised by WHO and the United Nations.

In its submission KEI says the collective management of intellectual
property rights can help the intergovernmental working group achieve its
goals. By pooling patent assets it is possible to overcome market
inefficiencies, lower transaction costs, and make it easier to access
multiple rights. Such arrangements can be made voluntarily or
non-voluntarily, notes KEI.

Precedents for pooling

But patent pools are not just a heavy-handed way of knocking heads
together to achieve policy objectives. One of the key motives behind
voluntary pooling is to clear blocking patents that would be infringed
when practising other patents. It also vastly simplifies the whole
process of intellectual property management, leading to a reduction of
licensing transactions, making it easier to deal with multiple owners
and handle the payment and collection of royalties.

The idea of pooling patents has plenty of precedents, dating from
industrial age sectors such as sewing machine and aircraft
manufacturing. More recently, it has been used to bring together
intellectual property in the creation of international technology
standards including DVD and MPEG.

Pools can involve simple cross-licensing among two or more competitors,
to share a handful of patents needed for a particular product, or they
may involve an industry-wide pool encompassing hundreds of manufacturers
and thousands of patents.

KEI notes that there are precedents for government intervention to
create a pool, citing the US Manufacturers=92 Aircraft Association pool,
formed in 1917 against the backdrop of legislation threatening
compulsory license of patents to overcome barriers to the scale up of
aircraft manufacturing, as the US prepared to enter the second world war.

The US government also insisted that rights to license patents for radio
technologies should be consolidated to foster development of the radio
industry.

Now KEI and others want to promote the use of patent pools with the
specific objective of increasing the level of generic competition to
branded medicines.

Lower prices, greater innovation

Providing much more efficient and effective mechanisms for the voluntary
or compulsory licensing of patents will lower prices and promote
innovation. =93The multitude of patents, potential claims of infringement,
variance of national laws, complexity of international treaties and
national patent laws, and complicated rules for the export of medical
technologies under compulsory licenses present barriers for the expanded
use of generic medicines,=94 KEI says in its submission to the WHO.

Ahead of the meeting the International Federation of Pharmaceutical
Manufacturers & Associations (IFPMA) published a progress report on
industry R&D projects for diseases of the developing world, in attempt
to demonstrate that current measures to foster the development of
suitable medicines are bearing fruit.

The figures show member companies are working on 50 treatments compared
with 43 at the end of 2006. At the same time, the number of ongoing
IFPMA company vaccine projects to address developing world diseases has
grown from six to eight.

The combination of the industry-based model and public-private product
development partnerships is increasing R&D in this field, said Harvey
Bale, Director General of the IFPMA, saying =93The R&D pharmaceutical
industry encourages [intergovernmental working group] participants to
support positive proposals that would reinforce this important trend.=94

Bayle added that the number of candidate products in development for
tuberculosis, the leading cause of mortality in the developing world,
has increased to 22, of which six are in phase II or phase III clinical
trials.

IFPMA, whose members include 25 leading international companies and 46
national and regional industry associations, has proposed a
=93transferable market exclusivity=94 model under which a company would be
granted patent extension for products marketed in developed countries,
in exchange for doing R&D on neglected diseases, to improve the supply
of medicines.

It would not be unprecedented for WHO to get involved in moves to form
patent pools. Following the outbreak of severe acute respiratory disease
(SARS) there was a rush to sequence the SARS genome and apply for patents.

In response the WHO SARS Consultation Group got together with SARS
intellectual property owners to create the SARS IP Working Group to
examine the implications of this land grab. The working group concluded
the patent thicket developing in the field would discourage investment
in R&D, potentially delaying the development of a vaccine. It suggested
the formation of a patent pool to steer round this road block.

How to manage patent pools

In the Report of the Commission on Intellectual Property Rights,
Innovation and Public Health, published in 2006, WHO encouraged
pharmaceutical companies to grant voluntary licences. But NGOs argue
that such disparate, voluntary agreements will not give generics
manufacturers the confidence they need to invest.

KEI and others have proposed the creation of the Essential Medical
Invention Licensing Agency, a non-profit entity, to manage patent pools.
Patent owners would be asked to voluntarily license patents for use in
countries not designated as high income by the World Bank. In cases
where the pool failed to obtain voluntary licences, it might ask
governments under the terms of the memorandum of understanding to seek
compulsory licences.

The agency would collect royalties from generic manufacturers and pay
royalties to patent owners on a pre-determined transparent and
predictable formula basis that takes into account the actual use of each
patent in the manufacture of products by patent pool licensees.

--
Judit Rius Sanjuan
Attorney
judit.rius@keionline.org

Knowledge Ecology International (KEI)
www.keionline.org / www.cptech.org
1621 Connecticut Ave, NW, Suite 500 Washington, DC 20009 USA
Tel.: +1.202.332.2670, Ext 18  Fax: +1.202.332.2673