Intellectual Property Implications on Pharmaceutical Innovation and Investment

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Intellectual Property Implications on
Pharmaceutical Innovation and Investment

• Presented by
• James Ringer
• CEO, Lilly South Africa
• Chairperson IMSA Regulatory and Patent Team
• 14 August 2007

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Innovation benefits the patient
Lilly researchers collaborated with scientists at
the University of Toronto to develop a process
to mass-produce insulin. The work resulted in
the introduction of the worlds first commercial
insulin product in 1923 by Eli Lilly and Company.
Patient with diabetes before and after insulin
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Pharmaceutical Research and Development (R D)
Process
Definitions IND Investigational New Drug
Application FDA U.S. Food and Drug
Administration NDA New Drug Application
Source www.Innovation.org
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Economics of Pharmaceutical Intellectual Property
(IP) Best Case
Patent Filing
Marketing Authorisation Granted
?
Exclusivity Period (11.5 Years)
Elapsed Time (8.5 Years)
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Why Patent Protection?

• Govt gives exclusivity for fixed period in return
  for transparency open use afterwards 20 years
  in SA
• Pharma industry does not get full 20-year benefit
  due to nature of industry and regulatory
  realities
• Fairness appropriate reward for innovation
  should underpin the system

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South African patent life compared to individual
countries
Grant Thornton Patent life country comparator
analysis 2007.
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Regulatory processes take time
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SA market realities versus proposed pricing
benchmarking countries
1 Grant Thornton Patent life country comparator
analysis 2007. 2 5 years based on Simvastatin
IMS model 2 years based on Simvastatin IMS
model.
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Public Health and Policy Considerations

• Compulsory licensing /parallel importation
• Provisions of Medicines Act (giving Govt autonomy
  to grant licenses where pressing need arises) to
  apply even with SPC in place
• Voluntary licensing has been successfully used in
  South Africa
• Development of medicine vs. Profits
• Put measures in place to protect investment so
  that more focus can be put on RD in developing
  world

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IP Innovation Investment

• Virtually all of the inventions which ultimately
  hastened economic development and lifted living
  standards especially new technologies and
  manufacturing processes were developed in
  societies with strong intellectual property
  protections.
• Countries with weak IP protections receive less
  direct foreign investment and the investment
  they receive is less technologically
  sophisticated
• Source Robert Shapiro and Kevin Hassett, The
  Economic Value of Intellectual Property, October
  2005.

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Value of IP

• Research shows positive link between IP and
  economic growth
• New drug development can benefit developing
  countries, e.g. in unique disease areas,
  technology transfer, skills development
• Innovative research leads to better health
  outcomes, skills development and increased
  investment.
• A scientific base is critical for long-term
  growth which goes beyond manufacturing
  duplication
• Discourages counterfeit drugs that can pose
  public health risk

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Economic Benefits of IPJordan Case Study
Source US PhRMA 2005
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Economic Benefits of IPMexico Case Study
Source US PhRMA 2005
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Economic Benefits of IPSingapore Case Study
Source US PhRMA 2005
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Multinational Pharmaceutical Sector Contribution
to SA
Contribution (Rand bn)
Source Deloitte Touche
Significant Direct Pharmaceutical Manufacturer
Contribution To SA Economy
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Multinational Pharmaceutical Sector Contribution
To SA Greater Than Direct Economic Contributions
Alone - 2006
Skills Development Double The
Statutory Requirement Of 1 Of Payroll
Total Export 2006 R 414 million (Growth
of 240 Last 3 Years)
CSI Investment Of 4.8 Net Profit After Tax gt
1 Required By BBBEE
Contribution (Rand bn)
Source Deloitte Touche
Further Pharma Contributions Greater Than
Statutory Requirements Codes
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R D in Pharma Benefits to SA and its Patients
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Proposed solutions for Pharmaceutical
Intellectual Property Protection in South Africa

• Supplementary Protection Certificates (SPC)
• Extends patent protection to account for longer
  pharmaceutical development and registration
  period
• Patent application to time of marketing approval
  less 5 years
• Data Package Exclusivity (DPE)
• 8 years from date of marketing authorisation
  before agency can use confidential information to
  grant another application
• 2 years of additional protection for
  authorisation of a new indication
• 1 year for additional work done on pediatric
  populations
• Based on current EU practices

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What is at stake for South Africa ?

• Opportunities for increased investment
  into R D
• Access to innovative drugs to treat more
  conditions and improve a patients quality of
  life
• Increase the eventual availability of generics
  that can enter the market

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Innovation benefits the Patient
Patient with diabetes before and after insulin
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• Thank You