IPR and Medicines 30: R&D and Innovator Companies

Interesting  data here. Out of the top 10 biggest firms in the world in terms of R&D spending, five are pharma (Roche, Novartis, Merck, Pfizer, J&J), three are IT (Samsung, Intel, Microsoft), and two are automobile firms ((Volkswagen, Toyota). Latest data March 2014. 

Source: Raconteur, Intellectual Property 2014

But in terms of top 10 firms in terms of number of patents held, zero from pharma, almost all of them are IT companies.

From this article:

"It’s estimated that currently up to 80 per cent of stock market values are based on intangible assets. This compares to just 20 per cent in 1975, the year before Apple was founded. This remarkable difference reflects the fact that many companies in 2014 operate in industries with very little machinery or other fixed assets. Accordingly the observed company value must be attributed to intellectual assets such as brand value and other IP...

"The importance of IP is particularly apparent in the pharmaceutical sector, where the expiry of dozens of critical patents has wiped billions from the value of the industry over the past few years.

"On March 12 for example, Pfizer’s stock was suspended for 20 minutes on news that its blockbuster pain drug Celebrex would lose its patent protection 18 months earlier than expected. Pfizer stock closed down almost 3 per cent, a meaningful number for a company with almost $200 billion in market value...."

Yes, people simply want to live long -- against cancer (there are about 200+ different types of cancer), against Alzheimers, against various infectious diseases (dengue, malaria, HIV, MERS-CoV, ebola, etc.). There are ethical and economic issues, some people think the cost of R&D by innovator pharma should be neglected, the fruits of their successful drug inventions should be shared to all. This is a wrong argument.

More interesting infographics here, http://raconteur.net/.../ranking-the-worlds-most...

10 Most innovative nations in the world, 2014 (Raconteur)

1. S. Korea (and #3 by R&D intensity, #2 by patent activity)

2. Sweden (#4 by R&D intensity)

3. US (#10 by R&D intensity, #5 by patent activity)

4. Japan (#5 by R&D intensity, #3 by patent activity)

5. Germany (#9 by R&D intensity, #6 by patent)

6. Denmark (#6 by R&D intensity)

7. Singapore

8. Switzerland (#8 by R&D intensity)

9. Finland (#2 by R&D intensity)

10. Taiwan (#7 by R&D intensity, #1 by patent)

That's 4 from Asia, 5 from Europe and 1 from N. America..

Israel is #1 by R&D intensity, China is #4 by patent; both though are not in the top 20 most innovative nations in the world.

Samsung spent big time money in R&D because it wanted to topple Motorola, Nokia, other previous heavyweights in mobile phone and electronics. The innovator pharma spent big time money on R&D because the demand by patients, rich and poor, for new, more revolutionary, more disease-killing medicines, is high.

If governments are involved in many countries in pharma, it is more of helping the generic manufacturers, not the innovators. See policies like drug price control, compulsory licensing (CL), special CL, etc. All these are aimed and targeted at innovator pharma, never at generic pharma.

In the case of medicine innovation by innovator pharma, all of their new medicines that start out as patented, more expensive drugs "for the rich" for about 8-10 years (the various regulatory approvals, multiple clinical trials, take about 10-12 years out of total patent life of 20 years) ultimately become off-patent, the generic manufacturers come in and multiply the production at cheaper price, benefiting the poor. Government has zero role here except as drug regulatory agency via FDA and still the poor will benefit.

Here's a good chart. It shows that out of the 20 years patent life of a newly-invented medicine, up to 13 years are gobbled by R&D, pre-clinical, clinical trials, registration. Each stage must get regulatory approvals from government FDAs.

Source: IFPMA, 2012. The New Frontiers of Biopharmaceutical Innovation.

Exploratory stage: 2 to 4 years identifying antigens to prevent or treat a disease. Selected candidate vaccines will continue the process.

Pre-clinical stage: 1 to 2 years assessing antigens’ safety in animals and selecting the best candidate vaccine to continue the process.

Clinical development: 6 to 7 years Testing the candidate vaccine in humans.

Phase I: test of safety on 10 to 100 volunteers.

Phase II: Evaluation of the immune response in 100 to 3,000 volunteers.

Phase III: Large-scale tests of the vaccine’s efficacy and tolerance on 3,000 to 40,000 volunteers.

Registration: Synthesis stage from 12 to 18 months

Another good chart, the vaccine development cycle. Same source above, IFPMA.

Innovation and IPRs like patent, copyright, trademark, should be protected. Not all ideas are the same. Stupid ideas are numerous and endless, readily available anywhere, they do not need protection. Bright ideas are scarce, they need protection.

Governments should fully appreciate and recognize this, and not be easily pressured by populist demands to confiscate or disregard IPRs and give to some (very likely, crony) local firms.
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See also:
IPR and Medicines 26: Novartis' Glivec and India's IPR Ruling, April 01, 2013, 
IPR and Medicines 27: More on Glivec and India's SC Decision, April 02, 2013
IPR and Medicines 28: Politicizing Innovation, Rewarding Rent-Seeking, April 06, 2013
IPR and Medicines 29: Parallel Importation and Patent Linkage, August 19, 2014

Counterfeit Drugs 7: WHO, InterPol and IFPMA on SFFC

The spurious/falsely-labelled/falsified/counterfeit (SFFC) medicines or simply counterfeit medicines is a big public health problem. Patients who take such fake and/or substandard drugs will not experience improvement from their illness unless their immune system is strong enough. At worse, their condition might even worsen as the disease can mutate and evolve into something more complicated, and can even result to death.

While the more commonly faked medicines are those patented or newly-introduced ones and hence, are priced high, even cheaper but popular generic drugs are also counterfeited. The Department of Health (DOH) and the Food and Drug Administration (FDA) are also raising public awareness of this problem, like this DOH poster.

At the World Health Organization (WHO) website, this basic information is posted.

http://www.who.int/mediacentre/factsheets/fs275/en/

Medicines: spurious/falsely-labelled/ falsified/counterfeit (SFFC) medicines

Fact sheet N°275
May 2012

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Key facts

• Spurious/falsely-labelled/falsified/counterfeit (SFFC) medicines are medicines that are deliberately and fraudulently mislabelled with respect to identity and/or source.
• Use of SFFC medicines can result in treatment failure or even death.
• Public confidence in health systems may be eroded following use and/or detection of SFFC medicines.
• Both branded and generic products are subject to counterfeiting.
• All kinds of medicines have been counterfeited, from medicines for the treatment of life-threatening conditions to inexpensive generic versions of painkillers and antihistamines.
• SFFC medicines may include products with the correct ingredients or with the wrong ingredients, without active ingredients, with insufficient or too much active ingredient, or with fake packaging.

Recently, the International Federation of Pharmaceutical Manufacturers and Associations (IFPMA), based in Geneva like the WHO, produced a short video clip about the danger of SFFC medicines, Watch Out for False Friends.

Some of the points mentioned by the WHO above were reiterated there. It also highlighted that some 124 countries are impacted/affected by these fakes, and 532 products have been counterfeited. The longer, 3:30 minutes version, is found here.

These fakes that are dangerous to public health are being exposed by certain civil society organizations including the federation or association of pharma companies themselves, both innovator and generic. And there is a big role for the government here, when civil society effort are not enough and a bigger, wider network of government agencies, local and national, armed (the police) and non-armed, are needed. After all, the main function of government is to promulgate the rule of law, including the law against stealing the intellectual property of certain companies like trademark, patent and copyright.

The former Executive Director of PHAP, Reiner Gloor, wrote a paper about this subject a few months ago. He discussed the role of the Interpol, in coordination with country governments, drug manufacturers and civil society organizations, in battling this global crime. For instance,

In 2012, an Interpol-supported initiative spanning 100 countries aimed at disrupting the organized crime networks behind the illicit online sale of medicines, resulted in some 80 arrests and the seizure of 3.75 million units of counterfeit medicines worth $10.5 million.

Below is the article.
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http://www.bworldonline.com/content.php?section=Weekender&title=Interpol-in-fight-vs-fake-medicines&id=67608

Interpol in fight vs fake medicines

Medicine Cabinet -- Reiner W. Gloor

Posted on March 21, 2013 07:22:41 PM

FAKE MEDICINES are found everywhere in the world. Emerging economies like the Philippines, as well as highly developed countries with strong regulatory systems, have fallen victims to pharmaceutical counterfeiting.

In the Philippines, close coordination between the government and the pharmaceutical industry has resulted in the monitoring and seizure of counterfeit medicines in Metro Manila and some provinces. A multi-stakeholders alliance advocating patient safety called the Safe Medicines Network has also been established to help the government in the campaign against fake medicines.

Drug Innovation 7: IFPMA, Superbugs and Tropical Diseases

People's lifestyle and communities evolve and continuously change. Their expectations, patience or impatience for more modern lifestyle, including more modern treatment in case they get sick, also evolve and changes. That is how modern medical science, pharmaceutical R&D, diagnostic tests and other aspects of the healthcare industry evolve.

I am reposting below three nice articles by the Executive Director of the Pharmaceutical and Healthcare Association of the Philippines (PHAP), Mr. Reiner Gloor. These are about the role of drug innovation and how to better encourage it, not demonize it. These appeared in his weekly column in BusinessWorld.

Protecting intellectual property rights (IPR) like drug patents is an important policy measure by governments to encourage innovation. Policy reversals like promoting compulsory licensing (CL) and other variants of IPR confiscation can only discourage innovation. After spending 10 to 14 years in various clinical trials and drugs R&D, and some $1 B or more per candidate drug molecule, it is not wise for governments to simply coerce the innovator companies to give away those efforts to other companies which did not spend equal amount of time and money to develop more revolutionary and more disease-killer medicines.

I have argued it over and over in this blog and other papers, that the main function of government is to promulgate the rule of law, protect private property rights, and the citizens' liberty, freedom of expression and freedom from aggression by bullies. Protecting IPR is consistent with this government role.

The three papers are entitled "Impact of innovation", "Protecting innovation", and "Encouraging innovation". Enjoy reading.

(1) Impact of innovation

Posted on 05:03 PM, November 08, 2012

Medicine Cabinet -- Reiner W. Gloor

http://www.bworldonline.com/weekender/content.php?id=61108

THERE was a time when infectious diseases such as pneumonia, typhoid fever and tuberculosis ravaged people around the world with no medicines available to treat or prevent them.

Alexander Fleming’s discovery of penicillin and subsequent research yielded new antibiotics that continue to protect the people from simple to complex infections. Since the 1920s, scientists also had their eyes on prevention, management and even cure for non-communicable diseases. Now, thousands of medicines have been produced to treat or prevent diseases, thanks to pharmaceutical innovation.

During the biennial conference of the International Federation of Pharmaceutical Manufacturers and Associations (IFPMA) in Geneva last week, the global research-based medicines industry called for a shared commitment to promote global health through the promotion of further innovation.

These medical innovations, along with other health interventions, have, after all, helped in beating polio on a global scale, and prevented measles, mumps, rubella and other ailments.

IFPMA President Dr. John Lechleiter said that in the past decade alone, vaccines for measles, polio, and diphtheria-tentanus-pertusis have saved the lives of an estimated 21.2 million children under the age of five each year.

He added that between 2000 and 2006, immunization campaigns reduced the number of deaths caused by measles by 68% worldwide and 91% in Africa. Furthermore, immunizations provided to nearly 300 million children in 72 developing countries have saved over five million lives. Reports also showed that global infant mortality fell from 77 deaths per 1,000 births to 62 or a reduction of 20% between 2000 and 2009.

Innovations in medicine have also helped increase cancer survival rates, and dramatically reduce deaths due to HIV/AIDS.

Biopharmaceutical research is likewise being focused on non-communicable diseases such as cardiovascular diseases, diabetes, chronic respiratory diseases, and cancers that have grown to become the world’s biggest killers.

The biopharmaceutical sector has similarly invested heavily on understanding so-called rare diseases or those which affect fewer than 200,000 people. A deeper look at an individual’s genetic make-up is putting personalized medicine in the forefront of today’s innovation so that detection, treatment and prevention of the disease will be more tailored to the needs of each patient (For more information on personalized medicine, go to www.innovation.org.)

People are also living longer due to medical innovations. In illustrating this, a child born in 1955 had an average life expectancy at birth of only 48 years. In 2000, a child could expect to live 66 years. Life expectancy will increase to 73 years in 2025, it is said. Dr. Lechleiter commented that developing countries are seeing the most rapid gains.

Professor Frank Lichtenberg of Columbia University disclosed “new medicines accounted for 40% of the increase in life expectancy during the 1980s and 1990s in 52 developed and developing countries.”

Apart from the impact to life and health, biopharmaceutical innovations also resulted in economic gains by way of years of productive work, economic value added, consumer spending, and taxes paid.

No less than the World Health Organization (WHO) said that a nation needs a healthy population to achieve economic development. In fact, the 2001 report by the WHO Commission on Macroeconomics and Health stated that “health is a creator and pre-requisite of development.” It emphasized that increasing the coverage of health services and a small number of critical interventions to include the world’s poor could “save millions of lives, reduce poverty, spur economic development, and promote global security.”

The IFPMA Assembly also pointed out that there is strong evidence that innovative medicines are the most cost-effective part of health care. In another study, Mr. Lichtenberg found that for every $1 spent on new medicines for cardiovascular diseases in Organization for Economic Cooperation and Development (OECD) countries, close to $4 were saved in hospitalization and other healthcare costs.

More than economic gains are the social impact of medical innovations on patients who may be our children, siblings, parents and friends.

These days, a diagnosis of a disease does not necessarily mean an end to ties with families and friends.

These gains and the processes that these innovations go through must not be taken for granted. As Mr. Lechleiter said, we must build upon and not rest upon the contributions of the past. For despite our tremendous progress, much more remains to be done.

IPR and Medicines 21: Tropical Diseases and Governments

Malaria, dengue, tuberculosis, schistosomiasis, river blindness, leptospirosis, lymphatic filariasis, sexually-transmitted diseases (STDs), these are among the known tropical diseases that affect Filipinos and other people living in the tropics yearly. Many of them are infectious and communicable, usually by mosquitos and other insects, parasites and bacteria, and have no treatment or vaccines yet. Hundreds, if not thousands, are dying in the Philippines alone each year because of these diseases.

Yet the attention of many governments and even the WHO are on the lifestyle-related non-communicable diseases (NCDs). Even the DOH website, http://www.doh.gov.ph/ has little discussion about tropical diseases, more on NCDs. While it is true that the latter are now the world's chief killers, their isolation and control are mostly internal, meaning based on personal responsibility or irresponsibility, on how people takes care of their body and that of their households. I have argued in the past that government should focus more on infectious and communicable diseases because these can affect entire communities, and they are relatively easier to control than NCDs.

I am posting here two of the most recent articles by Mr. Reiner Gloor on "neglected tropical diseases" (NTDs). Reiner is the Executive Director of the Pharmaceutical and Healthcare Association of the Philippines (PHAP, www.phap.org.ph). This is the organization of mostly innovator pharma companies, enterprises that are often demonized by certain sectors over patents and other intellectual property rights (IPR) issues, and they fail to recognize the value of medicine innovation and the high cost, high risks of such undertaking. These groups are so focused on "cheaper medicines" and curative healthcare, than more powerful, more disease-killer drugs and vaccines.

Reiner did not mention the policy bias of governments towards NCDs in his two articles below, I only made that observation myself. Here are the papers, enjoy.
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(1) http://www.bworldonline.com/weekender/content.php?id=46457

Posted on 05:34 PM, February 09, 2012

Medicine Cabinet -- Reiner W. Gloor

Global collaboration vs tropical diseases

THE WORLD Health Organization (WHO) has set a new target that would control, eliminate and eradicate a group of diseases that affects about one billion people living in poor tropical and subtropical countries.

By year 2020, the WHO announced its vision to end the misery caused by neglected tropical diseases (NTDs) that kill or disable millions of adult and children worldwide.

Since these illnesses affect poor countries, they likewise remain a contributor to a vicious cycle of poverty.

NTDs often lead to stigmatization and prevent children from developing to their fullest potential. Given their impact on patients, NTDs can no longer be ignored.