In recent years, many large pharmaceutical companies’ top selling patents have expired, as the patent’s twenty-year life cycle has come to an end. Once the patent protection expires, generic versions of the medicine can be produced, which allows other companies to enter the market. The production of generic medicines strengthens competition in pharma field.
A reference price system for medicines has been in use in Finland since 2009, under which medicines included in the system can be substituted for a less expensive generic equivalent. The system aims to promote price competition and thereby lower the cost of medicines. In Finland, pharmacists are required to tell customers about the least expensive product. Similar systems, which also aim to promote competition and achieve savings in the public sector, are widely used elsewhere in Europe.
Pharmaceutical patents are granted to products in which the active ingredient meets the criteria for a new invention. Such patents can also be granted to improved products, for example, for a re-purposed medicine that has already once been patented for another purpose.
The usefulness of granting patent protection for improved products and whether this encourages further research and development of medicines has been widely discussed in Europe over the last two years. European courts in the UK, the Netherlands and Germany, for instance, have debated who is ultimately liable when a generic medicine is sold to patients for a patented purpose over the generic medicine’s purpose.
In practice, granting patents to improved products can create problematic situations. Once the patent protection of a medicine used to treat a rare disease expires, generic products aimed at doing the same job become available. However, while generic versions are entering the market, the original medicine may have been found to alleviate e.g. pain and has therefore received a new patent. In such a situation, a patented version for one purpose and a generic version for another purpose both consisting of the same active ingredient are available on the market at the same time.
Nevertheless, these problems are often only realised at the stage when a generic medicine is sold to a customer for a patented purpose and the original medicine’s protection suffers. Solutions such as the reference price system enable the situation to happen. What makes this a particularly difficult issue is the fact that prescriptions in many European countries only include the medicine’s active ingredient, not the intended purpose. It is therefore impossible for pharmacies to know the purpose for which the medicine was prescribed, which is why a generic medicine that can legally only be sold to treat the rare disease mentioned above may be given to treat the pain.
Since a generic medicine manufacturer often has nothing to do with how the drug actually reaches the end user, it is difficult for pharmaceutical companies to seek damages from their competitors. In addition, various European courts have given very different decisions in these kinds of patent disputes in recent years. The implementation of pharmaceutical patents relating to improved products and questions concerning liability for damages are still very controversial and open to interpretation. However, Europe is eagerly awaiting more detailed policy regarding these difficult questions.