Novartis has been in the news lately for the lawsuit filed against it by the US government for kickbacks it allegedly gave to doctors for prescribing certain drugs. As we noted about that case, it should be no surprise that this sort of activity happens, given that the incentive structure we've created with patents is so extreme. Here's one example of at least some principled doctors striking back against Novatis. Over 120 cancer researchers and doctors have published a paper calling out Novartis specifically for its pricing on the cancer drug Gleevec (marketed as Glivec outside the US). The doctors point out that it can cost over $100,000 per year for Gleevec currently. And, Novartis has been continually jacking up the price. There had been concern when the drug was first introduced a decade ago, that it was priced way too high at $30,000, leading the company's then CEO, Daniel Vasella, to acknowledge the complaints, but to argue that it was "a fair price." Well, now the company is pricing the drug at more than three times what it thought was a fair price, and it should be no surprise that people think this is outrageous profiteering by abusing a government granted monopoly to charge way more than any fair market price would allow.
The paper these doctors published points out that such high prices undoubtedly causes harm to patients who need the drug. The lead author of the paper told CNN that this whole situation is unsustainable, and something needs to be done to bring prices down to a more reasonable, market-based level. He just focused on Gleevec because it's his area of research:
"These price increases do not reflect the cost of development of drugs or the benefit they provide to the patient," he told CNNMoney. "They are simply related to the drug companies' wish to increase profits beyond a reasonable range."
Of course, one key way to help drive down prices is to do the obvious: stop granting government-given monopolies on the production of such drugs. That, alone, is the reason why the prices are so crazy in most cases. Thankfully at least some countries have recognized how ridiculous this is. India recently blocked Novartis from trying to patent a slightly different version of Gleevec, which means that the company will finally face some real pricing pressure from generics in that country. One would hope that other countries would do the same, and recognize that competition isn't a bad thing. It might just save lives.
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You may have seen the news recently that the US government has kicked off a lawsuit against Novartis, the pharmaceutical giant, for paying kickbacks to doctors to get them to prescribe certain drugs.
Authorities said the Basel-based company for a decade lavished healthy speaking fees and "opulent" meals, including a nearly $10,000 dinner for three at the Japanese restaurant, Nobu, to induce doctors to prescribe its drugs.
They said this led to the Medicare and Medicaid programs paying millions of dollars in reimbursements based on kickback-tainted claims for medication such as hypertension drugs Lotrel and Valturna and the diabetes drug Starlix.
The charges are detailed in a whistleblower lawsuit first filed against Novartis Pharmaceuticals Corp by a former sales representative in January 2011 and which the U.S. government has now joined.
Of course, this is hardly a surprise to anyone who has followed the medical profession at all over the past few decades. The stories of "favors" and benefits for doctors from mis-named pharmaceutical "sales reps" (often very young, just out of school, incredibly attractive, but with little knowledge of the actual field), whose jobs often seemed more akin to cruise director and entertainer rather than knowledgeable, helpful sales person, are everywhere. That it's finally taken this long for the government to think that maybe, just maybe, this might distort the nature of our healthcare system, and lead to wasteful prescriptions, including prescriptions that cost significant taxpayer money is somewhat incredible.
What's worse, as economist Dean Baker points out, is that anyone at all is surprised that this happens. After all, when our own government policy is to hand those drugmakers incredibly powerful monopolies on life-saving pharmaceuticals, we've actually created the incentives ourselves for such activity to take place:
When the government grants drug companies patent monopolies that allow them to sell drugs at hundreds or even thousands of times the free market price it gives them an enormous incentive to do things like pay off doctors to prescribe drugs. Everyone who has ever taken an intro economics class understands that fact.
Unfortunately our leading economists do not seem aware of how protectionism in the prescription drug industry leads to corruption that can both raise costs and jeopardize the public's health.
Perhaps that's why it took the US government so long to even attempt to crack down on such activities. It created the environment in which such activities thrive and are encouraged.
If we want to stop such practices, perhaps, rather than just suing the pharmaceutical companies, we start to look at the ridiculous incentive structure we've set up, whereby drug companies take on very little of the actual risk (most drugs today are actually first created by universities using publicly funded money), but are given incredibly powerful monopolies, such that the prices are considered unbelievable.
True competition in the market would -- as always -- lead to both more actual innovation, lower prices, less corruption and (most importantly) better health and public safety.
The Indian supreme court has refused to allow one of the world's leading pharmaceutical companies to patent a new version of a cancer drug, a decision campaigners hailed as a major step forward in enabling poor people to access medicines in the developing world.
Novartis lost a six-year legal battle after the court ruled that small changes and improvements to the drug Glivec did not amount to innovation deserving of a patent. The ruling opens the way for generic companies in India to manufacture and sell cheap copies of the drug in the developing world and has implications for HIV and other modern drugs too.
The key issue at stake is a practice known as "evergreening": making small changes to a drug, often about to come off patent, in order to gain a new patent that extends its manufacturer's control over it. It's a way of cheating on the implicit bargain of patents: that a government-backed monopoly is granted in exchange for the invention entering the public domain at the end of the patent's lifetime.
That's what makes today's decision so important. It's not just about allowing Indian generics manufacturers to offer Glivec for a fraction of the Novartis price; it's equally about establishing the principle that "evergreening" patents won't be as easy in India as it is elsewhere, where the practice is common. This will allow India's pharma companies to produce a wide range of drugs at low prices that can then be sold to emerging countries unable to afford Western prices.
"We strongly believe that original innovation should be recognized in patents to encourage investment in medical innovation especially for unmet medical needs," said Ranjit Shahani, Vice Chairman and Managing Director, Novartis India Limited. "We brought this case because we strongly believe patents safeguard innovation and encourage medical progress, particularly for unmet medical needs. This ruling is a setback for patients that will hinder medical progress for diseases without effective treatment options."
That's pretty much what you'd expect him to say, since we've heard it here on Techdirt so many times before: without patents that allow monopoly pricing and big profits, there will be no investment in new drugs, and everyone will suffer etc. etc. But this simply isn't true. Much of the fundamental research that leads to important new drugs is done in public laboratories, paid for by taxpayers around the world, not by pharma companies.
Here, for example, is the story of how Novartis came to gain its highly-lucrative monopoly on Gleevec/Glivec, as told by the key researcher who actually developed it: Brian Druker, chair of Leukemia Research and professor of medicine at the Oregon Health and Science University Cancer Institute. He explained how the crucial initial research was carried out in an opinion piece published on the Livemint site in 2007:
The basic research that led to the identification of enzyme inhibitors for CML [Chronic Myeloid Leukaemia -- the main condition that Glivec is designed to treat] dates back to 1960 with the identification of the Philadelphia chromosome in patients with CML by researchers at the University of Pennsylvania, Peter Nowell and David Hungerford. In 1973, Janet Rowley at the University of Chicago determined that the abnormal chromosome was due to a translocation of genetic material.
No pharmaceutical companies seem to have been involved in this early work, and they were also minor players in the crucial move out of the laboratory, into product development, as Druker explains:
In 1993, I moved to Oregon Health Sciences University in Portland and had a single goal of finding a company that had the best inhibitor for Bcr-Abl [the cancer-causing protein] and to bring it into clinical trials. My work in Oregon on a therapy for CML was primarily funded by public sources, particularly the National Cancer Institute. My persistence with scientists at Ciba-Geigy (now Novartis) helped to keep the development of imatinib on their agenda despite uncertainty from product managers.
So not only was the drug developed largely thanks to public funds, but the pharma company that ended up making all the profits from it wasn't even hugely enthusiastic about the project initially: it was only Druker's "persistence" that led to the drug being approved. And if you're wondering about his views on the current world of pharma, with its stratospheric prices and a habitual recourse to evergreening to extend patents way beyond their original life-span, here's what he wrote back in 2007:
Pharmaceutical companies that have invested in the development of medicines should achieve a return on their investments. But this does not mean the abuse of these exclusive rights by excessive prices and seeking patents over minor changes to extend monopoly prices. This goes against the spirit of the patent system and is not justified given the vital investments made by the public sector over decades that make the discovery of these medicines possible.
The fact that many key drugs have only been possible thanks to those "vital investments made by the public sector" is nearly always overlooked by defenders of the pharma patent system. It's another reason why the Indian Supreme Court's decision is not only right, but just.
Techdirt has been following the important story of the kidney and liver cancer drug marketed under the name Nexavar since March, when India granted a compulsory license for the first time since re-instating patents on pharmaceuticals. Naturally, the patent holder, Bayer, fought back, and appealed against that decision. Now we learn from Intellectual Property Watch that Bayer has lost:
Last Friday (14 September), the Chennai-based Intellectual Property Appellate Board (IPAB) which is responsible for hearing appeals on patent applications, rejected a petition by German pharma major Bayer AG, seeking a stay on an order of India’s Controller of Patents granting a compulsory licence (CL) to Indian generic drug maker Natco Pharma Limited, for a drug used to treat liver and kidney cancer.
It's quite possible that Bayer will try to appeal to a higher court, but what's noteworthy is that this is just one of several other important pharma cases in India at the moment. For example, the Delhi High Court held that Roche’s patent on the cancer drug Tarceva was valid, but that an Indian generics manufacturer had not infringed on it because it had only been selling a variant of the drug. Another high-profile case concerns the blood cancer drug Gleevec, sold as Glivec in India, whose manufacturer, Novartis, is fighting India's refusal to grant it a patent. Here's the background:
The legal dispute in the Glivec case centres around a provision of India’s 2005 patent law, called Section 3(d), which states that "the mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance or the mere discovery of any new property or new use for a known substance or the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant." The dispute brings to the fore a fundamental question: what is an "invention"? Or more precisely, how much innovation is required to obtain a patent in India?
Novartis insists that it is not fighting in order to get more money, but to vindicate its "honor". What this probably means is that it is trying to establish the principle that patents can be given for new forms of drugs, even if they provide no enhancement over earlier versions. If it loses the Gleevec/Glivec case, that could have serious repercussions for future patent applications by the company in India.
More generally, this current round of high-profile drug patent cases may well have major knock-on effects in other regions of the world. Western pharma companies are probably worried that their recent failures in India to gain certain patents or block local manufacturers of generics could be repeated elsewhere as emerging countries wake up to the flexibilities within the TRIPS agreement that India is currently exploiting. The Intellectual Property Watch article mentions three nations that are already considering this -- Botswana, South Africa and Swaziland.
In trying to limit compulsory licences and avoid efficacy tests on products, the Bayer and Novartis cases are seeking to undermine public health considerations aimed at improving access and therapeutic advantage. The TRIPS Agreement does not limit the grounds on which compulsory licences can be granted, and does not prevent patent applicants from having to demonstrate enhanced efficacy for their allegedly new and useful inventions. There are many problems facing access to and rational use of medicines in India but the provisions within the country's patent laws, if more extensively and properly applied, should help rather than hinder such access. India's laws and experiences could provide a useful example for low-income and middle-income countries worldwide.
Two months ago, we received an email from a guy at a company who claimed that an operation called Webvention was claiming that his company's website was violating its patent by having links on their website that would show additional info when you moused over the links -- commonly called "tooltips." This is a standard feature in HTML. I asked the guy for details and he suddenly got worried and said he would need permission to share the threat letter. I even promised him I'd keep his company's name out of it, I just wanted to see the specifics of what the threat letter said. After emailing me back once to say he was busy but would get to it, he then stopped responding to all my emails. I eventually did write a post about how Webvention was suing a bunch of website operators, noting how incredibly vague the lawsuit was, and also pointing out that this was one of Intellectual Ventures' one-time patents.
While the guy who contacted us never came through with any details, it looks like many of the details are now coming out. Ars Technica calls our attention to the news that two of the companies who received similar letters, Tenneco and Novartis, have both sued pre-emptively, asking for the patent to be invalidated, or failing that, for a declaratory judgment that they don't infringe. While Ars Technia says that the patent covers "rollover images," I believe it's even worse than that. They seem to believe it covers tooltips. The key claim in the patent (5,251,294) is:
28. A computer-based method for aiding a user in accessing a body of stored information which includes segments of related information, the method comprising displaying a set of labels, each label providing an abbreviated indication of information content of a corresponding one of said segments, said labels being displayed in an organized model reflecting relationships among information contents of said corresponding segments, enabling a user to point to individual labels in said model using an electronic pointing technique, and for each label to which said user points, displaying to the user, for previewing, the information content of the corresponding segment.
Yeah. Tooltips. Anyway, the lawsuit filing actually shares much of the details of the threat letter that my original source was unwilling to share. Webvention apparently offers a special deal: if you pay up within 45 days, it'll only cost you $80,000, for using one of the most basic features on the web today. The letter also claims that a ton of companies have, in fact, licensed this ridiculous patent, including HP, Symantec, Panasonic, American Express, Nokia and Google. If so, that's really sad that those companies would give in on such a lawsuit. Joe Mullin's story at Law.com (linked above) notes that at least Nokia and Google are supposedly paying members of Intellectual Ventures -- which is supposed to protect them from bogus patent claims. It would be a bit ironic (and would certainly question the value of IV) if it turned out that both companies paid up to avoid a lawsuit from an ex-IV patent (the other possibility might just be that Webvention considers IV members to have "licensed" the patent, which would be misleading).
Either way, kudos to Novartis and Tenneco for fighting this shakedown, whereas others appear to have given in. This use of the patent certainly has the feeling of the infamous JPEG patent (5,253,341) which was used to terrorize all sorts of websites that had JPEG images on their site, until it was finally knocked down by the USPTO. Of course, the real shame is all those companies who have already paid up for this patent. Assuming this patent is also struck down eventually, the companies who paid up won't get their money back. It's a shame they can't sue the USPTO for outright fraud in approving such a patent in the first place.
Technology can certainly make for some interesting clashes with regulatory regimes. Social networking, for example, starts to bring up all sorts of questions about the fine line between certain regulated areas of advertising, and basic free speech communication issues. Eric Goldman points us to the news that the FDA is warning pharma giant Novartis (pdf) over its use of a "Facebook Share" widget on its site promoting the drug Tasigna (a leukemia drug).
The specific complaint is that the "share" feature includes promotional material about Tasigna, but not all of the associated risks (and, as with so many drugs, there's quite a list of risks). Because of the limited amount of space often used in "sharing" content, the FDA feels that some of the sharing options are misleading, not correctly noting that the drug is only approved for some users.
The shared content is misleading because it
makes representations about the efficacy of Tasigna but fails to communicate any risk
information associated with the use of this drug. In addition, the shared content inadequately
communicates Tasigna’s FDA-approved indication and implies superiority over other
products. Thus, the shared content for Tasigna misbrands the drug in violation of the Federal
Food, Drug, and Cosmetic Act (the Act) and FDA implementing regulations.
The FDA even picks on the specific word choices in some of the sharing features, such as calling the drug a "next-generation" drug, which apparently implies it's better than other drugs in the space when that might not be the case. Advertising and marketing for pharmaceuticals has always been a contentious area, and I believe that many countries ban it, while the US allows it. But with the internet and social networking, the line between advertising and communication can start to blur. Yes, it may be problematic if Novartis is suggesting people "share" misleading or incomplete info about the drug, but what if people just start sharing that info on their own? Where do you draw the line?
from the jacking-up-the-price-on-known-medicines dept
As you may or may not know, India only recently changed its patent laws (under sever pressure from foreign countries and pharmaceutical companies) to allow pharmaceutical patents. Before that, pharmaceuticals (for the most part) were unpatentable there. Of course, contrary to what patent system supporters would tell you, India had a thriving pharma industry. Yes, a lot of it was in generic drugs, but according to patent system supporters if people can just copy each other, no one will even bother to get into that business. Reality shows that wasn't true. But, of course, the big pharma companies were quite upset by all of this, and got their governments to put pressure on India to "join the world community." In 2005, India's new patent laws went into effect, and while the results of all of this are still being analyzed, one thing that politicians smartly put into the law were sections 3(d) and (e), "which restrict protection being granted to already known and long-ago patented drugs and their combinations." This upset pharma industry sympathisers, but it's hard to fathom who could reasonably be against such a rule. You simply should not be able to patent things that are already known or patent the simple combinations of drugs that are already known. This is just common sense to prevent pharmaceutical firms from getting monopolies on drugs already out there.
However, Jamie Love points us to the news of a new report that found that the Indian patent office has gone against this law and issued such patents quite frequently and, no surprise, the main recipients are among the world's largest pharma companies, including Pfizer, Novartis and Eli Lilly. Is it any wonder that they've all been pushing to dump sections 3(d) and (e) all along? Remember, pharma patents are not about drug discovery, but about jacking up the prices on drugs.
While many people are aware of how dangerous software patents are to innovation in the software space, not nearly as many feel the same way about pharmaceutical patents. However, there is increasing evidence that pharmaceutical patents are harming healthcare in a variety of ways, often by slowing the pace of innovation by locking up important concepts and making them too expensive. Recently, India was pressured to update its patent system to cover pharmaceuticals (in many countries, pharma patents are a relatively recent addition), though the rules state that drugs created before 1995 cannot receive patent protection. However, drug makers have long learned that a great way to artificially extend patent protection on a drug is to make a tiny modification and then get a new patent. That's why you now see Clarinex on the market from the maker of Claritin. Claritin went off patent, so the maker came out with Clarinex, advertising that it was much better, even though that doesn't actually seem to be the case.
It seems that pharma firm Novartis tried to use this little trick to sneak in patent protection in India for a leukemia drug that came out before 1995. It tried to get a patent on a slightly modified version of the drug, which would then let it ban the sale of generic versions of the non-patented version of the drug. Luckily, as pointed out at Against Monopoly, an Indian court has denied the request, since Indian law says patents should only be granted for new products, or ones where there's a significant improvement -- which is not at all true in this case. That means generic makers can continue to market their drug in India and many, many more leukemia patients will be able to afford the medicine. Novartis, of course, whines that this will slow down drug development, but the evidence suggests exactly the opposite. Having a truly competitive market increases the incentive for real innovation. What Novartis wants is to focus on marginal, useless innovation for the sake of keeping monopoly profits.