[Contribution] Evergreening patent strategy, various shapes and shades

The basic spirit of patent law is to promote industrial development by encouraging inventions and disclosing technology, while granting exclusive rights to developers for a certain period of time with corresponding compensation. In particular, the importance of these 'patents' can be said to be very great in the pharmaceutical and bio industries, as the value of technology is important due to their nature. However, the current patent period is 20 years from the date of application, and in the case of pharmaceuticals, extensions of up to 5 years are possible (there are also issues related to this due to the recent revision of the patent law).

According to a report (Price Declines after Branded Medicines Lose Exclusivity in the U.S.) published by the IMS Institute for Healthcare Informatics, the prices of all drugs fell 51% within one year after losing exclusivity (patent). After 10 years, it plummeted by up to 88%. The difficulty of developing new drugs increases due to the strengthening of product approval procedures and competition with new technologies, and thus the development costs increase. However, the moment the patent expires, the price of the drug plummets, so the expiration of the period is more fatal to original pharmaceutical companies than anything else. Therefore, original pharmaceutical companies have no choice but to always try to compensate as much as possible for losses resulting from patent expiration.

As a result, many original pharmaceutical companies adopt a strategy of continuously filing for follow-up patents before the existing patent expires, effectively achieving the same effect as extending the patent period. The goal is to increase the period of market occupancy by blocking the entry of generic drugs, also known as generic drugs, into the market. This is commonly referred to as the ‘Evergreening patent strategy.’

◇Various forms of Evergreening patents

The original purpose of patents is to protect innovation and promote R&D (research and development), but if the evergreening strategy is abused, it can work differently from its original purpose. Companies are using various methods to extend the protection period of existing patents within the legally permissible range. The main types are as follows.

①Formulation change: Apply for a patent containing the same main ingredient but changed to a new formulation such as sustained-release formulation, oral formulation, or injection formulation.
② Change in indication: Apply for a patent for a new indication (medical use) in addition to the original therapeutic purpose.
③Composition change: Change the composition ratio to improve the effect and apply for a new patent on it.
④Improvement of production process: Apply for a patent that optimizes the production method of existing drugs
⑤ Combination Therapy: Apply for a patent for a new composition with improved efficacy and effectiveness by combining existing single-ingredient medicines with other active ingredients.

Representative examples include Viagra and Lipitor. Viagra, developed by the American pharmaceutical company Pfizer, was originally a cardiovascular treatment. However, during clinical trials, a new effect for treating erectile dysfunction was discovered, and Pfizer applied for a new patent due to a change in use. Accordingly, the exclusive right was extended for approximately 7 years from March 2012, the original patent expiration date, to October 2019. Through this, the company was able to generate enormous profits, occupying 92% of the erectile dysfunction treatment market. The original patent for Pfizer's hyperlipidemia treatment Lipitor expired in May 2007. However, in order to defend its interests, it continued to apply for follow-up patents, starting with the first material patent and going through the entire cycle from preclinical to phase 3. Various efforts were made to defend profits even after the expiration of patent rights, such as filing for optical isomer patents, composite patents, and amorphous patents.

◇Positive and negative aspects of Evergreening’s patent strategy

From the health authorities' perspective, there are both positive and negative aspects to the evergreen patent strategy. In some countries, there are attempts to regulate it through fair trade laws or patent abuse by focusing only on the negative aspects, but it is difficult to deny that there are positive aspects to the evergreen patent strategy.

① Positive side: From the original pharmaceutical company's perspective, new patents can secure stable profits, and based on this, an environment is created where they can invest in new research and development. In fact, because the development of new drugs requires enormous costs and time, some argue that a certain level of market monopoly is necessary for continuous research and development. Additionally, practical benefits can be provided to patients (consumers). A typical example is when the convenience of taking is increased or side effects are reduced through improved drug formulation. If the goal is to actually improve quality and improve the quality of life of patients rather than simply extending the monopoly, this can be a positive factor.

②Negative aspect: Contrary to the above, patients may suffer losses due to restrictions on competition. Subsequent patents make it difficult for generics to enter the market, causing drug prices to rise. Patients do not have the opportunity to use cheaper alternatives, which leads to an increase in the burden of medical costs. If it goes further, it will lead to loss of insurance finances on a national level. In some cases, there may be a possibility of becoming embroiled in legal disputes. Recently, regulatory agencies have tended to strictly judge the inventive step of composition patents, etc., so there is a possibility of invalidation. Additionally, if it is judged to be an abuse of patent rights, regulatory agencies may take action under the Fair Trade Act, etc. Generic companies may become embroiled in another dispute by filing patent invalidation trials, rights scope confirmation trials, or using other strategies to avoid patents altogether.

Evergreening patent strategy is an important tool for maximizing the profitability of pharmaceutical and bio companies. However, if abused, it not only hinders fair competition but can also cause harm to consumers. Therefore, in order for the pharmaceutical industry to achieve sustainable development in the future, a certain degree of balance with legal regulations is necessary. At the same time, companies will be required to develop innovative new drugs and develop ethical and fair patent strategies rather than simply extending monopolies.

Small Business Team

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[Contribution] Evergreening patent strategy, various shapes and shades (link)