The Use and Abuse of Patents – Evergreening in the Pharmaceutical Sector

University essay from Lunds universitet/Juridiska institutionen

Abstract: This thesis identifies some of the uncertainties surrounding the application of Article 102 of the Treaty on the Functioning of the European Union (TFEU) to evergreening of pharmaceutical patens. The concept of ever¬greening refers to a multitude of strategies adopted by patent holders with the aim to extend the privileged position that the patentee holds due to this exclusive right. Evergreening is common in the pharmaceutical sector, considering the financial profits that a successful patented drug can generate. Recently, the pharmaceutical industry has undergone some significant changes with several lucrative blockbuster medicines having lost patent protection. Even though an increased amount of money is spent on research and development (R&D), the companies seem to have difficulties to launch new medicines. As a consequence, they become increasingly dependent on their existing patents and do their utmost to maximize profits from them. This may lead to evergreening. The purpose with this thesis is to investigate the legality of evergreening by describing and analysing such behaviour in relation to Article 102. This thesis primarily put focus on one of these strategies: the launch of a second generation medicine. By launching a newly patented version of a product which is close to patent expiry, the risk of generic companies gaining a significant market share is decreased while the originator company maintains comparable sales numbers and avoids a decline in price. Depending on the measures taken around the launch of a second generation product, a pharmaceutical company may be liable under Article 102. Evergreening involves three fields of regulation: pharmaceutical regulatory law, patent law and competition law which may seem difficult to reconcile since they pursuit different policy objectives. For example, the intersection between intellectual property law and competition law has been the subject of intense debate and when applied to the context of pharmaceutical patents, it becomes even more complex. In this thesis, it will be demonstrated that they may just be different means to the same goal. Nonetheless, it is shown that the relationship is complicated and that the application of competition rules to evergreening can lead to difficulties. To decide how far a patent holder can go when it comes to evergreening, this thesis takes its stance in the recently decided AstraZeneca: the first case in which a pharmaceutical company was fined for an abuse of its dominant position in relation to evergreening in the EU. The result of this study indicates that evergreening may, depending on the circumstances in the specific case, constitute a violation of Article 102. The concluding chapter elaborates on the reasons to why pharmaceutical companies engage in evergreening and suggests that a reform of the patent system may be a way forward.

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