Yağmur Karahan

Avukat

11.05.2021

EVALUATION OF GENERIC DRUG CONCEPT WITHIN THE SCOPE OF THE PATENT SYSTEM AND COMPETITION LAW

  1. Introduction
 
The demand for the pharmaceutical industry increases day by day and the sector grows due to the factors of the increase and aging of the world population, the change in living conditions of people, the increase in the variety of illnesses across the world. Pharmaceutical industry represents one of the most global industries in regards to manufacturing, marketing and post-marketing operations. Pharmaceutical industry is one of the outstanding industries because of its market share, trading capacity and contribution to the national economy with tax revenues. That is why, the pharmaceutical industry is one of the fields in which multinational manufacturers actively take part in on a global scale. 
 
Hence, it is extremely unfavourable to leave this sector solely to the dynamics of the market economy. Absolute audit and intervention of the public authority is needed for all phases from the development of the drug, which is an essential product, to its delivery to customers. The audit and intervention in question are critical not only for public and consumer rights, but also for competition law.
 
Türk Rekabet Kurumu’nun ilaç sektörüne ilişkin 27/03/2013 tarihli raporunda da yer verildiği üzere; bu sektörde rekabet hukuku kapsamında öne çıkan ve değerlendirilmesi gereken kavramlardan ilki; orijinal ilaçlar ve eşdeğer ilaçlardır.
 
As ranked in the report of the Turkish Competition Authority on the pharmaceutical industry dated 27/03/2013; The first concept that stands out and requires to be evaluated as part of competition law in this sector; original drugs and generic drugs.
 
  1. What is Generic Drug?
 
Chemical drugs, which are simpler in structure than biological drugs, are called generic (equivalent) drugs, which are produced by taking the original as a reference. Generic (equivalent) drugs are developed by the researcher, viz. the inventor, firm and produced by taking the original drugs to the market as a reference. These drugs are products that share the same features as the original one and provide the same treatment to the patient. It must be proven with scientific studies that a generic drug shares the same features as the original and it provides the same treatment to the patient. In order for a generic drug, which contains the same active ingredient as the original on the same doses but produced by different establishments, to be used instead of the original drug, it is necessary to prove its biological equivalence.
 
  1. Evaluation of Generic Drug Concept Within the Scope of the Intellectual Property and Competition Law
 
Prices of medication decrease and patients get to have access to medication for more affordable prices all due to the production of generic drugs. This means that the costs of social security systems in terms of the reimbursement mechanism would also decrease. 
 
So how would the generic drug production be possible within the scope of Intellectual Property Law? The patent right in the pharmaceutical industry provides a 20-year protection from the discovery of the drug's molecule. Generic drugs can only be released into the market after the above-mentioned patent protection ends. Nevertheless, considering that it takes about 12-15 years for pharmaceutical firms to turn a patented molecule into a marketable drug, the time benefited actively from patent protection decreases to 5-8 years.
 
Original drug producers come up with certain initiatives to decrease competition against generic drug producers in order to achieve the maximum profit possible, in this shortened patent protection phase. 
 
Following are the methods used; removal of an existing drug from the market towards the termination of the patent phase and then introducing a different dosage or form of the same drug to the market by procuring a new patent, entering into agreements for generic drug producers to withdraw from the market, coming up with integrations and takeovers to hedge the competition, opening cases against generic pharmaceutical firms for nondurable patent violations, forming patent lots around the products, lodging forked patent applications and procuring additional protection certificates towards the termination of the patent. The patent lawsuit threat which is one of the initiatives given above, hampers or escalates the entry of small-budget and domestic generic pharmaceutical firms into the market.
 
Hence, there are various measures taken in order to manage the competition in the process within the scope of competition law. As a result of the discussions on the effect of trial-purpose operations, clinical experiments etc. on the patent right, it was concluded that activities such as tests and experiments performed for the purpose of licensing drugs are exempted from trial-purpose acts, and this result has become acceptable in terms of both drug policy and law.
 
In Turkish Law, by making amendments to the 75th article of the Decree Law 551 on 26.06.2004, trial acts involving the invention subject to the license, including the licensing of drugs and the tests and experiments required for this, are excluded from the context of the rights emerging from the patent. Thus, with this verdict, also known as the "Bolar Exception", generic products can be developed and licensed without violating the relevant patents.
 
However, Article 9 of the Human Medicinal Products Licensing Regulation dated 19/01/2005 entered into force on 01/01/2005 under the name of "Abridged Application" in order to warrant that generic drugs are subject to facilitated licensing processes.
 
Today, the insufficiency of even developed countries in combating the COVID-19 pandemic has fastened the efforts to ameliorate health policies again. Thus, the European Commission stated with the European Medicines Strategy dated 25.11.2020 that it will apply competition law instruments in order to smoothen the access of the citizens of the member countries to affordable generic medicines and to encourage competition in the pharmaceutical sector. The Commission Report prepared regarding the application of competition law in the pharmaceutical industry; it is highlighted that necessary measures will be taken by means of competition law, and integration or takeovers transactions that may hedge competition between pharmaceutical companies will be carefully examined.
 
Although it is thought that the unfolded patent system and competition law are in conflict, according to the evaluation made in the report prepared by the Turkish Competition Authority on the pharmaceutical industry; the existing patent system in the pharmaceutical industry is accepted as an arrangement that serves the same purpose, not conflict with competition law. Because there is a conflict of interests between original drug producers and generic drug producers. While original drug producers aim to make maximum profit within the patent duration, generic drug producers seek for a share from the market by entering the market as soon as possible. Hence, the existence of both sides is in sort of  interdependency. As the generic drug producers cannot provide products to the market without the original ones; the existence of generic drug dealers also keeps the original drug producers' urge to manufacture new and lucrative drugs alive. In the case of not having patent protection, drug producers cannot supply the resources needed for R&D, and original drug production cannot be done. . 
 
 
Hence, the problems in regards to competition law in the pharmaceutical sector based on original drug-generic drug concepts arise from abusing the patent system, not the system itself. According to the report of the EU Commission, even though these problems are tried to be eliminated by competition law regulations, the existing competition law tools are sometimes insufficient at times. Therefore, one of the most outstanding lessons COVID-19 pandemic has given to all countries would be; following new strategies in the pharmaceutical industry by developing competition law instruments and ensuring the popularization of generic drugs in order to facilitate the access of patients to affordable vehicles through these tools.