Considering the high relevance of PM, an assessment has been conducted to determine whether de lege lata incentives can encourage investment in PM. One of the most significant objections to the exclusivity-based incentives is that, even if exclusivity rights can be obtained, the industry may not be motivated to invest in PM due to the low expected return on investment. This, in turn, is a consequence of the small market.
The aim of the dissertation is to evaluate how de lege lata accommodates PM, considering specifically whether it allows for exclusivity, the extent of its protection, the rights it confers, and whether it provides de facto exclusivity.
Firstly, the author delves into the intricacies and dismantles the specific subject matter of PM that can benefit from exclusivity rights. There is no single official definition of PM, nor is there a single product or innovative process that alone constitutes the PM. PM is understood to be an innovative approach to healthcare in which therapy is tailored to a specific patient (subpopulation), including by the detection of biomarkers through the use of molecular diagnostic tests. For the purposes of the assessment, the author breaks down PM into certain innovations – diagnostics and subpopulation drugs – which have been further analyzed in the terms of eligibility and ability to obtain exclusivity, rights conferred and scope of protection.
Although the EU has set the goal of becoming a leader in PM research, and the timely translation of PM into practice in Europe is highly relevant due to an ageing society and rising healthcare costs, there are no specific incentive instruments dedicated to PM. Instead, PM has to be accommodated by the traditional incentive mechanisms. Therefore, the analysis commences with the general legal framework for incentive mechanisms in the form of exclusivity rights available for the biotech and pharmaceutical sectors – the field in which the identified topics, diagnostics and subpopulation medicines – are found.
For the purposes of the patentability analysis, the specific subject matter that may be patentable has been distinguished and analyzed against the backdrop of PM. PM diagnostics is split into genes and diagnostic methods, while drug personalization falls under the patent category of (second) medical use claims.
The legal framework chapter also provides a comprehensive depiction of the framework of the regulatory exclusivity system in Europe. Regulatory exclusivity refers to the exclusive marketing rights or data exclusivity rights that are adjunct to the marketing authorization of a medicinal product. They prevent the authorization and thus the marketing of generic or biosimilar products, either by prohibiting the use of the originator’s regulatory data (data protection) or by prohibiting the authorization itself (market exclusivity). Regulatory exclusivity is independent of and distinct from patents, and the effect of regulatory exclusivity is not affected by the existence of a patent.
Regulatory exclusivities gain relevance as an incentive for (bio)pharmaceuticals. However, it is important to keep in mind that the initial rationale was not only to provide incentives in the form of exclusivity for originators but also to enable generics to enter the market as soon as the exclusivity expires. This is to enable generic competition and facilitate affordability, and hence broad availability and access for patients. This cannot be overlooked when introducing new regulatory exclusivities or making a new architecture of the regulatory exclusivity system.
A comprehensive analysis of orphan drug incentives was conducted due to the similarities between PM and orphan drugs. The analysis concluded that the specific targeted regulatory exclusivity has been successful in increasing the number of new orphan drugs on the European market. Therefore, regulatory incentive mechanisms could be employed to achieve specific goals that cannot be accomplished through patent law due to the prohibition of discrimination based on technology under TRIPs. However, the analysis also highlighted significant dysfunctionalities within the regulatory exclusivity system caused by exclusivities blocking market entry of exclusivity-free drugs.
The analysis concludes that the patent system has largely adjusted to the latest developments in PM. Both diagnostics and subpopulation drugs are patentable in Europe. However, the enforcement of these patents is severely hampered. The issues with enforcement of patents on subpopulation drugs and the ambiguity of enforcement of these patents can be exploited by both the patent holders of subpopulation drugs and generic manufacturers, leading to dysfunctional effects on the market. The enforcement complexities have manifold reasons. First, these are the scenarios where the originator holds a second-medical-use patent covering the (soon-to-be) off-patent substance or composition. The question that arises is how to distinguish the market for the drug covered by the second-medical-use patent from the market for the generics of the off-patent drug when both are composed of the same off-patent substance or composition. Second, the substitution obligation imposed by the Member States requires doctors to prescribe and pharmacists to dispense the cheapest medicine containing the particular active ingredient, regardless of the indication for which it is intended and regardless of the patent status of the medicine. Substantiating patent infringement has been a challenging task when a drug with the same active pharmaceutical ingredient(s) is prescribed and dispensed for a patented indication, despite the fact that the outer appearance of the generic drug does not suggest its use for that patented indication (known as skinny labelling) – this is referred to as cross-label use.
The tests used by courts throughout Europe have been diverse, and they have encountered difficulties in achieving the appropriate balance between the interests of generic manufacturers and originators. While generic drug marketing should not be impeded, originators of personalized drugs covered by second-medical-use patent claims should not be deprived of patent incentives due to the impossibility of ceasing and desisting from patent infringing use. On the one hand, hindrances to the enforcement of second-medical-use patents can incentivize generic manufacturers to intentionally target, or negligently enjoy, marketing their generics not only for patent-free indications but also for those covered by second-medical-use patents. On the other hand, if a generic manufacturer is threatened with an infringement lawsuit if it tries to market its generic product for off-patent indications, it may be reluctant to manufacture and sell generic products, thereby prolonging the de facto exclusivity of the off-patent.
In the first scenario, this can disincentivize investment in such personalized subpopulation drugs currently covered by second-medical-use patents. In the second scenario, it can contribute to the blocking of generics marketing.
The analysis of regulatory exclusivity reveals certain deficiencies within the system. While regulatory exclusivity can be used to address specific aims, such as incentivizing certain fields of medical innovation, there are shortcomings de lege lata that have led to interpretations of the provisions resulting in dysfunctional effects on the markets. The CJEU’s interpretation of the Orphan Drug Regulation has led to the exclusion from the market of generic versions of drugs that themselves no longer enjoy exclusivity. As it is often the case that the same substance or composition has multiple orphan indications authorized at different times by the same sponsor, the CJEU’s interpretation of the Orphan Drug Regulation has enabled de facto extension of the exclusivity of those orphan drugs whose own orphan drug market exclusivity has expired. This is particularly dangerous given the impact of exclusivity on the pricing of orphan drugs.
In conclusion the author provides recommendations de lege ferenda. These recommendations are particularly relevant as the European regulatory incentive system is currently under scrutiny, and the Commission has put forward legislative proposals to improve general pharmaceutical regulation.
The author concludes that the common perception presented in literature regarding PM and its small markets, at least for diagnostics and drugs for subpopulations, is short-sighted. The fact that a market is segmented does not automatically make it smaller or unprofitable.
