In my previous column, I wrote that inventors are generally free to exploit their invention as a result of the state-granted monopoly that patents guarantee. In the field of medicine, however, many jurisdictions have laws or regulations that either limit the price for which the inventor can charge for the medicine or, in some cases, force the owner to license the patent, known as a compulsory license. The government of the United States, for example, threatened the manufacturer of ciprofloxacin with a compulsory license during the anthrax scares of 2001. As a result, the manufacturer agreed to lower their price of the drug.  

In Canada, the government has empowered the Patented Medicine Prices Review Board (PMPRB) to monitor the prices of patented drugs and also establish a maximum price at which the owner of a patent can charge for a drug. As legislated under the Patent Act, the owner of a drug protected by a patent must provide the PMPRB with information such as the price of the medicine in Canada or elsewhere, the costs of making and marketing the medicine and information concerning the prices of other medicines in the same therapeutic class. Once all of the pertinent information has been gathered (on an on-going basis) and reviewed by the PMPRB, the review board has the power to order the patentee to lower the price of the drug in any market in Canada for any period of time. Of course, authorizing the PMPRB with the power to lower the price a patentee can charge for their patented drug is not without controversy. Pharmaceutical companies argue that higher prices reflect the staggering cost of the research and development that is necessary to bring a patented medicine to market. Governments and consumer advocates argue that patients need access to life-saving drugs, which they may not be able to afford without price controls. A high-profile case currently proceeding through the courts involves the drug Soliris in which the manufacturer charges $500,000 a year for the drug for the treatment of a rare blood condition. A complicating factor in this case is that the medicine is classified as an “orphan drug,” meaning it is used to treat a rare condition. It therefore may not have been developed without the incentive of higher prices due to the limited population requiring the drug.

International free trade agreements can also affect the price of medicines. Canada is currently party to a number of high profile agreements, including the Trans-Pacific Partnership (TPP) and the Comprehensive Economic and Trade Agreement (CETA) with Europe. What, you may ask, do these free trade agreements have to do with the price of patented medicines in Canada? Well, a lot actually. Many free trade agreements contain provisions related to intellectual property and the TPP and CETA agreements are no exception. One controversial provision that has been included in both agreements is patent term restoration. As I have mentioned in the past, patents in Canada last for a term of 20 years from the date of filing the patent application. Under patent term restoration, a patentee can apply for restoration of the patent term, which is intended to compensate a patentee for delays by health authorities in obtaining regulatory approval for pharmaceutical products. The argument for patent term restoration is that the patentee should not be penalized for unnecessary delays during the regulatory approval process. The maximum amount of patent term restoration is two years. Not surprisingly, such provisions in free trade agreements are highly contentious, as opponents argue that 20 years is sufficient time to recoup development costs.   

When it comes to patented medicines, patentees face a multitude of issues that are just not present in other areas of technology. Contrast patented medicines with mobile phone technology, which is lifting millions of people out of poverty in impoverished nations, based on a phone’s potential to increase commerce. However, people generally don’t fret over the price of a cell phone, nor do governments enact laws limiting the price. Clearly, patented medicines are a different ballgame. In my next column, I’ll explore the ethics of patented medicines that, in some cases, are desperately needed in developing countries.   

Mike Fenwick is a patent lawyer with Bereskin and Parr LLP in Toronto and holds a master’s degree in organic chemistry.