Patent protections of pharmaceutical composition and drug price issues

According to current IP Law of Vietnam, Invention is a technical solution, in form of a product or a process, to resolve a specific problem by utilizing laws of nature [1]. Protection of a patent means protection of the owner to fully auexploit both technical and commercial in respect of the registered patent during its validity period (20 years nomarlly). The protection of phamarceutical composition inventions allows the owner to legally exploit such inventions to recover researching fees as well as stimulate the discovery of the new inventions. However, the protection of phamarceutical composition inventions also has its downsides, especially as it causes the drug price to be pushed up, which means limiting public access to new inventions in the pharmaceutical field in general and drug in particular. 
In addressing this conflict, the Trade-Related Aspects of Intellectual Property Rights (TRIPs) and the Doha Declaration on the TRIPS Agreement and Public Health ("Doha Declaration") has given some flexibility solutions in patent protection. This article analyzes the provisions of TRIPS and the current IP Laws of Vietnam concerning the protection of inventions in the pharmaceutical field, the influence of the granting protection for phamarceutical composition inventions to drug price and competition and access to generic drugs [2] in the world as well as in Vietnam. 
1. Provisions on the protection of pharmaceutical inventions in the TRIPS Agreement 
Accredited by Member States on 15 April 1994 and entered into force on 1 January 1995, TRIPS is a multilateral international treaty covering the global leading role in the field of Intellectual Property. The provisions of TRIPS are legally binding for all WTO members, including Vietnam.
TRIPS provides for minimum standards for the protection of inventions, trademarks, industrial designs, copyrights and other intellectual property objects. In the field of invention, TRIPS requires member states to grant protection and take enforcement of patent rights in all areas of technology, including the pharmaceutical field. One of the flexible mechanisms for the protection of pharmaceutical inventions under the TRIPS Agreement is the provision of involuntary licensing (also known as compulsory licensing).
Involuntary licensing is the government's permission to allow another person/company to manufacture a product or apply a patented process without the consent of the patent owner based on certain conditions [3]. The main conditions in relation to granting involuntary licensing are (i) Licenses are only granted if, prior to use, the intended user has attempted to obtain a license for the rightful owner of the patent at reasonable prices and conditions, but after a reasonable period of time, that effort still does not work; (ii) this right of use must be non-exclusive, non-transferable; (iii) licensed only for use in the domestic market of the licensing country; (iv) in all cases, the owner of patent must be paid adequate compensation depending on the economic value of the granted use rights, etc.
According to the condition numbered (iii) above [4], the rights of use are only licensed for production purposes to serve the domestic market primarily. That is, when a member country is not empowered to manufacture the drug, it can not cooperate with other member states to produce such drug. This rule invisiblely restricts the access to generic drugs of people in developed and underdeveloped countries.
To overcome this inadequacy, member states have adopted the amendment TRIPs (effective January 23, 2017). Article 31bis of the Amendment TRIPs allows Member States to issue a decision authorizing the licensing of a pharmaceutical invention without complying with Article 31 (f) of the TRIPs Agreement. This means that the supply of drugs under a compulsory licensing agreement is not limited to the domestic market of that Member State but also allows the export of generic drugs. In addition, the Annex of the amendment TRIPS also adds some terms such as pharmaceuticals, members as eligible importers, members as exporters, etc., to facilitate to apply to countries.
On 16 January 2017, Vietnam has ratified the Amendment TRIPS. At the same time, the Government of Vietnam also announced the use of the mechanism provided in Article 31bis of the amending TRIPS as an importing country of pharmaceuticals.
2. Patent protection of phamarceutical composition inventions in Vietnam
According to the rules, WTO member states are possible to explain and flexible apply TRIPS provisions for the purpose of protecting the health of their citizens, especially in creating opportunities for all people to access to generic drugs. 
Under the provisions of the TRIPS Agreement, IP Law of Vietnam introduced three conditions for inventions to be granted protection titles in Vietnam: (i) to be novel; (ii) to involve an inventive step; and (iii) to be susceptible of industrial application. A phamarceutical composition invention shall be eligible for protection by granting of an Invention Patent if it meets the foregoing conditions.[5]  
According to the NOIP's statistics, in the period 2000-2016, the number of protection titles granted to pharmaceutical inventions in Vietnam accounted for a significant proportion of the total number of intellectual property protection titles every year. However, the actual total number is not many and the annual growth rate is almost negligible, as shown in the chart below:
According to the NOIP's statistics, the requirements for patent protection for pharmaceuticals in Vietnam are mainly focused on the following types of forms: Markush claims, selection inventions, polymorphic forms and enantiomers, salts, ethers and esters, formulations, pharmaceutical compositions, combinations, prodrugs, metabolites, new medical uses, etc.
In the above types of claims, since the entry into force of the IP Law (01 July 2006), the invention relates to the general use, including the use of a known product under the second or subsequent medical functions were considered to be ineligible for protection as a result of a non-product or process and were refused for protection.
In practice, the improvement of quality of the examination and granting of protection title in the pharmaceutical sector has always been focused on by the competent state agencies to avoid the abuse of patents. This work is also subject to close scrutiny by the authorities to prevent the negative behavior of the patent holder. However, in the current NOIP’s Regulations on Examination of Patent Applications, the contents related to phamarceutical inventions are still quite general, not in detail; thus, it is very difficult to be adopted. While, currently, the NOIP is still in the process of researching, drafting and seeking opinions from the concerned competent authorities to issue an  independent regulation on examination of pharmaceutical inventions.
3. The impact of patent protection on drug prices
From the above analysis, it can be clearly seen that the protection of pharmaceuticals patents has a great impact on the drug prices, hence, it causes the rights of accessing generic drugs of the poor in developing countries, including Vietnam. This is reflected in the following aspects:
- Granting exclusive rights of patent leads to shortcomings in public health protection, especially in developing and underdeveloped countries. Currently in Vietnam, domestic pharmaceutical companies can only invest in the production of generic drugs that have expired patents. Most of the imported drugs sold on the Vietnamese market, which are often used to treat serious diseases that generic drugs can not, are very expensive. This leads to the incapacity of patients with serious illnesses, who are impossible to pay for expensive drugs, will not be cured.  
- With the huge profits gained from the exclusive phamarcuetical patents, patent protection holders are always using techniques to extend their recent protections. For example, some amendments to a registered patent but little substantial improvement, new uses, new value, isomers, new methods of distribution of new compounds, etc. can still be patented. This means that poor patients still have very little chance of accessing the drug;
- Unfair competition, exlusive rights protection, the security of new formulas, new dosage forms, etc. of drugs lead to the inability of the drugs of the same type to reach the market for reasons of sucessfully proving the independence of clinical or toxicological data.
The report presented by the UNDP at the “National Capacity Building Workshop on Patent Examination Guidelines for Phamaceuticals” organized by the NOIP in November 2016 providing a practical example proving the decrease of drug price to treat HIV/AIDS due to competition from generic drugs as follows:
- Cost of ARV treatment of HIV/AIDS in 2000: US$10.439/year;
- Introduction of generic by Cipla in 2001 2001: US$350/year;
- Current ARV (2016): US$65/year (99% price reduction).
Due to the significant price reductions consequent to the competition of generic drugs, many HIV/AIDS patients have chances to access to drugs to prolong life. As a result, ARV rises 22 times globally over the past years.
4. Conclusion
With the influence of the patent for pharmaceuticals on the drug price as mentioned above, each country needs to find the appropriate legal mechanism to strike a balance between patent protection in order to stimulate new phamarceutical inventions and the protection of public health, in particulars, ensure the access and possibility of drug payment for the poor. TRIPS and Doha Declaration are effective legal tools for people in developing and underdeveloped countries to access to generic drugs beyond the scope of IPR protection. The remaining problem is that countries must take advantage of this opportunity to simultaneously achieve the above goals./.

Duong Thi Van Anh (Mrs.)
Head of IP Division, Registered Patent & Trademark Attorney
VIETTHINK LAW FIRM
8th Floor, Diamond Flower Tower, Le Van Luong Street, Thanh Xuan District, Hanoi, Vietnam.
Tel/Fax: (+84) 46 666 6886 
HP: (+84) 946 111 283
Website: www.vietthink.vn


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Footnote
[1] Article 4.12 of Intellectual Property of Vietnam in 2005, amended in 2009.
[2] Generic drug is a bioequivalent drug with original proprietary drug on pharmacokinetic and pharmacodynamic properties produced when industrial property rights of the original drugs expire, thus, it is often sold at cheaper prices than drug which is still under patent protection.
[3] Article 31 TRIPS Agreement
[4] Article 31 f) TRIPS Agreement
[5] According to“The actual of examination of patents on pharmaceutical field in Vietnam and proposal on building patent examination guidelines for pharmaceuticals” issued by Division of Patent No. 2 – The National Office of Itellectual Property of Vietnam.
Reference documents:
- IP Law of Vietnam issued in 2005, amended in 2009; 
- TRIPS Agreement;
- Doha Declaration;
- The actual of examination of patents on pharmaceutical field in Vietnam and proposal on building patent examination guidelines for pharmaceuticals” issued by Division of Patent No. 2 – The National Office of Itellectual Property of Vietnam;
- Report of UNDP at the “National Capacity Building Workshop on Patent Examination Guidelines for Phamaceuticals” organized by the NOIP in November 2016.