Moves on IP rights in Europe could affect jobs in Ireland, drug firms warn

Drug companies have warned that moves to weaken protections for intellectual property (IP) rights in Europe could put the brakes on efforts to cure some diseases and improve current treatments for others.

That could undermine both employment and exports across the European Union, including in Ireland where the pharma sector is a significant economic player, they argue.

The warning comes ahead of a meeting of the EU Competitiveness Council in Brussels next week at which ministers for trade, industry, research and innovation from all member states are expected to discuss European Commission plans to loosen restrictions on drug manufacturing by generics companies.

Pharma companies can currently apply for a supplementary protection certificate (SPC), effectively extending patent protection on their drugs for five years. The process is designed to compensate drug developers for bureaucratic delays in having their medicines approved.

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Patent protection

The commission wants to introduce an “export manufacturing waiver” that would allow generics manufacturers – which produce cheaper copies of medicines that have lost patent protection – to make drugs in Europe even though they have SPC protection as long as they are exported to markets where the drugs do not have patent protection.

A draft report by consultants EY and DKM, seen by The Irish Times, says that reforms to the existing IP framework "could mean that fewer innovative medicines will be researched and developed".

The Irish Pharmaceutical Healthcare Association (Ipha), which represents the major drug companies, is opposed to a loosening of rules protecting IP. It is particularly concerned that any waiver regime would be tightly circumscribed so that any drugs exported under a waiver could not be re-imported for same or use in EU markets.

It also wants reassurance that a waiver will not be retrospective so that it will apply only to SPC patent extensions that are sought after any waiver is introduced.

The draft report notes that the number of SPC applications by major drug firms has tripled in the 20 years to 2013. It says this is largely down to increasingly complex regulation of medicines.

Threat

The commission estimates that a waiver could lead to 25,000 new jobs over a decade and a €1 billion increase in export sales from the bloc.

But the industry is concerned that it poses a threat to the 30,000-plus people the sector employs in Ireland, never mind the additional 6,000 jobs earmarked from pharma by 2021 by the Export Group on Future Skills Needs.

The industry notes that its investment in R&D, at 15 per cent of net sales, is one-third higher than the next most R&D intensive sector, which is software. The draft report argues that clear IP rights can be a “pivotal driver” in a decision to invest in R&D.

With the cost of developing new medicines rising to over €2 billion – taking account of the cost of failures – and anywhere up to 12 or 13 years, pharma companies say they need certainty on the strength of their IP to ensure they can recover the cost of development.