Another exception specifically applicable to pharmaceutical patents124 relates to using an invention without the patentee’s authorization for the purpose of obtaining approval of a generic product before the patent expiration date. This procedure may permit the marketing of a generic version promptly after the patent expires. Since generic competition generally lowers prices125, this exception - known in the United States as the “Bolar” exception126 - promotes the affordability of off-patent medicines.
124 It may also apply to agrochemical products and other products the commercialization of which is subject to prior administrative approval.
125 See, e.g. WHO, 1988, p. 31.
126 It is so named “Bolar” after a case judged by US courts in Roche Products Inc. vs. Bolar Pharmaceutical Co.(733 F. 2d. 858, Fed. Cir., cert. denied 469 US 856, 1984). See also, e.g., Coggio and Cerrito, 1998.
The availability of generics either under a brand name (“branded generics”) or a generic name (“commodity generics”) would lead to increased competition in the pharmaceutical market, and to correspondingly lower prices for the consumers and improved affordability of drugs127.
127 See, e.g. WHO, 1988, p. 31.
THE “BOLAR EXCEPTION”
The “Bolar” (early working) exception was first introduced in the United States by the U.S. Drug Price Competition and Patent Term Restoration Act (1984), and has been explicitly adopted by Canada, Australia, Israel, Argentina and Thailand. In many European countries it has been recognized by case law based on the experimental use exceptiona).
a)Ono Pharmaceuticals Co. Ltd. V. Kyoto Pharmaceutical Co. Ltd., Case No. Heisei 10 (Ju) 153, 1998.
The Supreme Court of Japan has also ruled (on April 16, 1999) on the validity of experiments made before the date of expiration of the patent for the purpose of an authorization petition for selling after such date. The Court argued that “it is one of the basic principles of the patent system to allow anyone to exploit freely a new technology after the expiry of the patent term, thereby generating a benefit to society”. Given the need to undertake clinical trials in order to obtain approval for commercialization of a generic product, the Court found that manufacturing the patented product for that purpose was not an infringement of the patent, since otherwise “third parties would not be in a position to exploit freely the patented invention for a certain period of time even after the patent had expired. This, in turn, would contradict the basic principles of the patent system”.
Some countries (e.g. the United States, Israel) have adopted the “early working” exception while simultaneously extending pharmaceutical patent terms, but the law in other countries need not include this linkage.
Given that commercialization of the generic product does not take place until after the expiration of the patent, the early working exception can be regarded as fully compatible with article 30 the TRIPs Agreement.
In the case of Canada, the law established a “Bolar”-type exception that not only allowed tests with the invention, but also production and stockpiling of the product for release immediately after the expiration of the patent (Section 55(2)(2) of the Patent Act 1993). The European Union requested a panel against Canada under the WTO dispute settlement mechanism in connection with this exception. The panel decision confirmed that an early working exception is consistent with the TRIPs Agreement, even in the absence of an extended period of protection for the patent. However, the panel considered that the right to manufacture and stockpile before the expiration of the patent was not consistent with the said Agreement (see WT/DS114/R, 17 March, 2.000).
The World Health Organization and the Joint United Nations Programme on HIV/AIDS (UNAIDS) have supported the establishment of an “early working” exception in national laws “for the rapid production of generic products in order to promote competition and contain drug expenditure”128.
128 WHO, 1999, p. 2; UNAIDS, 1999, p.2.