New use pharmaceutical patents refer to patents granted for new uses for previously known products. New pharmaceutical uses are either first pharmaceutical use (also referred to as first medical indication) or second pharmaceutical use (second medical indication).17 The former case relates to a situation where a new pharmaceutical use is discovered for a product with no previously known pharmaceutical use. Under this scenario, the product will be put to use in the pharmaceutical sector for the first time. In the latter case, a product already known to have one or more pharmaceutical uses is discovered to have a further pharmaceutical use although unrelated to the earlier known use(s). The classical example of second medical indication is the case of Azidothymidine (AZT).18
17 For further discussion see Grubb (1999), pp. 217-218.
18 The drug was first discovered in 1964 at the United States National Cancer Institute Laboratory as a cancer treatment. However, due to problems of toxicity, it was not used and the patent eventually expired. In 1984, the Institute invited companies to submit compounds for testing as possible AIDS drugs and Burroughs Welcome submitted AZT. For a detailed discussion of the AZT case, see Ackiron (1991).
The general rule on patentable subject matter under article 27 of the TRIPS Agreement is that, subject to the exceptions set out in the TRIPS Agreement, patents shall be available for all inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application.19 However, article 27 does not define what an invention means. The effect of not defining an invention under Agreement is that countries have the flexibility to define the scope of the concept of invention under their national laws to exclude new uses from patentability.20 The proponents of new use patents justify them on the basis that the discovery of a new use may require the same level of investment and creativity as in the case of a new product. However, this applies in very limited cases, if any.
19 See article 27 of the TRIPS Agreement.
20 Correa (1999b), p. 228.
Innovation in the pharmaceutical industry for which patents are claimed varies widely. It ranges from breakthrough discoveries to minor modifications of existing medications. A recent study by the National Institute of Health Care Management Research and Educational Foundation (NIHCM) has shown that in the United States, the market with the largest number of pharmaceutical patents, in the 12 year period from 1889 to 2000 of the 1,035 new drugs approved by the federal regulatory agency only 35 per cent of them contained a new active ingredient.21 Consequently, highly innovative drugs - medicines which contain new active ingredients and at the same time provide significant clinical improvement- are rare. During the 12 year period only 15 per cent were such medicines.22 The bulk of new medicines are therefore modified versions of older drugs which, however, command high prices.
21 NIHCM (2002), p. 3.
Protection of new uses, especially second medical indications, is routinely used for anti-competitive purposes mainly for extending the patent period and blocking generic entry. Patent holding companies have been able to thwart generic entry by modifying the existing drugs and claiming patents on them.23 In the United States, modifying existing drugs enables companies to extend their patent protection on existing drugs by either patenting new features of old medicine or by obtaining three year exclusivity under the provisions of the so-called Hatch-Waxman Act.24 This problem can become quite acute in those countries where pharmacy laws do not permit generic substitution and or generic prescribing.
23 NIHCM (2002), p. 4.
24 Under this Act if the federal regulatory agency approves a modified version of the branded drug on the basis of new clinical studies, its manufacturer receives three years of market exclusivity on the new use of the product. New uses encompass not only the new indications but also other changes to the drug including the older drug’s dosage form, route of administration and incorporation into a new combination product. For further discussion see NIHCM (2002).