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Let's say there is a patented medication that is very effective and very expensive at the pharmacy, say $1,000/dose. But also assume that the medicine only costs $1 to formulate - most of the "cost" was in the research.

I understand that a competing company cannot legally manufacture and sell a patented medicine to consumers. However, could a nonprofit legally manufacture and give away the patented medicine for free?

Pete Kirkham
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YPCrumble
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    Non-profits and charities are still obliged to abide by patent law... –  Feb 28 '20 at 01:36
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    I've heard something similar supposedly happened with software programs. In the 80s and 90s all licenses stated that you could not redistribute the programs for profit . Someone started a server and hosted software downloads free of charge. Companies sued him and lost because he was abiding by the license. Unfortunately patents infringement is not handled by something the company writes without thinking. – Giacomo Alzetta Feb 28 '20 at 09:02
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    Note that something similar happens internationally. There are a number of medications where India and China do not recognize US/EU patents and produce knock-offs. As long as these don't make their way to the US/EU this is mostly accepted. – quarague Feb 28 '20 at 10:17
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    Not recognizing patents for essential medicines might be covered by the TRIPs Agreement. Members have the "right to protetect public health, and in particular, to promote access to medicines for all." The Regulation of International Trade – Georg Patscheider Feb 28 '20 at 13:30
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    "Most of the cost was in the research" this might not be true. Large costs are allegedly incurred to perform clinical trials; charities are, for some reason, able to perform these much cheaper, e.g. New Oral Drug Candidate for African Sleeping Sickness. Also, there are multiple known cases were existing prices are hiked up by huge amounts only to increase profits, e.g. Valeant Pharmaceuticals, Martin Shkreli – Georg Patscheider Feb 28 '20 at 13:38
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    Note that the answer to the title question would rather be "yes". They can give the drug for free - if they legally (i.e., expensively) bought it from the patent holder / a licensed manufacturer. – Hagen von Eitzen Feb 28 '20 at 14:31
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    @GeorgPatscheider Are clinical trials not part of research? – Acccumulation Feb 28 '20 at 22:35
  • You understand wrong. A competing company can sell anything they want. They can not posess or distribute a patented medicine without license. The same applies to nonprofits. – Billy left SE for Codidact Feb 29 '20 at 01:17
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    @BillyC. A competing company can of course buy the product of the patent holder and then resell it or give it away. If there are five related illnesses A, B, C, D and E (say five illnesses causing blindness), company X had a patent on medication for D, while company Y had licenses or patents on medication for A, B, C and E, Y could buy the product from X and sell it to offer medication for the complete range of illnesses. No license needed. – gnasher729 Feb 29 '20 at 15:27
  • @GeorgPatscheider: one reason for reduced trial costs is for sure that charities may leverage their charity status so that they get non-monetary donations for such a trial. And I admit freely that I'm far more likely to donate professional services for a charity-organized trial (work at cost/at a reduced rate/for the tax voucher that I get for the donated time/...) than for one organized by a for-profit pharmaceutical company (see e.g. https://en.wikipedia.org/wiki/Statistics_Without_Borders). – cbeleites unhappy with SX Mar 01 '20 at 14:14
  • @GeorgPatscheider: the obscene pricing policies point to another worthy endeavour: I don't think there's anything that prevents a charity from also being parmaceutical manufacturer that sells the produced drugs at cost (deliberately below cost would probably not be allowed, but at cost is sufficient to combat such price distortions). Such a charity could specialize on overpriced drugs, and at least here in Germany patent law has at least 3 different possibilities to tackle such issues, see my answer for details. – cbeleites unhappy with SX Mar 01 '20 at 14:29
  • It's worth noting that here are two scenarios - the default legal situation, and the scenario that we sometimes see with governments intervening to restrict/revoke patent rights for certain medicines; a non-profit can't unilaterally do that, but in certain cases it would be plausible for a national government to permit a non-profit to circumvent patent rights for some medicine. – Peteris Mar 01 '20 at 18:54

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No, they could not. The conditions of violating a patent don't revolve around monetary gain, so regardless of compensation they would be in violation of the patent.

Ron Beyer
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  • A patent gives the right to control making, using, selling, offering for sale, and importing. Obviously making and using do not require any commercial activity. – George White Feb 28 '20 at 02:24
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    This of course assumes that the patent is recognized by the country where the generic medication is to be manufactured. – Georg Patscheider Feb 28 '20 at 13:51
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    @GeorgPatscheider: Countries do not recognize patents from other countries; you have to apply for a whole stack of national patents. ( Patent applications are generally cross-recognized in order to have an agreement on the filing date. ) So either the medicine is patented in the country where it's produced, or it isn't. – MSalters Feb 28 '20 at 14:33
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    I might have my terminology wrong, what I meant is this: assume the (original) medicine is patented in the US. But if it is not patented in India, a company there can produce a generic medicine with the same active ingredient, without breaking Indian law. But as I unterstand, you can't reimport this generic medicine legally to the US? Or can you, and this is the reason why pharmaceutical companies "give away" patented medicines in developing countries to stifle research into generics? – Georg Patscheider Feb 28 '20 at 14:40
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    @GeorgPatscheider Yes, offering the product for sale (which includes free) in the US would still violate the patent. Someone could likely get away with importing it themselves for personal use without any trouble, but the foreign producer could get in trouble if this becomes a significant part of their business. – Aidan Feb 28 '20 at 16:49
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    Worth noting that not only is it illegal to manufacture patented drugs, the US has put considerable effort into making it illegal to import drugs from other markets, that are perhaps cheaper. Lessig writes about it in relation to the AIDS crisis: http://www.authorama.com/free-culture-20.html

    I had misremembered it as being that the US had stopped the production of generic forms of the drug in the country because they were under patent, which would have been more relevant! But it still might be interesting. There's also a Microsoft example in there that might be more relevant

     – Aster Feb 28 '20 at 19:21
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    @GeorgPatscheider you can’t import the generic drug into the US for a more important reason than patents - generics still require “equivalency” trials and FDA approval as a generic form, which requires huge amounts of money and often access to the original research and outcomes of the non-generic drug (which the non-generic owner doesn’t have to give), which is why it’s often difficult to get a generic to market. You can’t just import it from another country, because it still won’t have been approved for use. –  Feb 29 '20 at 08:32
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    @GeorgPatscheider You definitely can’t reimport the Indian-manufactured drug into the US, because it has not been previously exported from the US. You might be able to import it, but the patent means that you can’t do so legally – Mike Scott Feb 29 '20 at 09:41
  • @GeorgPatscheider If there is a US patent, someone else without license cannot make the product in the USA for sale in the USA or elsewhere, and cannot make the product elsewhere for sale in the USA. They can for example make the product in Germany for sale in Italy. If someone else has a patent in France and assuming French law is similar, you would have an interesting situation. – gnasher729 Feb 29 '20 at 15:32
  • @MikeScott: at least where I am (Germany), patent only means that the importer needs a license from the patent owner - but the patent owner cannot refuse a license on reasonable terms. Reasonable terms would of course include costs for research, clinical trials etc. so that is not what OP is after. – cbeleites unhappy with SX Mar 01 '20 at 14:05
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I am in no way an expert on patent law. However I do know for a fact that in my home country, the Netherlands, some hospitals started making their own medicines to circumvent patents/high prices.

https://www.nu.nl/gezondheid/5811003/waarom-sommige-ziekenhuizen-zelf-medicijnen-maken.html

https://www.volkskrant.nl/nieuws-achtergrond/inspectie-amc-mag-duur-medicijn-zelf-produceren~bfd40126/

https://www.trouw.nl/nieuws/ziekenhuis-mag-dure-medicijnen-namaken~b5fc184a/?referer=https%3A%2F%2Fwww.google.nl%2F

https://www.dutchnews.nl/news/2018/04/dutch-hospital-challenges-big-pharma-by-making-own-version-of-very-pricey-drug/

So it seems, at least in my jurisdiction, a charity would in theory be permitted to manufacture their own medicine and give it away. However they would need to have the knowledge and resources to actually produce these medicines. Also those medicines would need to meet quality/safety standards. So it's not a simple thing to do I guess.

thieupepijn
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    The only English-language article there refers to a drug that’s been around since the 1970s, and so is not patented. Patents (in most jurisdictions) only last for twenty years from the filing date. The drug is covered by a different intellectual property law that allows pharmacies to make it for their own use. – Mike Scott Feb 29 '20 at 10:03
  • Dutch law may very well have a general exception for pharmacies producing individual prescriptions: e.g. the neighboring German law has [see my answer for details]. – cbeleites unhappy with SX Mar 01 '20 at 13:40
  • As I gather from the posts, they all refer to the same case of a university hospital's pharmacy producing drugs for a particular rare disease - they speak of 60 or 65 patients in the whole Netherlands of which 2 get their drugs from said pharmay (so far). The (commercially available) drug price is cited with 150 - 200 k€/year and patient and the production cost at the pharmacy at 25 k€. Apparently, here an existing drug got "orphan medine" status, which is a constellation always open to abuse discussion. See e.g. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3132155/ ... – cbeleites unhappy with SX Mar 01 '20 at 13:55
  • ... According to that paper, the EU orphan medicine legislation does have the possibility to cut that special protection if the drug turns out to be too profitable, though. – cbeleites unhappy with SX Mar 01 '20 at 13:56
  • Patents must disclose the invention so that everyone in the world would in theory have the knowledge to reproduce the invention. That's the core idea of patents - to prevent the loss of knowledge and spread knowledge the government allows the inventor temporary monopoly over an invention. Some companies never patent their invention and keep them a trade secret instead. Of course, this doesn't take into account cases where only parts of the whole invention is patented. But normally that doesn't apply to drugs – slebetman Mar 02 '20 at 08:44
  • (US) First sale doctrine would still apply, so if they were able to acquire the medicine at much lower cost overseas, then they should be able to sell/donate it locally, pending issues such as tariffs, customs, and distribution regulations. Not knowing the regs offhand, I wouldn't imagine that selling to another org, such as a hospital or pharmacy would run afoul of the law. – Tyzoid Mar 02 '20 at 15:50
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patent law means in general that a license needed if the drug is only offered or put into circulation, the price doesn't enter this consideration §9 PatG:

[...] In the absence of the consent of the proprietor of the patent, any third party shall be prohibited from

  1. producing, offering, putting on the market or using a product which is the subject-matter of the patent, or from either importing or possessing such a product for the purposes referred to;

  2. using a process which is the subject-matter of the patent or, if the third party knows or if it is obvious from the circumstances that use of the process is prohibited in the absence of the consent of the proprietor of the patent, from offering the process for use within the territorial scope of this Act;

  3. offering, placing on the market or using a product which is produced directly by a process which is the subject-matter of the patent, or from either importing or possessing such a product for the purposes referred to.

But there is an exception for pharmacies producing individual drug formulations in §11 PatG:

The effect of a patent shall not extend to

[...]

  1. the extemporaneous preparation in a pharmacy, for individual cases, of a medicine in accordance with a medical prescription or acts concerning the medicine so prepared;

So if the charity is a volunteering pharmacy that fulfils individual prescriptions, they are fine (just that it is in all probability still far more expensive than the question supposes, see below).

If the charity wants to produce the drug on a larger scale, they need a license (plus regulatory approval). There are limits to the patent owner arbitrarily denying to license because the charity may apply to a court to get a compulsory license according to § 24 PatG

(1) The non-exclusive authorisation to commercially use an invention shall be granted by the Federal Patent Court in an individual case in accordance with the following provisions (compulsory licence) where

  1. a licence seeker has, within a reasonable period of time, unsuccessfully attempted to obtain permission from the proprietor of the patent to use the invention on reasonable commercial terms and conditions, and

  2. the public interest calls for the grant of a compulsory licence.

[...]

(6) [...] The compulsory licence may be granted subject to limitations and made dependent on conditions. [...] The proprietor of the patent shall be entitled to remuneration from the proprietor of the compulsory licence, such remuneration being equitable in the circumstances of the case and taking into account the economic value of the compulsory licence. [...]

The equitable remuneration would include research costs, of course.

Finally, the charity could lobby with the government to void the patent according to §13:

(1) The patent shall have no effect in a case where the Federal Government orders that the invention is to be used in the interest of public welfare.

That being said, I do suspect that you seriously overestimate the possibility for a pharmacist to produce these individual drugs for low price, even if they were to volunteer their work time.

The argument would look quite different to me had you said that the charity is able to produce a drug that is sold for 100k$ for only 10k$ per dose. The Dutch university hospital's pharmacy in thieupepijn's answer who probably also have some other departments [pharmaceutical & chemistry] at hand with additional required knowledge or instrumentation if I read the news posts correctly are cited to produce a drug that commercially costs 150 - 200 k€ per patient and year for 25 k€ (presumably also per patient and year; for 2 patients). Still, for a charity aiming to this also means that they decide against a whole lot of lower hanging fruit which are also worthy of charitable work.

Now, I'm not a pharmacist but analytical chemist. I.e., I work in the subfield that is specialized on step 4 and the proof of substance identity in the third bullet point below), but here's the insight I have:

  • AFAIK, individual prescriptions are typically formulated from ingredients the pharmacy buys. Thus, they'd need to buy the active ingredient - and if the ready-made drug is sold for big $$$, I don't see why the active ingredient would be sold cheaply. AFAIK, the patent typically covers the ingredient rather than the drug. (The formulated drug must pass the regulatory approval, though.)

  • If the pharmacy would instead set up an organic synthesis lab to synthesize the active ingredient, they'd need to

    1. synthesize the ingredient. This is comparatively cheap for some drugs.
    2. purify it: we cannot have impurities as they can pose known or unknown dangers to the patient, in some cases even the other enantiomer cannot be in the drug. Purification is typically a whole lot of work and rather expensive. Particularly for drugs that are cheap to synthesize, this step can be orders of magnitude more expensive.
      Related to this is that you also need to do a whole lot of cleaning the labware to make sure you don't get contamination*.
    3. make sure you have the correct modification and/or possibly particle size
    4. Prove that they have the correct substance (incl. modification/particle size) in the correct concentration and at the required purity (and this also involves that they prove that the instruments they use work as they are supposed to). Again, a whole lot of work, and/or specialized lab instrumentation required.

  • In contrast, when buying the ingredient, they must only prove identity, i.e. check that the white powder is what it says on the label. This is relatively easy and fast and thus not too expensive. Basically this checks that they did not accidentally get the wrong white powder and are otherwise allowed to trust the statement of product purity that accompanies the ingredient. (The measurements they can do for this react also to impurities, though not as sensitively as required for the quantitative testing outlined above)

I may add that whenever I've met the argument that so many expensive drugs are cheap to produce the numbers given always estimated synthesis costs on the basis that the educts (starting substances for a chemical reaction) are cheap. They may not even have considered with that that you probably want to start from purified educts in pharmaceutical synthesis - but I've never so far encountered an argument that did consider steps 2 - 4 above.

*I once visited an industrial production line for drugs (tablets). When they change the product that is produced (which for the pharmacy happens all the time as we're talking individual prescriptions), they first clean everything very thoroughly. Then a dummy substance goes through, and is also cleaned away. The dummy substance is one where traces are visible (either by itself or via fluorescence), so that every little leftover trace is easily spotted and cleaned. For the production line they told us this takes several days.

cbeleites unhappy with SX
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Not in the US. From 35 U.S. Code § 271 – Infringement of patent:

Except as otherwise provided in this title, whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.

So even if you cook your own medicine at home for yourself, you are already infringing.

In other jurisdictions you might only infringe on a patent if you sell something or use a patent as part of your business. That seems to be the case in Japan:

Infringement under the patent law in Japan is defined by Article 101 of Patent Act (Act No. 121 of 1959), which shows the following acts shall be deemed to constitute infringement of a patent right or an exclusive license:

(i) where a patent has been granted for an invention of a product, acts of producing, assigning, etc., importing or offering for assignment, etc. any product to be used exclusively for the producing of the said product as a business;

(ii) where a patent has been granted for an invention of a product, acts of producing, assigning, etc., importing or offering for assignment, etc. any product (excluding those widely distributed within Japan) to be used for the producing of the said product and indispensable for the resolution of the problem by the said invention as a business, knowing that the said invention is a patented invention and the said product is used for the working of the invention;

(iii) where a patent has been granted for an invention of a process, acts of producing, assigning, etc., importing or offering for assignment, etc. any product to be used exclusively for the use of the said process as a business; and

(iv) where a patent has been granted for an invention of a process, acts of producing, assigning, etc., importing or offering for assignment, etc. any product (excluding those widely distributed within Japan) to be used for the use of the said process and indispensable for the resolution of the problem by the said invention, knowing that the said invention is a patented invention and the said product is used for the working of the invention as a business.

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Look into Compounding Pharmacies. Imagine you need a particular medication, but for whatever reason the medication you need is not commercially available, or the standard version available isn't suitable for some reason. For that, you would go to a compounding pharmacy, who have the equipment to manually manufacture whatever it is you need, instead of being restricted to just commercially-available medications.

Now, they are required not to "compound regularly or in inordinate amounts (as defined by the Secretary) any drug products that are essentially copies of a commercially available drug product", but this is a somewhat blurry line compared to standard patent law.

Note that this doesn't require an actual charity to be involved when the actual drug costs are very low, just for a sympathetic doctor to be writing prescriptions that can't be fulfilled by a regular pharmacy.

user3757614
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