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Pharmaceutical Innovation and Patent Law and Policy Making - focusing on Patent Term Extension Debates in Japan and in Europe

Professor Nari Lee


Patent law often is said to be modelled for the type of industry where the path technological innovation is centripetal and unidirectional, following a common technological trajectory. A sunk cost of investment in the initial phase justifies the legal monopoly of exclusive right granted at the end of this path to recoup the cost of invention. Pharmaceutical industry is said to be the paradigm example of this case, where research and development including clinical trial period leading to innovative medicine and pharmaceutical products justify a strong exclusive right not only as an incentive to innovate but also as a means to coordinate the innovation process. Pharmaceutical industry arguably is the example where an early grant of right working toward an identified patent prospect leads to an economic efficiency, as it would reduce the wasteful duplicative research efforts.

Pharmaceutical products are regulated heavily, out of concern for the safety of the public without expert medical knowledge. However, technologically sophisticated consumer products increase this regulation necessity, such as the products with genetically modified organism, subject to Cartegena Protocol on Biosafety. Furthermore, a modern administrative State also concerns itself not only with the public safety but also with public health, aiming to provide access to crucial medicines at a lowest possible cost to the widest public. To complicate the policy choices further, certain pharmaceutical innovations have also become less cost intensive and more subject to various innovation that enhances or improves the efficacy of the existing or even known medical products, by focusing on new delivery system, or secondary medical indications.

This paper examines these conflicting policy choices through patent term extension where the several policy decisions at different level have to be made between the public safety, the public health and the promotion of technological progress. Given this complex factors, using the examples of the recent case law development and debates in Japan and Europe on patent term extension and supplementary protection certificate, this paper highlights the cases which institution of law (market, law, court, and the administration) would be at a least imperfect position to make policy decisions concerning what aspect of the patent term extension. In conclusion, this paper argues that patent term extension is not uniformly treatable, as it affects actors in the value chain of pharmaceutical innovation differently both as the producers as well as the users of the pharmaceutical innovation. The crucial policy question is not whether the patent term extension should be introduced in comparison with the practices of other countries, but its impact on the broader scope of stake holders including competing producers, consumers and to provide them with a countervailing means of redress against the abuse. The institutional comparison thus need to take this question of redress into consideration and the institution that have the best situated to address the question of abuse may be entrusted with the competence to make the policy decision.

Patent Term Extension, Supplementary Protection Certificate (SPC), Generics, Pharmaceutical Innovation, Institutional Comparison