Expiring patents are expected to contribute billions of dollars towards the loss of revenue of drug manufacturers in the years to come. To save itself from falling off the patent cliff, Big Pharma needs to restock its R&D shelves in a cost-effective manner. Aside from developing niche products like biologics and acquiring companies with promising drugs in clinical trials, Big Pharma should be aware of existing opportunities to extend the life cycle of their drugs still on patent. Sharing their intellectual property rights via free licences with drug manufacturers in least developed countries (LDCs) can simultaneously improve drug access to those who need it most and create hubs of R&D at no upfront cost to these companies.

The Medicines Patent Pool

The Medicines Patent Pool (MPP) is a United Nations-backed organization that aims to improve access to HIV medicines for people living in LDCs. In 2014 they launched the Paediatric HIV Treatment Initiative (PHTI) to focus on a pressing concern in the African continent: overcoming barriers to develop paediatric formulations of HIV medications. In February of 2015, they obtained a licence from Merck to develop paediatric formulations of raltegravir, adding this key drug to their pool that already includes lopinavir and ritonavir with AbbVie Inc.

In the licensing agreement with Merck, generic manufacturers in the specified LDCs are allowed to research and develop alternate or improved formulations of raltegravir for children. Considering those living in LDCs cannot afford these medications, Merck will not be cannibalizing its own sales. This agreement is significant because Merck retains the right of first refusal of licensure or purchase if the manufacturer develops an improved formulation and intends to market the product outside of the specified countries they serve.

A Unique Opportunity

Improved or altered formulations are methods for drug manufacturers to retain a portion of market share when the patent of the original drug expires (see for example Cipralex Meltz and Actonel DR). By expanding the range of licensing agreements beyond HIV medications, drug manufacturers can outsource R&D of new formulations of their patented drugs at no upfront cost, while improving access to life-saving medicines in LDCs. Empowering LDCs to develop its own drug manufacturing industries has many advantages over the traditional method of directly donating medications.

Win-Win?

In the years to come the effects of the patent cliff will continue to eliminate important sources of revenue for Big Pharma. These companies also face the need to increase R&D budgets to avoid grinding drug development to a halt. Undoubtedly, cost-effective ways to extract value from current patents will be crucial. Thus, Big Pharma should pursue an expansion of licensing opportunities with organizations such as MPP with great interest since it serves the dual purpose of improving drug access in developing nations while potentially extending the life cycle of their patented drugs.

Jason Ho is an IPilogue Editor and a JD Candidate at Osgoode Hall Law School.