Policy innovation and improvisation on pharmaceutical drug discovery

Out-of-the-BoxAs I sit down to pen this post, I am well aware of the complex, heavily debated policy dimensions on incentivizing innovations in the pharmaceutical industry. There is no one absolute ‘right’ answer to the various dilemmas posed by this discussion. In fact, there are several answers. Each one is right in its own way. As I see it, the only way out is to ‘try out’ which, of course, entails the ability to ‘embrace’ risks. As Paulo Coelho said, “There is only one thing that makes a dream impossible to achieve: the fear of failure.”

Setting the context

This post broadly argues for considering non-patent models for incentivizing drug discoveries. Going by the utilitarian justification for patents, patents are beneficial for the society if (and only if) the benefits of patents outweigh the costs incurred by the society in awarding a 20 year monopoly. This justification may or may not hold the ground as it is to be determined on a case-to-case basis. On a fair note to the pharmaceutical industry, the failure rate in pharmaceutical industry is quite high especially in the case of radical innovations. In other words, ‘deep pocket’ is a pre-requisite for absorbing the risks involved in pharmaceutical R&D. The sector tends to hedge the risks on a patented ‘blockbuster’ drug which unavoidably raises the costs of the drug. This inevitably raises some pertinent public policy issues. What shall be our approach in this demanding milieu?

I do not intend to give a direct answer. Instead I shall reproduce some parts of the article titled “The web app that made information free” (reproduced below) which encapsulates the tone and tenour of this post:

“In 2000, Encyclopaedia Britannica recorded its largest sales. A mere 12 years later, the brand had decided to stop printing copies of its eponymous product. Its audience had not only moved online, but moved to other sources altogether. It was an astonishingly rapid decline for a brand that held pride of place in intellectual traditions of the English speaking world of nearly 250 years. Behind this change in consumer preference were the usual suspects: affordable PCs and broadband internet access in homes. There was also an additional, if much less celebrated technology that did Britannica in – the humble Wiki, which is the technology that powers Wikipedia, the open encyclopedia that anyone with an Internet connection can edit and improve……………….

If it weren’t such a raging success, Wikipedia could have easily been dismissed as an impractical idea conceived by idealistic geeks on overdrive. After all, the whole value proposition of a classic encyclopedia such as Britannica is that the content is carefully curated by a panel of hand-picked experts who are paid for their troubles. To even think of an open encyclopedia put together by an army of volunteer contributors of unknown pedigree is mind-bogglingly counter intuitive.”

                                   Broad contours of some of the ‘non-patent’ models

A) Project Marilyn

Project Marilyn is a recently launched campaign to develop a crowd funded patent-free anticancer drug. The objective is to pool funds to test anti-cancer drug called 9-deoxysibiromycin or 9DS. Though the drug is a promising drug, the pharmaceutical companies are not interested in funding the expensive clinical trials. As 9DS is not patented, any other pharmaceutical company can ‘free ride’ on the generated clinical trial data. Therefore, the option is not financially attractive for pharmaceutical companies. As I am not aware of the operational details of Project Marilyn, I cannot comment on it even though it does come across as a prima facie welcome model.

B) Open Source Drug Discovery

Open Source Drug Discovery, a CSIR (India) headed India consortium, is an initiative to provide affordable healthcare through a global platform where the best minds can collaborate and collectively solve complex problems associated with discovering novel therapies. OSDD tries to collectively aggregate the skills of researchers in academia, research laboratories, industry and elsewhere for a collaborative, sustained and coordinated attempt at drug discovery for tuberculosis. One can use the information, work further on it and even commercialise and make profit from it. However, improvements on common information have to be contributed back to the community. The drug that comes out of the drug discovery process will be made available as a ‘generic’ molecule, free of intellectual property (IP) constraints for the industry to manufacture and distribute anywhere in the world, thereby ensuring that the prices are affordable. [We had earlier reported that the OSDD project is in limbo, thanks to bureaucratic hurdles. (03 April 2014)]

I have certain observations on OSDD (and its journey so far) which I would like to pen down here.

Firstly, open-source model may run into difficulties when it comes to clinical trials. Companies may not be incentivized since they will not be awarded with intellectual property rights despite taking the risks involved in clinical trials.

The modus operandi of Project Marilyn may broadly address this policy dilemma. Further, introduction of certain incentives may also address this dilemma. A new form of data exclusivity, administered by a regulator, that rewards drug development of an open source licensed molecule, pathway or process may address this drawback. Data exclusivity (rather than patent) ensures that the underlying IP remains under open source terms and available for use by others in ongoing research and innovation.

Secondly, 3.6 of License Terms of OSDD states that “in the event one acquires intellectual property rights by making improvements or modifications on any part of the Protected Collective Information which includes clinical trials, one shall grant an unencumbered worldwide non exclusive right to the OSDD for use of such rights for further research in furtherance of its Vision and Mission.” Limiting such IPRs to research may vitiate one of the objectives that OSDD intends to achieve i.e providing affordable healthcare.

According to OSDD, all the elements of the final drug product will be available for licensing on a non-exclusive and royalty-free basis. However, even if the active pharmaceutical ingredient compound is licensed or available on open source terms, the finished drug may itself end up being treated in a conventional proprietary manner. For example, if the open source license on the drug compound allows improved/modified version of the compound to be patented and conventionally licensed, a drug developer can have an avenue for routing a drug that is developed from open source-licensed material into a conventional IP stream. Assume that a compound X is licensed on open source terms to company PHARMA. PHARMA does additional research on X and discovers that it is potentially more effective in treatment if ESP is added to it. It, thus, creates the improved version of X, namely X-ESP. As per 3.6 of License Terms of OSDD, PHARMA can acquire patent over the improved version. The license terms does not prevent PHARMA from selling the product at high prices which, of course, may defeat the very purpose of OSDD and strengthen the negative externalities associated with patent. PHARMA is only obligated to grant an unencumbered worldwide non exclusive right to the OSDD for use of such rights for further research in furtherance of its Vision and Mission. This may vitiate the objective of providing affordable medicines. Considering this possibility, the license term should be modified to mean that one shall grant an unencumbered worldwide non-exclusive right to the OSDD for use of such rights in furtherance of its Vision and Mission.

Thirdly, the development costs associated with developing a drug is much higher than that of developing software. Since drug development requires more than one patented component, development costs will be higher. Currently, CSIR envisages the project to be funded by Government of India, multilateral/bilateral science donors and philanthropic agencies/individual donors. This may not be feasible in the long run especially considering the risks involved in this project. Since the project intends to address neglected diseases, this is of concern for all developing countries. Hence there is a need to form a global consortium consisting of all developing countries, interested international organizations and NGOs. Alternatively, crowd-funding is also a plausible option.

C) Patent pools

Even as open source drug development needs to be explored further, it is worth considering various alternatives to achieve similar ends. Targeted use of patent pools can also be an option. Patent pools aim to make a certain set of intellectual property available in an effort to overcome the potential of patent thickets or other IP blocks. Novel financing or tax exemption, in combination with some form or variation of patent pools, can provide an appropriate and workable path to less expensive and more accessible drugs. [See spicyip.com for our posts on various developments in this sector.]

D) Utility Model

I have dealt with this model here.


Patent is just a ‘means to an end’. The right approach is to innovate and improvise new models for incentivizing R&D in pharmaceutical drug discovery. Let us not place all the eggs in one basket (read it as ‘patents’) for drug discovery. We may not be able to devise a ‘fool-proof’ model at one-go. But we can address the inadequacies as and when they arise and improve upon a model or discard it altogether if it proves to be redundant. But it’s high time that we set the wheels in motion and more importantly, enhance our risk taking ability. Indians are generally perceived to be risk-averse. If we truly aspire to place ourselves high up in the pecking order, we should first introspect and change the way we look at world (read it as ‘citizenry which embraces calculated risks’).

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