06 December 2019

What the US-UK trade deal documents actually reveal

Generics and innovator sources from the pharma industry explain why documents from US and UK trade discussions do not point to the US trying to extend pharmaceutical patents

Pharma insiders from generics and innovator companies tell Patent Strategy that contrary to what Labour Party leader Jeremy Corbyn interpreted from the 450 pages of trade talk negotiations, the UK and Europe have longer patent monopoly rights for medicine than most of the world.

Last week, Corbyn accused the government of negotiating with US trade representatives to lengthen UK drug patents in a post-Brexit trade deal. The Labour Party leader said the trade documents give undeniable proof that the NHS will be “up for sale” after Brexit because prolonging patents will give US pharma drug companies extended market exclusivity in the UK.

“Longer patents can only mean one thing: more expensive drugs. Lives will be put at risk as a result of this,” said Corbyn.

He also said the trade talks give further credence to his accusations that the NHS is not safe in Conservative Party leader Boris Johnson’s hands, and that discussion to extend patent rights is proof the NHS is “on the table” in negotiations with the US if Johnson wins.

While lengthening patents would indeed lead to delayed market entry for generics companies and result in higher drug prices, a pharmaceutical industry source says that Corbyn doesn’t understand that patents do not control costs, and that drug prices are set by the National Institute for Healthcare and Excellence (NICE).

“There are two distinct issues here; one is the NICE side and one is the IP side. NICE is a price regulator and is separate from patents. NICE decides drug prices,” he says.

“The documents go back to 2016 and are a record of four or five meetings that really are the US side asking the UK to tell them about the SPC system, regulatory data system and patent system.”

He says a closer reading of the documents reveals that the IP discussions were simple exchanges of information between the two sides, with the US asking for more information about the EU SPC system.

The head of IP for a global generics company in Switzerland agrees and adds the documents show nothing more than a standard discussion between two countries in the first steps of a trade deal.

“We know the US has a different system and this shouldn’t be seen as the fault of pharma people. Some people are making it sound like this is big bad pharma doing something nefarious.

“It is most likely the US trade reps were putting forward their position on patent rights and patent law that don’t exist in the UK, but that is what the US would do in trade talks with any country,” he says.

Patent term length is controlled by the European Patent Convention and is similar to the rights granted by the US Code. For the UK to lengthen patents after Brexit, the government would have to change the current EU SPC system that grants extensions for some inventions that face regulatory approval before market entry.

But Martin MacLean, partner at Mathys & Squire in London, points out that the SPC framework is longer than the US patent term extension regime. “The EU SPC regulations goes up to 15 years, the US goes up to 14 years, so I do not see on what basis Corbyn is saying the US is trying to get the UK to extend patents.

“Both of us have patent extensions, we both have the same principle and the US gives a shorter maximum term, so I just don’t see how even if we were to accept the US system if would mean longer exclusivity on the UK market.”

The general counsel at a UK generics company says he believes Corbyn’s accusations that IP discussions are proof this government is willing to sell of the NHS to US companies are nothing more than political fear-mongering.

He says: “This is a cheap political move by Corbyn and bares no relation to reality. It is an extraordinary suggestion that the UK would change the patent system. Western Europe has on average patent rights that extend longer than anywhere in the world so it is the most favourable part of the world for originator companies.

“I find it an incredible suggestion that the UK would negotiate with the US to become the most favourable place for big pharma by maintaining monopolies longer and keep access to medicines from the population longer,” he says.

MacLean adds that one area of agreement between the two countries was the UK’s membership of the UPC, and that any modifications to the current patent system would jeopardise the possibility of the UK becoming or remaining a member. “The US stakeholders were in favour of the UK being part of that, and anybody worth their salt in Europe would also want to be part of that system,” he says.

“But changing our patent system would be madness, absolute madness. I don’t say impossible, but it would be crazy.”

Grace periods and data

One part of the trade talks that Corbyn did not highlight was the discussion about data protection rights for innovative drugs. The pharma industry insider explains the US has five years of data protection for simple molecules and 12 for biologics, while the UK has 10 years for both large and small molecules.

Data protection is important for innovator drug companies to protect their inventions in the rare circumstances that their patents are found invalid. But the pharma insider says that even though he believes trade talks focused heavily on data exclusivity rights, he doesn’t believe many molecules would be affected by changing the system. 

“In principle, if we introduced a US style system for biologics, we’d gain a little but then lose for small molecules. Data protection is your backup in case you lose your patent, but most of the time you don’t need to rely on it because you have a valid patent,” he says.

The head of IP in Switzerland tells Patent Strategy that he doesn’t believe data exclusivity rights are a deal breaker for the US, especially since these rights are controlled by the EPC and not the UK.

“My sense is that talks about this are all standard posturing that the trade representative would take when they are kicking off trade talks with any country and that doesn’t mean the UK would accept any proposals.

“In the replacement for the North American Free Trade Agreement, Mexico did not accept the 12 years data exclusivity or patent term extension, and neither did Canada,” he says.

The trade documents do show that US trade representatives pushed for the 12-month application grace period for inventors who reveal parts of their discovery before filing a patent. This is a unique feature of US IP law and is not found in the EPC.

“There are many industries here in the UK that would see the grace period as a benefit, but any discussion about that would have to take place at the EPO,” says the head of IP.

Even if the US argued heavily for the UK to adopt a grace period for disclosure of inventions, MacLean believes that alone would not be enough for the UK to abandon the EPC.

“These documents are a very healthy discussion between two parties who want to get a deal done,” he says.

“It is madness to say this points to the NHS being up for sale because whatever rules the US pharma companies have to play by the UK companies would as well. I just don’t get it. This whole thing is a storm in a teacup.”

Hopefully, the storms won’t involve any more egregious misunderstandings about IP.

This article was first published on Patent Strategy in December 2019.