Intellectual property plays an essential role in the pharmaceutical industry, influencing innovation, the development of new medicines and treatments, and market competitiveness. Furthermore, intellectual property is a strategic and important contributor to economic growth and the promotion of public health.
In this industry, patents are the most relevant form of intellectual property, as they grant holders the exclusive right to produce, use, sell and distribute an invention for a certain period. This protection encourages industries to invest in Research and Development (“R&D”), allowing them to recover the high investments made through licensing and the exploration of the invention.
Without patent protection, other companies could copy and sell the medicine developed by a certain industry, without incurring the same R&D costs or any licensing, thereby discouraging innovation. Thus, patents ensure that the developers have market exclusivity for the term of the patent – in Brazil, 10 years – allowing them to set prices without direct competition from other companies’ generics. This monopoly is crucial for offsetting high development costs and funding new research.
After the patent expires, other manufacturers can produce the same medicine as a generic, which is a copy of the original formula. Generics are sold at significantly lower prices, as their manufacturers do not face the same high R&D and patent costs. The entry of generics into the market increases competition and lowers sales prices, improving access to essential treatments, as well as allowing governments and health insurers to provide these medicines to a greater number of patients.
In this way, some pharmaceutical companies adopt strategies to extend market exclusivity, such as developing new formulations or methods of administration for the already patented medicine, or making minor modifications to an existing medicine, so that new patents may be granted, and thus extending the protection and delaying competition from generic manufacturers. This practice is known as “evergreening” and it is a practice that remains a contentious issue within the pharmaceutical industry, which might in some cases be considered as an anti-competitive practice, highlighting the ongoing tension between innovation incentives and access to affordable healthcare. In addition, they may enter into exclusivity agreements with generic producers to delay the entry of these products in the market.
In conclusion, patents in the pharmaceutical industry are fundamental to encourage innovation, as they grant exclusivity to the owners, while guaranteeing access to medicines. Patent protection is essential for pharmaceutical companies to invest in new research and develop innovative treatments. However, it is crucial to balance the access to affordable medicines for the population, especially in more vulnerable regions. In Brazil, this balance is reflected in the term of patent protection and the assurance that, after this period, other companies can produce the same medicine.