The recent (and ongoing) scare about swine flu has invited queries about the arrangements which governments have in place to deal with outbreaks of epidemic diseases in their populations. Many governments, including Ireland, have agreements in place with pharmaceutical companies to produce and supply anti-viral or other appropriate treatments within a certain time-frame.

The usual trigger for such agreements to kick into effect is the elevation of the particular illness to “pandemic” status by the WHO. Swine flu was declared a pandemic by the WHO on 11 June 2009. This contractual route appears to be the most appropriate way of dealing with the problem.

However it is also worth noting that many governments have made provision in their patent laws to side-step the patents which might apply to protect pandemic treatments, in order to enable them to deal with a crisis effectively including by arranging to produce medical treatments themselves. While there is currently no proposal to invoke such provisions in Ireland,  it is likely to be impractical for the government to invoke such provisions and could risk damage to the State’s relationships with pharmaceutical manufacturers.

Part V (Sections 76 – 78) of the Irish Patents Act 1992 (as amended) permits the use of inventions “for the service of the State”. This is separate to the compulsory licensing provisions under Part IV of the Act, which can also be invoked by any Minister of Government as well as by private parties. Section 77 provides an express exemption to the government or any of its Ministers to do “for the service of the State” certain acts which would otherwise amount to an infringement of a patent: they may (a) make, use, import or stock any product which is the subject-matter of a product patent or which is obtained from a process patent, or may sell or offer that product for sale; and (b) supply or offer to any person the means for putting the relevant invention into effect.

These provisions would extend as far as to permit the government to parallel-import medicines from outside the EU, notwithstanding patent rights which might normally be relied upon to prevent such importation. “Service of the State” means, simply, a service financed out of government funds. In other words, if the State pays for the product, then the State will be deemed to be using the invention which is represented by the product for the “service of the State” and so will meet the pre¬condition imposed by Section 77. The State does not need to show that there is some underlying immediate social need or emergency to able to rely on the exemption. Section 78 specifies certain express uses which the State is entitled to make of the relevant product, for example for “the maintenance of supplies and services essential to the life of the community”, but these are additional provisions only, and the use of the general power in Section 77 is not dependent on them.

However, the government is not entitled to a free ride under Section 77. Instead, the relevant government minister who is invoking the provision must agree licensing terms with the patent proprietor, either before or after the use of the patent by the State has occurred. If terms cannot be agreed, the matter must be referred to the Irish High Court, who in turn may appoint an arbitrator to determine the dispute.

Unfortunately, Section 77 does not lay down any particular matters for the Court/arbitrator to consider in determining an appropriate level of compensation for the proprietor or any other terms, save that they can take account of any benefit or compensation which the proprietor may have already received (directly or indirectly) from the State.

There are also a few interesting add-ons to Section 77:  in any Court proceedings to adjudicate disputed terms, the Government is entitled to put the validity of the relevant patent in issue and to apply to have it revoked; also, if the Government no longer requires the relevant products, it may sell off its extra stock and any subsequent purchaser of the product cannot be attached for patent infringement for dealing in those products.

What is interesting (and probably ultimately limiting) about the provisions is that they make no reference to medicinal product licensing rules. Arguably, therefore, any medicine imported into the State in reliance on Section 77 would still require a marketing authorization which was valid for Ireland. Ireland’s marketing authorization legislation does not exempt the State from these rules nor does it make any provision for the State to side-step those rules.

At best, the government would be forced to rely on exemptions permitting named-patient supply under individual prescriptions issued by doctors on a patient-by-patient basis, which would not seem to be very satisfactory. Further, the State would still be liable to purchase the products in compliance with public procurement rules, which would seem odd given that there is an underlying assumption (at least politically) that the provisions should only be used to deal with emergency situations or exceptional circumstances.

There is an individual defense available to patent infringement claims under Section 42(c) of the Patents Act 1992 (as amended) which permits pharmacies to prepare individual treatments for patients on foot of a doctor’s prescription. This mirrors the exception in the marketing authorization legislation for unlicensed medicines to be supplied to named patients under an individual prescription. However, Section 42(c) is unlikely to provide a basis for a widespread, strategic approach by the government for dealing with a pandemic outbreak, unless it was confident of individual pharmacists’ abilities to make up complicated treatments, which they are highly unlikely to have the facilities or expertise to do.

(via Philip Lee Solicitors, Dublin, Ireland)

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    A few points to note regarding the U.S. approach, at least as indicated by the potential anthrax crisis in 2001 – which was not a pandemic per se (since anthrax is not contagious) but was quite similar in its possible devastating effects.

    Unlike many governments, the U.S. has NOT expressly provided in its patent laws for a method of side-stepping the patent exclusivity in times of a national health crisis. Thus, when in 2001 Bayer indicated that it likely could not timely produce sufficient amounts of Cipro, Congress was faced with having to consider special legislation to break the patent exclusivity. Many scholars in the field questioned whether such government invalidation of the patent exclusivity would constitute a violation of the Constitution’s Takings Clause. 28 U.S.C. section 1498 provides for compensation for government use of patented inventions, and might have addressed the constitutionality concern, but that provision does not apply under all circumstances.

    I addressed this issue in my article, “Not All Property is Created Equal: Why Modern Court Resist Applying the Takings Clause to Patents, and Why They are Right to Do So’, 15 Geo. Mason L. Rev. 1 (2007) (available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=968417 as well as at http://www.law.gmu.edu/gmulawreview/issues/15-1).

    Davida Isaacs
    Associate Professor of Law