February 2001
If it's Patented, Is it Protected? The Zoloft® Case
by John R. Graham
Patents exist to fuel innovation. If innovation can be freely copied,
the required investment will not be made. Therefore, governments issue
patents to give temporary monopolies to innovators to protect revenues
deriving from their inventions. This begs a serious question: what is an
"invention"?
In the Canadian Patent Act, "invention means any new and useful art, process, machine, manufacture or composition of matter, or any new and useful improvement in any art, process, machine, manufacture or composition of matter." The Canadian definition is broader than, for example, India's, which includes only processes. It is not, however, as broad as the United States', which includes business processes, not just material processes. Last December, the breadth of Canadian patent law was challenged in the Ontario Superior Court, and the result should satisfy nobody.1 The court upheld Pfizer's patent, but gave no guidelines as to how the patent can be enforced. This decision raises serious challenges to the ability of patent-holders to protect their intellectual property.
Zoloft (sertraline hydrochloride (HCL)) is an extremely successful anti-depressant, second only to Prozac® in Canadian market share. It is also a somewhat less successful treatment for anxiety-related disorders, including obsessive compulsive disorders and panic attacks. These two different uses were protected by two different patents, both held by Pfizer Inc.2 The first patent, issued in 1982, was a patent on various manufacturing processes for sertraline HCL. Because patents must be "useful," the patent application described the compound's success in blocking serotonin reuptake in the brains of mice and rats, thus indicating its usefulness as an anti-depressant for humans. This patent expired in 1999, which means that competitors can manufacture and sell a generic version of the drug in Canada. To date, three companies are doing so.
The second patent, issued in 1990, covers the use of sertraline HCL for anxiety-related disorders. This patent will expire in 2010. No new manufacturing process is described, rather, the patent simply protects a new way of using the drug. Thus, we have a drug which is patented for one treatment and not another. Although Pfizer earned both patents, this is not simply a case of patent extension. According to the Patent Act, "Any person who has invented any improvement on any patented invention may obtain a patent for the improvement, but he does not thereby obtain the right of making, vending or using the original invention, nor does the patent for the original invention confer the right of making, vending or using the patented improvement." Therefore, another company could have developed and patented the use of sertraline HCL for anxiety-related disorders. That company could have then either sold the patent to Pfizer or demanded a royalty to allow Pfizer to sell the drug for the new indication. Patenting improvements motivates further innovation to an existing product.3
So, this patent asymmetry led to the current situation where generic manufacturers can make and sell sertraline HCL for one use, but not for others. It's as if the law allowed you to use your kitchen knife to cut carrots but not potatoes. Enforcement would be quite impossible. The Ontario Health Ministry addressed the issue by listing generic sertraline HCL on its formulary (list of drugs subsidized), with the note: "interchangeable with Zoloft for the treatment of depression," indicating that Ontario recognized that the drug was still patented for other uses.
However, Apotex Inc., one of the generic manufacturers, encouraged pharmacists to sell generic sertraline HCL for all indications. Obviously, Pfizer insisted otherwise. Because doctors usually do not write their diagnoses on their prescriptions, pharmacists did not know when the drug was prescribed for depression or an anxiety-related disorder. Predictably, this muddle ended up in the courtroom.
In hindsight, both Apotex and Pfizer can be criticized for poor business strategy. In 1997, Apotex had undertaken not to make or sell sertraline HCL for uses other than depression which were covered by Pfizer's patents. Perhaps the company expected that doctors would prescribe and pharmacists supply the generic substitute nevertheless. This proved not to be the case. Pharmacists, ignorant of the diagnoses behind the prescriptions, seldom substituted the generic, fearing that they may have been violating Pfizer's patent. In 2000, Apotex wrote to Ontario's pharmacists, challenging Ontario Health's decision to subsidize the generic drug for depression alone, and offering to indemnify them from liability for substituting the generic for other indications. However, pharmacists were also aware that they may have been selling branded Zoloft when cheaper, generic sertraline HCL was appropriate, thereby jeopardizing their subsidies according to the Ontario formulary. (Ontario Health audits pharmacies and has clawed back fees in instances when inappropriately expensive drugs were sold to patients.)
Pfizer, on the other hand, could have minimized the risk to its intellectual property by re-branding the drug with a new trademark for anxiety-related disorders, and perhaps manufacturing it with a modified appearance under the different name. GlaxoWellcome achieved this with a successful extension of bupropion HCL, originally sold as the anti-depressant Wellbutrin®, into the smoking-cessation market as Zyban®. However, since depression and anxiety-related disorders are often diagnosed in the same patient, Pfizer's ability to differentiate a new brand would have been extremely limited.
This leaves us with a significant public policy headache, which the Ontario court has not resolved. While respecting Pfizer's anxiety-related patent, and supporting Ontario Health's listing generic sertraline HCL with limited interchangeability, the court did not address the behaviour of doctors and pharmacists. Doctors resist writing diagnoses on prescriptions citing patient privacy. However, this invasion of privacy is small. The prescription can only be for mental illness, so that much is automatically known to the pharmacist. Specifying which mental illness provides only a small piece of extra information. Pharmacists resist being held liable for actions they take in ignorance of diagnoses. Although the law could force doctors to specify "Zoloft, no substitution" in cases of anxiety-related disorder, enforcement would be difficult.
This is the first, but probably not the last incident of this type. Given the unsatisfactory resolution of the first case, perhaps we can rely on market forces to motivate generic and branded drug manufacturers to improve their business strategies to avoid a repeat performance. If not, we will have to rely on government's clumsy hand to address this new risk to intellectual property.
Notes
1 Ontario Superior Court of Justice, File No. 59/2000, Mr. Justice J. O'Driscoll, December 20, 2000.
2 Patent number 1,130,815 (depression) and patent number 2,029,065 (anxiety). The compound is further protected by three other patents concerning indications for which the medicine is not currently used.
3 Whether patents on improvements should be as long as patents on original manufacturing processes and indications is a question outside the scope of this article.
John R. Graham (johng@fraserinstitute.ca) is Senior Analyst and Acting Director of the Pharmaceutical Policy Research Centre at the Fraser Institute. He has an MBA from the London Business School, University of London.
info@fraserinstitute.ca
4th Floor, 1770 Burrard Street, Vancouver, BC, Canada, V6J 3G7
Tel: (604) 688-0221 Fax: (604) 688-8539 Book Orders: 1-800-665-3558 ext. 580
You can contact us at the above email address for any comments or information requests. Please report any dead links or technical problems.