The interplay between intellectual property and healthcare innovation: the role of trade secrets, compulsory licensing, and patent law

Gökçe İzgi

Moroğlu Arseven, Istanbul

gizgi@morogluarseven.com

Innovation in healthcare is primarily fuelled by intellectual property. The significance of intellectual property rights extends beyond merely establishing the ownership of inventions; they are also crucial for transforming these inventions into economic assets. By enabling inventors to market their innovations without worrying about imminent competition or imitation, these rights are intended to incentivise creativity and innovation.

There is a consensus that swift changes in technology are prompting the creation of new rights definitions in law. However, for now it is possible to say that according to current regulations, intellectual property rights in the healthcare industry might include copyright, trademarks, trade secrets, and patents. Among these, trade secrets and patents are the most important for promoting innovation in this industry.

Striking a balance between safeguarding the innovators’ rights and providing universal access to essential medical care is a delicate topic that frequently provokes discussion, particularly during public health emergencies when the conflict between propriety rights and general welfare is most noticeable.

The main forces that influence how intellectual property and healthcare innovation interact are examined in this article.

Patents in healthcare

Patents are the most common protection sought by inventors, healthcare innovations being no exception. The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) is one of the main sources for World Trade Organization (WTO) members regarding legislative purposes of the intellectual property rights. TRIPS covers patent protection and the specific exceptions that may be imposed and WTO members, including Turkey, are expected to integrate them into their legal systems.

A patent is an exclusionary right which grants the patent right holder the authority to prevent others from manufacturing, using, selling or otherwise commercialising the patented invention for a specified period. In general, this period is 20 years, which is also the case under Turkish law.

While not available in Turkey, certain jurisdictions allow for the extension of patent protection through various mechanisms. One such mechanism is the use of supplementary protection certificates (SPCs), which are designed to compensate for the loss of patent protection caused by lengthy processes of testing and clinical trials required to obtain regulatory marketing approval. An SPC can extend the duration of a patent by up to five years. Furthermore, an additional six-month extension may be granted under Regulation (EC) No. 1901/2006, provided the SPC pertains to a medicinal product intended for paediatric use for which the required data has been submitted according to a paediatric investigation plan (PIP).[1]

Patents play a pivotal role in the healthcare sector. They not only safeguard the substantial investments in research and development, often involving considerable financial and resource commitments, but also enable the creation of life-saving innovations including vaccines, medical equipment, and medications. For instance, without the protection afforded by patents, the development of critical medical advancements such as Covid-19 vaccinations, cancer therapies, and HIV/AIDS drugs would not have been achievable.

Whether limited to 20 years or extended through SPCs, the rationale for patenting healthcare inventions is clear: healthcare research and development (R&D) is both costly and time-intensive, and it is essential to provide businesses and individuals undertaking the risks of innovation with a guarantee of return on their investment. Without the exclusivity granted by patents, businesses may have little to no incentive to invest in the expensive and unpredictable process of developing novel therapies and technologies.

Exemptions to patent protection applicable to balance the public benefits

The exclusive nature of patents, while fostering innovation, also presents significant challenges, especially regarding the accessibility of patented medicines and treatments. Patents can lead to high drug prices, potentially restricting access to essential medicines, particularly in low and middle-income countries. Moreover, during the patent protection period, the patent holder is entitled to prevent unauthorised use of the invention by third parties. This challenge is addressed through mechanisms such as compulsory licensing and the Bolar exemption, which aim to strike a balance between protecting IP rights and ensuring public access to essential medicines and treatments.

Bolar exemption

A critical legal mechanism that seeks to balance patent protection with broader healthcare access is the Bolar exemption. Named after the United States legal case Roche Products, Inc v Bolar Pharmaceutical Co, Inc (1984), the exemption allows generic products to be released to the market immediately after protection for the patented pharmaceutical expires. Allowing the tests and trials to start and run only after the expiration of patent protection would artificially extend the 20-year patent protection period, because the required tests and trials take a long time.

Consistent with the approach in many countries, Article 85/3-c of the Turkish Industrial Property Law No. 6769, excludes trial practices, including tests and experiments necessary to establish a patent from patent protection. This provision allows pharmaceutical companies to use the patent for clinical trials, tests, and licence applications for generic drugs prior to the expiration of the patent protection period.

In general, the interpretation of the Bolar exemption and the actions included within the exemption are crucial in balancing the rights of the patent holders with the need for public access to medicines. In Turkey, the interpretation of the Bolar exemption has been rather broad. For example, certain court decisions have determined that generic products which have obtained price confirmation and are listed on the Social Security Institution reimbursement list fall under the Bolar exemption and, therefore, do not constitute patent infringement. This seems to be in line with the proposed amendments in the European Union Pharma Package.[2]

As an exception, the Bolar exemption should be interpreted strictly and narrowly and according to the general interpretative principle singularia non sunt extenda. A broad interpretation of the Bolar exemption can create significant challenges for the enforcement of patent rights for originators. Moreover, since the price of the original product drops to 60 per cent of its actual price once a generic product enters the market, as stipulated by the Communique on the Pricing of the Medicinal Products for Human Use, it is essential to determine whether patent infringement has occurred. Early resolution of such disputes is critical for originators to protect their interests and sustain their motivation to invest in innovation.

The interpretation of the Bolar exemption plays a pivotal role in shaping the strategic options available to businesses, whether originators or generics, as they plan their next steps. In some instances, the courts in Turkey have applied the Bolar exemption in a way that limits even the preparatory phase of collecting evidence. Turkish courts often reject requests for the determination of evidence by patent holders, even after marketing authorisation is granted but before product launch, citing a lack of legal interest, as such actions are deemed to fall within the scope of the Bolar exemption. This interpretation also creates difficulties for generic companies when seeking a determination of non-infringement. Specifically, such requests are typically denied if filed prior to the granting of marketing authorisation, as courts maintain that the actions of generic companies are still covered by the Bolar exemption and thus lack legal interest.

Compulsory licence

Compulsory licensing is an important exemption to patent rights and serves as a vital tool for responding to public health crises. The most recent example is the role it played during the Covid-19 pandemic: during the pandemic, many countries advocated for the temporary suspension of intellectual property rights for Covid-19 vaccines and treatments to facilitate broader production and distribution. This proposal, commonly referred to as the TRIPS waiver, aimed to enable countries to manufacture generic versions of Covid-19 vaccines without the consent of the patent holders and was envisaged as a means to alleviate global vaccine inequalities.

The exclusionary nature of patent rights makes compulsory licensing mechanisms very rare and exceptional. In Turkey, the rarity of these mechanisms is evident, as there has been only a single case of a compulsory licence request since the inception of patent protection in the country.

The IP Law in Turkey sets specific conditions under which a compulsory licence (CL) may be granted and outlines the corresponding procedures for filing and processing CL requests. The key provisions regulating the request and grant of a CL include the following:

• Non-use of the patent: in cases involving allegations of non-use, the courts have jurisdiction to address such requests.
• Interdependency of patents: where the subjects of patents are interdependent, the courts are authorised to handle these requests.
• Development of new plant varieties: requests in which plant breeders cannot develop a new plant variety without infringing on an existing patent.
• Anti-competitive practices: when patent holders engage in practices that prevent, distort, or restrict competition in the use of a patent, the Turkish Competition Authority is empowered to address these requests.
• Doha declaration compliance: in matters involving the export of pharmaceutical products to foreign countries facing public health crises, as per the Doha Declaration, the courts are authorised to handle these requests.
• Public order: for cases concerning the interests of public order, Turkey’s Ministry of Health and Ministry of National Defence are authorised to request compulsory licences, with the final decision resting with the President.

Under the Doha Declaration and its associated amendments, Turkey has committed to importing the pharmaceutical products manufactured under a compulsory licence only in cases of national emergency or other circumstances of extreme urgency. This constitutes the second exception. Considering the critical importance of ensuring rapid and uninterrupted access to these vital pharmaceutical products, in case the need arises while granting such a compulsory licence, the Presidency can grant the right of importation to the licensee. However, this authority must be exercised strictly within the limits and scope of the identified need and should be temporary.

While compulsory licensing serves as a necessary safeguard for public health, it also raises concerns about its potential impact on the incentives provided by patent protection. Consequently, the use of compulsory licensing must be carefully balanced to avoid discouraging future innovation while ensuring access to essential healthcare.

Trade secrets in healthcare

An analysis of the historical development of trade secret legislation in Turkey reveals that this notion is closely linked to the framework of unfair competition. Although Turkish law does not explicitly define ‘trade secret’, certain draft laws and regulations offer general guidance on the concept. Based on these frameworks, trade secrets can be described as confidential business information, processes, or technologies that provide an organisation with a competitive edge. Unlike patents, which mandate public disclosure of the invention in exchange for exclusivity, trade secrets are protected without the need for formal registration. Furthermore, as long as the information qualifies as a trade secret, it can enjoy indefinite protection.

The protection of trade secrets is crucial in the healthcare sector, especially for processes related to drug formulations, manufacturing techniques, and diagnostic tests.

An important aspect of trade secret protection in healthcare is data exclusivity. In Turkey, pharmaceutical products intended for human use cannot be marketed without authorisation from the Ministry of Health (MoH).

Pharmaceutical companies are required to invent and develop pharmaceutical products through extensive and time-intensive research and development processes. To obtain marketing authorisation and commercially exploit their products, these companies must submit the results of toxicological and pharmacological tests as well as clinical trials, to the MoH. This robust process represents a significant investment in both time and resources for companies working to introduce innovative or more effective therapies for patients.

Generic pharmaceutical companies, on the other hand, can submit abridged applications to the MoH. In the absence of a data exclusivity period, these companies can apply for marketing authorisation by referring to the original drug’s data, without providing their own toxicological and pharmacological tests or clinical trial results. By demonstrating the efficacy and safety of their pharmaceutical product, generic manufacturers can, through the abridged application process, achieve the same market result as the original drug’s inventor, but without incurring the extensive time and costs associated with the development process. This streamlined pathway promotes market competition by increasing the availability of alternative products and driving down drug prices.

However, a balance must be maintained by protecting the investments of drug originators. One mechanism for achieving this is the concept of data exclusivity in the regulatory field, which allows pharmaceutical companies to keep their valuable test and clinical trial data confidential for a limited time. On the other hand, in legal doctrine, the limitation of the data exclusivity period, such as the time frame provided in Turkey, is viewed as inconsistent with the indefinite protection afforded to trade secrets.

The concept of data exclusivity is regulated by the provisions of the Regulation on Licensing of Medicinal Products for Human Use (‘the Pharma Regulation’).

According to Article 9 of the Pharma Regulation:

• Scope of data exclusivity: data exclusivity applies to reference medicinal products that are licensed for the first time on or after 1 January 2005, in one of the countries within the Customs Union Area.
• Duration: the data exclusivity period is set at six years, starting from the date of first licensing in the Customs Union Area. However, this six-year period is limited to the remaining duration of the patent protecting the medicinal product.
• Automatic protection: the data exclusivity protection is automatically enacted upon the issuance of the marketing authorisation.

Data exclusivity, as a distinct form of intellectual property rights, operates independently of patent law. It grants the data holder certain exclusive rights, preventing competitors from entering the market for a specified period.

Conclusion

Innovation in healthcare and intellectual property (IP) share a complicated and nuanced relationship. Instruments such as trade secrets and patents are essential for fostering the development of novel medical procedures, technologies and medications. However, especially in lower-income regions, the exclusivity they offer can lead to high expenses and limited access to life-saving medical care. Mechanisms like the Bolar exemption and compulsory licensing exemplify efforts to balance the protection of innovators’ IP rights while ensuring that the benefits of invention are widely accessible.

As healthcare innovation continues to evolve, the international community must refine IP laws and regulations to ensure that they both encourage innovation and promote equitable access to healthcare worldwide.