Robert Wessman: the case for patent reform

An Expert View from Róbert Wessman, founder and chairman of Icelandic biosimilars company Alvotech (Nasdaq: ALVO) and investment fund Aztiq.

Making the case for change

The purpose of an appropriately balanced intellectual property (IP) system is to incentivize innovation and increase economic growth. Unfortunately, some pharma companies spend significant resources on manipulating the IP enforcement system to improperly extend expiring monopolies. They exploit unintended or unforeseen ambiguities in the law to crush competition rather than to protect innovation.

A case in point is so-called “patent thickets”. These artificial thickets are based on legal loopholes allowing companies to re-patent the same invention many times. This deters competition by creating high levels of uncertainty around patent protection and increasing the risk and cost of litigation for those seeking to develop and provide more affordable versions of the product for patients, such as biosimilars. Patent reform is needed to prevent unfair use of patent thickets by companies that seek to maximize profits from aging franchises, rather than invest in transformative therapies that better serve patients.

Recommendations to limit the ability of a patentee to re-patent an invention without limit?

In February, Alvotech, a company I founded which specializes in the development and manufacture of biosimilar medicines, filed comments with the US Patent and Trade Office (USPTO) that outlined recommendations on how to limit the ability of a patentee to re-patent an invention without limit. More specifically, we proposed closing the loophole which currently allows companies to file an unlimited number of terminal disclaimers. An applicant can file a terminal disclaimer and the USPTO will permit a second patent to a trivially different scope of patent protection covering the same invention. There is currently no limit on the number of times the applicant can pull this trick.

As a result, re-patenting the same invention, facilitated by terminal disclaimers, is becoming a common approach to amassing patent thickets. Our proposal is to set a hard limit for filing two terminal disclaimers over a patent. Any third or subsequent application seeking to file a terminal disclaimer over the same patent should be denied. We believe these changes can be implemented without passing any new legislation and could greatly restrict the ability for companies to thwart

competition and limit patient access via the creation of these artificial patent thickets.

Reform's potential for patients, health systems and drugmakers of both innovative and generic/biosimilar products

Abuse of the patent system, of which patent thickets are one example, harms patients by delaying and limiting the supply of critical medicines. Patent reform could reduce uncertainty and save unnecessary and costly litigation expense by developers of biosimilars and generic medicines. Biosimilars and generics could hence be developed at a lower cost, improving patient access, and reducing the financial burden for healthcare systems. As an industry, we owe it to patients to reduce costs and increase access to more affordable medicines and quality care.

These objectives can be met without sacrificing any of the beneficial impact which a well-functioning patent system has on investment in research and development and innovation in the pharmaceutical industry.