A Supreme Court ruling limits medical patents to a maximum of 20 years. Investors in innovation are likely to steer clear of Brazil
A vote to change a single paragraph of Brazil’s industrial property law could pose a significant threat to innovation in the country. Earlier in April, Supreme Court Justice Dias Toffoli suspended a rule allowing increases to the terms of medical patents, a decision that takes Brazil one step closer to imposing limits on legal protections for drugs and health processes. While potentially beneficial to manufacturers of generic medicines, the move represents a blow for those seeking to invest in new technology in Brazil.
Brazil’s industrial patent law states that all patents should have a duration of ten years. However, in cases where the National Industrial Property Institute (INPI) fails to analyze requests within the space of ten years, patents may be extended indefinitely. Justice Toffoli’s decision would cap medical patent limits at 20 years, regardless of how long INPI takes to decide on requests.
The ruling will not apply to patents already in force, only to those which are still pending INPI approval and future requests. The Supreme Court is set to hold a trial on whether to uphold Justice Toffoli’s decision, which is likely to take place before the end of the month.
The Federal Prosecution Service requested the change in 2020 and it has now been fast tracked due to the coronavirus pandemic. The rationale behind the amendment is that failing to place limits on medical patents harms citizens constitutional right to health. Prosecutors say this article of the law minimizes the supply of health products that the population and government can purchase, while increasing their prices.
According to a preliminary study conducted by the Economics Department of the University of São Paulo (USP), currently, by taking advantage of a monopoly structure, drug manufacturers in Brazil can enjoy extraordinary profits for a period exceeding the supposedly optimal level established by law.”
The study also states that imposing maximum limits on medical patents could result in significant savings for Brazil’s public health system (SUS), Generic drug manufacturers would then be able to produce and sell their own versions of protected pharmaceuticals, forcing their prices down.
Less attractive for innovation investors
The big losers, meanwhile, are those seeking to invest in innovation in Brazil. Entrepreneurs and representatives of multinational laboratories argue that INPI regularly takes more than ten years to analyze patent requests. Without being able to fall back on extensions in cases of delay, patents are likely to expire quicker and investors will look elsewhere for medical innovation opportunities.
And this is not purely a matter of public sector versus private, as major Brazilian public universities would also feel the pinch if these changes go ahead. The University of Campinas (Unicamp) and USP have partnerships with private companies and are Brazil’s leaders in medical innovation, knowledge, and patents. Limiting legal protections could see this crucial source of private funding dry up.
Ricardo Nunes, head of patents at law firm Daniel Advogados, points out that Justice Toffoli’s decision draws attention away from the real issue. “Ideally, INPI would have the human, financial, and technological resources to speed up the analysis of patent requests. preventing them from pending for any longer than what is reasonable.”
Published on The Brazilian Report. Read it here.