The Labour Party's Proposals for Patent Reform

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Jane Lambert

It is not often that intellectual property is discussed at a party conference.  While public attention was focused on the Supreme Court's decision in R (Miller) v The Prime Minister [2019] UKSC 41, the leader of the opposition made this very interesting commitment in his speech to the Labour Party conference:

"We will redesign the system to serve public health – not private wealth – using compulsory licensing to secure generic versions of patented medicines. We’ll tell the drugs companies that if they want public research funding then they’ll have to make their drugs affordable for all. And we will create a new publicly owned generic drugs manufacturer to supply cheaper medicines to our NHS saving our health service money and saving lives. We are the party that created the NHS. Only Labour can be trusted with its future."

He made that commitment after talking about the child in the video above.  According to the Labour Party leader, the child needs at least 4 hours of treatment every day in hospital. He could be helped by a medicine called Orkambi but he is not allowed it "because its manufacturer refuses to sell the drug to the NHS for an affordable price." Had it not been overshadowed by the prorogation appeals it would have attracted a lot more comment in the press.

The thinking behind those proposals is expressed in the Labour Party's publication Medicines for the Many: Public Health before Private Profit.  Having observed that  the pace of major drug discoveries, how valuable they are to patients, and how easily patients are able to access them, all depend on the incentives and rewards set by the health innovation system, tt contends that

"our current health innovation model is fundamentally broken – it is an inefficient system that is not delivering the innovation we need at prices we can afford. This is not just a case of market failure, but of an innovation model that is based on skewed incentives that drive high prices and often waste scientific and financial resources. Too often, the efforts and ingenuity of scientists are channelled into marginal but marketable improvements on existing drugs, instead of genuine steps forward. The government spends billions on funding research and development (R&D) but has to spend billions more purchasing the drugs that are developed out of this research. This is not fair or sustainable, particularly now as we experience a step change in health needs."

One of the solutions that the leader of the opposition mentioned in his speech is compulsory licensing. Steps that have been taken by the German courts and the Malaysian government against manufacturers of HIV and hepatitis C drugs are noted on page 21. The publication notes that s.55 (1) of the Patents Act  1977 provides that  "any government department and any person authorised in writing by a government department may, for the services of the Crown and in accordance with this section, do any of the following acts in the United Kingdom in relation to a patented invention without the consent of the proprietor of the patent." Where the invention is a product, such department or authorized person may sell or offer to sell it for  ................... the production or supply of specified drugs and medicines, or dispose or offer to dispose of it (otherwise than by selling it) for any purpose whatever." Equivalent provisions under the Patents Act 1949 were used in Pfizer Corporation v, Ministry of Health [1965] RPC 261 to make an antibiotic available to the NHS.

The establishment of a publicly owned pharmaceutical company is discussed on page 31 of Medicines for the Many:

"Practical interventions beyond the steps described earlier in this report should include the establishment of publicly owned, democratically controlled pharmaceutical companies that could deliver the medicines we need at prices we can afford. The public sector already invests substantially in health R&D. Instead of handing over the research to the private sector, the state should take on a more active role and produce priority drugs to sell to the NHS at affordable and accessible prices. This could include manufacturing generic medicines that are facing supply or pricing issues and facilitating a straightforward enactment of Crown use licences on patented medicines where necessary. Not only would this improve access to these medicines but this process of reshoring the UK generic industry would boost job opportunities in the UK. Any profits from these public companies could be funnelled back into the existing network of publicly funded R&D facilities, used to offset the cost of drugs that are more expensive to produce, or invested in non-drug-based public health interventions that can improve health outcomes."

Not surprisingly, the Labour Party's proposals have not been welcomed by the pharmaceutical industry. In a press release dated 24 Sept 2019, Dr Richard Torbett, Executive Director of Commercial Policy at the Association of the British Pharmaceutical Industry, said:

"The situation on Orkambi is rare, but it is clearly unacceptable, and a solution needs to be found for patients and their families.“However, ‘compulsory licensing’ – the seizure of new research – is not the answer. It would completely undermine the system for developing new medicines. It would send a hugely negative signal to British scientists and would discourage research in a country that wants to be a leader in innovation.”

At page 39, Medicines for the Many considers whether those fears are overdone.  More specifically it asks whether the proposed reforms would drive away the pharmaceutical industry and undermine jobs and the economy and whether transforming health innovation with the proposed policies would kill off medical innovation?  The authors' conclusion is that those policies could make the UK a more attractive environment for pharmaceutical companies and facilitate innovation/

One concern that the Labour Party's document does not address is whether compulsory licensing would be compatible with the many bilateral investment treaties that the British government has already concluded with governments around the world and the free trade agreement that it hopes to make with the USA after the UK leaves the European Union.  Restricting the right of say Vertex Pharmaceuticals Inc to negotiate the best possible licence fee could be regarded as expropriation in the light of the Metaclad decision (see Bilateral Investment Treaties: Claiming Compensation from Foreign Governments under Bilateral Investment Treaties for failing to provide adequate IP Protection  27 July 2013). There has already been one attempt by a pharmaceutical company to extend Metalcad to pharmaceutical patents which very nearly succeeded (see Can a business recover compensation if a state fails to protect its intellectual assets? The decision in Eli Lilly & Co. v Canada suggests "maybe". 25 July 2017).

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