The road to the approval of the amendment to the patent law led by Justice Minister Gideon Sa’ar is indeed still long, and a fight in the pharmaceutical industry is expected – but last week the amendment reached a significant stage: passing the first reading.
The main dispute surrounding the amendment is between the original drug industry (the ethical companies) and the generic drug manufacturers. Alongside these, there is the public interest in increasing competition in the pharmaceutical industry and lowering prices.
Today, when a pharmaceutical company registers a patent – it receives exclusivity for 20 years. After this period, the exclusivity can be extended for another five years. During the extension period, the companies that produce generic drugs (a copy of the original drug) can make a preparation, but they are prohibited from producing or marketing the drugs. So even when the market is opened to competition at the end of the period that lasts up to 25 years, the generic drugs are not sold immediately.
A discount will help to expand the medicines in the health basket
The amendment comes to change the situation in two aspects – sales in Israel and sales abroad. At the local level, generic drug companies will be able to manufacture and sell in the last six months – when at the end of the exclusivity period they will be allowed to hand over the drug. The Ministry of Justice says that the bill is intended to “enable pharmaceutical companies in Israel To produce generic drugs more efficiently and faster than the current situation, which will result in a wider selection of generic drugs at discounted prices and improve competitiveness.” Lowering prices is expected to lead to the expansion of drugs in the health basket, and to savings in the public purse.
At the international level, this is a dramatic change. During the last five years of the exclusivity period, Israeli companies will be able to produce and sell abroad, in countries where there is no patent protection.
Behind the bill is a struggle in the pharmaceutical industry between the promoters of the law, the manufacturers’ association, Teva and other companies, and the source companies, the multinational companies operating in Israel, represented by Pharma Israel. “The main goal of the amendment is to strengthen the pharmaceutical industry in Israel. It is important for drug manufacturers who have offices in Israel and Europe,” says Ron Tomer, chairman of the Manufacturers Association and owner of the pharmaceutical company “Unipharma” that produces generic drugs.
According to him, generic drugs reduce, on average, 50-70% of the price of the drug in the first year, and after 3-5 years about 80-90%. “Every day that a generic comes out early, it causes a drop in prices and savings for the public purse, and increases the availability of drugs. First and foremost, the ones who will benefit are the consumers.” Tomer adds that “the Minister of Justice gave a boost in the understanding that he is increasing competition. He understood that the citizens of Israel stand before the monopoly companies.”
“This is a comparison of conditions with the situation in Europe”
The lawyers from the field explain that the great significance is in the international aspect. According to attorney Tal Band, managing partner at the firm of S. Horvitz, an expert in intellectual property representing the manufacturers’ association, “the significant change lies in the fact that the European Union changed the law three years ago. While the European pharmaceutical companies can sell generic drugs in the world during the extension period, those who produce generic drugs in Israel cannot. Most of the generic drugs produced in Israel are for export and less for the domestic market, so straightening the line was important.” Band points out that the first goal mentioned in the explanatory notes to the bill is to improve the competitiveness of Israeli generic companies against foreign generic companies.
Tal Band Adv. / Photo: Eyal Yitzhar
“The big drama is allowing the generic companies to produce for marketing outside of Israel, before the end of the exclusivity period. The amendment enables competition with other generic companies, and improves their economic situation in international competition,” says attorney and patent attorney Asa Kling, head of intellectual property at the Nashitz office Brandes Amir, who served as the head of the Patent Authority.
Asa Kling / Photo: Ami Erlech
Attorney Kling adds that if the amendment passes in its current form, it is a “significant change of the balance point. The amendment touches the core of the generic industry.” However, Kling expresses doubt that the amendment will remain in its current form, due to the multiplicity of interests and the struggle of the originator companies.
The source companies fear a large financial loss
As mentioned, the one who opposes the amendment of the law is Pharma Israel, which represents 19 multinational companies that manufacture origin drugs and operate in Israel. The meaning of the shortening of the exclusivity period on the patent for these companies, which include Pfizer, Merck, AstraZeneca and Sanofi, is a large financial loss. This, after investing billions of dollars in the development of each drug.
The demand to compare the conditions of Israeli companies with foreign ones in foreign markets ignores, in Pharma Israel’s view, the difference between the situation in Europe and in Israel. Among other things, during the patent extension period. In Israel, for the most part, the period is shorter than in Europe – and the amendment will deepen the gap. In addition to this, the procedure for registering the drug in Israel is longer than in Europe, and depends on registration abroad. According to Pharma Israel, the amendment may harm the speed of the entry of new drugs into Israel. They refer to a study according to which the European arrangement may lead to the loss of thousands of jobs, and resulted in a decrease in research and development investments in the amount of 215-363 million euros.
The CEO of Pharma Israel, Kobi Zorf, warns of the deterioration of the waiting time for the registration of new drugs, with dozens of drugs waiting nearly two years for approval. According to him, the bill shortens the duration of patent protection and “could severely damage the incentive to make innovative drugs available to the Israeli public. Just a few days ago, the court called on the legislator to improve the protection of extending the validity of pharmaceutical patents, since the current arrangement hurts companies.”
“We may not be on the same page as the US and Europe”
A goldsmith claims that they misled the Israeli legislator. “They took a directive from abroad and copied it as it is, while omitting all the protections that exist in Europe for innovation and the public interest. The amendment to the law will also shorten the scope of protection of orders to extend the validity of patents in Israel, so that it may no longer be worthwhile to bring medicines here immediately after FDA approval.”
He warns that “if until now we have made an effort to bring medicines to Israel immediately after approval by the FDA and its European equivalent, the amendment of the law will deepen the existing gap. We may no longer be on the same page as the US and Europe, but we will receive medicines 3-4 years late. This is a serious harm to the public. The State of Israel, which sets its flag and invests great resources in promoting innovation in high-tech and biotech, needs to find a way to continue preserving our comparative advantage as an environment that protects the principles of intellectual property.
Attorney Liad Wetstein, who represents most of the international pharmaceutical companies that invest in pharmaceutical R&D, adds that Israel provides limited protection compared to what is customary for extending patents. “A country like Israel, whose economy is based on technological innovation, cannot afford to grant innovation patent protection that does not meet international standards.”