Patent Law Draft Threatens to Weaken Investment, Access To Medicines
BMI View: Turkey's ambition to become a manufacturing hub for drugmakers may not be realised if the current draft of the Patent Law is not amended significantly. In its current form, it undermines patent protection which drives innovation in the pharmaceutical sector. The amendments are less about reforming IP law and more aimed at striking the trade balance in the sector and granting local drugmakers an advantage over foreign competitors. In their desire to balance budgets and boost foreign investment, lawmakers are sidestepping the crucial issue of access to medicines.
The Turkish pharmaceutical manufacturers' association, the AIFD, has recently released a press statement highlighting the deficiencies in the draft Patent Law 1/756 currently undergoing review in parliament. The AIFD noted that Turkey's position in the Property Rights Alliance (PRA) 2012 Intellectual Property Rights Protection Index fell to 65 out of 129 countries, behind regional and emerging market competitors. Therefore, the wording of the new Patent Law could potentially offer recourse to Turkey's dire intellectual property rights laws, which have been cited as holding back foreign direct investment by pharmaceutical companies in the Turkish economy and the rolling over of product launches.
While the preamble to the draft law states its purpose is to bring Turkey's IP laws in compliance with international norms, the AIFD believes the draft has deviated from this objective, following amendments suggested by parliamentarians. There are currently provisions within the draft law that contradict EU Directives and European Patent Convention (EPC) and in fact worsen the current level of respect for IP within the country.
The amendments weaken patent protection by removing marketing exclusivity extensions through secondary indicators, increasing the time limit for patent applications from a maximum of 2 years, limiting the number of examinations by the patent office, allowing licensors to extend their licensing activities without permission from patent holder and restrictions on rights arising from awarding of patents.
The parliamentarians who have submitted these amendments have done so on the basis that weakened patent protection is in the interests of the Turkish state. They claim that by limiting intellectual property rights, generic drugs can enter the market much earlier and reduce the pharmaceutical expenditure of the SSI, benefiting public finances. We have noted previously that the SSI runs a significant structural deficit that is only set to grow as access to healthcare improves. The AIFD counters this claim by noting that drug prices are set by the Ministry of Health and not free market conditions. The SSI, in its position as the largest procurer of medicines, demands large discounts over the prices set by the Ministry of Health. As such, the release of generic drugs onto the Turkish market has very little impact on prices and drug expenditure as originator drugs are already heavily discounted.
Secondly, the draft law proponents believe that weakening patent protection will reduce import dependence and strengthen the position of local drugmakers. However, it must be noted that almost a quarter of generic drugmakers operating in Turkey are foreign-owned and control some 25% of the pharmaceutical market. According to AIFD data, generic drugs account for 38% of all imported drugs in volume terms.
The draft law in its current form would serve to worsen the operating environment for drugmakers in Turkey. The PhRMA report released in April highlighted the weaknesses of Turkey's intellectual property laws and singled out Turkey in its annual submission to the US Trade Representative. Access to the latest innovative therapies is crucial in maintaining a functional healthcare system and improving patient outcomes; this new patent law would effectively remove all incentives for bringing such medicines to the Turkish market and ultimately Turkish patients losing out. We believe that Turkey must harmonise its IP laws with EU and international norms to reward innovation and attract foreign investment into its domestic market. Without some form of safety net, the Turkish market could very well lose its appeal to markets such as Russia and Ukraine.