How Strengthened IP Rights Unlocked the Potential of Biomedical Innovation in Brazil

Stephen Ezell April 24, 2017
April 24, 2017

(Ed. Note: The “Innovation Fact of the Week” appears as a regular feature in each edition of ITIF’s weekly email newsletter. Sign up today.)

(Ed. Note: This post is part of Innovate4Health, a joint project of GMU’s Center for the Protection of Intellectual Property and the Information Technology and Innovation Foundation providing case studies on how IP-driven innovation is tackling some of the world’s toughest health issues.)

Cordia verbenacea is a perennial bush plant that grows widely along the southeastern coast of Brazil. For decades, local fishermen in Brazil had used the plant, mashed into oil, directly on sprains and cuts as an anti-inflammatory and anti-scarring medicine to aid healing. Managers at Ache Laboratorios Farmaceuticos, established in 1966 and the biggest local manufacturer and marketer of branded generics in Brazil, came to know of the medicinal potential for the plant by the early 1980s. In the 1980s and early 1990s, researchers at the company considered trying to isolate the active ingredient in cordia verbenacea into a medicinal compound, but, recognizing that Brazil’s lack of pharmaceutical patent rights meant they would be unable to protect their intellectual property (IP) and investments if they were successful, decided to delay doing so. However, in 1996, (in part as an effort to come into compliance with the Trade-Related Aspects of Intellectual Property (TRIPS) Agreement), the Brazilian Congress amended Brazil’s patent laws with Law No. 9,279 which introduced pharmaceutical product patent rights, so that, subject to procedural processes and some restrictions, only patent-holders or their licensees would be permitted to market under-patent medicines.

As Georgetown University Professor Mike Ryan writes in Patent Incentives, Technology Markets, and Public–Private Bio-Medical Innovation Networks in Brazil, the implication of the patent law reform for Ache managers was that they could finally invest in innovative medicinal product development, such as the cordia anti-inflammatory project, because the stronger IP rights enshrined in Brazil’s new patent law gave them confidence that their risky and expensive investments to develop the active ingredient in cordia verbenacea would be protected. In other words, the strengthening of IP rights gave Brazil’s innovators opportunity and incentive to tap into the rich ecological diversity of the country to produce novel medicines for the benefit of Brazilians and citizens throughout the world.

As Ryan observes, Ache managers in the early 1990s knew that in order to develop a product from the plant, Ache would need to isolate the active ingredient and take it through laboratory toxicology studies, animal testing, and human clinical trials to demonstrate safety and efficacy in order to introduce the innovation to the marketplace. But, Brazilian patent law at the time forbade pharmaceutical product patents and, thus, Ache would only be permitted to file for a process patent regarding the method of manufacture of the medicine. Thus, should the product prove popular, Ache’s competitors would be free to reverse engineer and sell the medicine themselves despite the fact that they had not made the investment into the product discovery, refinement, and safety and efficacy testing. Accordingly, Ache did some exploratory research into the active ingredient in the early 1990s but did not pursue the project further.

With the 1996 change to Brazil’s patent laws, Ache managers decided to restart the cordia verbenacea project in 1998. But lacking sufficient internal capacity to conduct the research, Ache established a research partnership with a local university professor to renew a study of the plant and its chemistry. Even that agreement with the local university was difficult to negotiate, in the words of an Ache senior manager, because there was “no patent culture” in Brazil. When isolation of the active chemical was achieved, again lacking internal capacity, Ache hired an outside research organization to design and carry out the toxicology, safety, and efficacy studies in order to gain market-release approval from Brazilian pharmaceutical regulators. Ache managers estimated that some 100 university agronomists, biochemists, pharmacologists, and medical doctors at a number of universities participated from 1998 to 2004 in the product development process. Agreements regarding IP rights, confidentiality, and compensation were negotiated with all these outside specialists. While parties reported that these agreements proved difficult to negotiate because of university inexperience with IP rights, as Ryan notes, it was in fact the advent of pharmaceutical patent rights that gave rise to the impetus to develop these broader biomedical innovation networks among companies, universities, researchers, and research institutes in Brazil. Accordingly, the evolution of local biomedical innovation networks should also be viewed as an important contribution made by strengthened IP rights in developing countries.

Ache’s investments in research and network development paid off, and cream-form Acheflan, an anti-inflammatory drug, was introduced as a prescription medicine in the summer of 2005, becoming the first medicine to be developed and introduced into the marketplace by a Brazilian company. Ache’s attorneys submitted patent applications to the Brazilian National Institute of Industrial Property that indicated the inventiveness of the product and explained how the company’s anti-inflammatory would contribute a valuable new therapy to the betterment of the Brazilian health system. Ache’s attorneys also submitted patent applications for Acheflan, both the cream form and the aerosol form, to the Patent Cooperation Treaty administrative unit of the World Intellectual Property Organization in Geneva in order to seek patent protections in the United States, Europe, and other countries.

By 2006, Acheflan garnered a 30 percent share of the Brazilian anti-inflammatory market and by the end of 2007 its market share exceeded 40 percent, despite the fact it competed directly with products from Aventis, Novartis, and Pfizer. The company subsequently initiated development of a cream-form Acheflan for the American and European marketplaces, development of an aerosol-form Acheflan for Brazilian and international markets, and development of an oral-form Acheflan for Brazilian and international markets.

The Brazilian experience demonstrates that even in countries where IP has not traditionally been viewed as a priority, innovations can be created to fulfill global needs. Yet the reality remains that Ache’s managers waited some 15 years, until after the 1996 patent reforms, to develop and patent a biodiversity-based anti-inflammatory technology; 15 years in which an innovative medical product could have been brought more quickly to the Brazilian and global public had stronger IP rights existed to protect the investments and efforts of biomedical innovators.

These results also echo findings from a recent study by consulting company Charles River Associates, Policies that Encourage Innovation in Middle-Income Countries, which finds that for countries whose “objective is to develop an innovative biopharmaceutical industry (either by domestic companies or investment by international companies), intellectual property is a necessary building block.” Ultimately, stronger IP rights provide necessary incentives for local biomedical innovators to tap into the robust ecological diversity of their countries, and the brains of their own citizens, as a powerful basis for novel biomedical innovation. 

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How Strengthened IP Rights Unlocked the Potential of Biomedical Innovation in Brazil