Evergreening in the Farmaceutical Industry

Matilde Boje Larsen & Gabriela Nedic

Student thesis: Master thesis

Abstract

In a market where investors finance a lot of money into inventions and the research to development them, patents are an important tool to get the financed money back and more. The development of the invention is a long and expensive procedure. The money the drug company earns from selling the invention helps to please the investors and give them an incitement to continue investing in our future. On the pharmaceutical market, the investors give money in support of the research and development of new drugs. Drugs that can help consumers dealing with health issues. The patent period in Denmark is 20 Years. Once this process is completed the patent protects the drug from getting copied. This allows the investors and the companies producing the drugs are getting their invested money back and most times, more money in return. The drug company can set the price wherever they want because they are the only producers on the pharmaceutical market and the consumers have very limited alternatives to buying their drug. The companies are protected by their patent from intruders on the market, and they therefor have monopoly power on the market for 20 years, as previously mentioned. That leaves the question: what happens when the patent period is over?
When the patent period is over, new companies start entering the market with generics products which have the same effect and chemical structure as the original manufacturer’s drug. With the generics product on the market, the original manufacturer can no longer set the prices they wish to. Most times, the generics product is cheaper to produce which means it can be sold at a lower price, while the generics manufacturer still receives an income. This forces the original manufacturer to lower their price so compete with the generic brand. The original manufacturers are interested in having monopoly power on the pharmaceutical market as long as possible. In order to keep that power they start using evergreening. Evergreening is the strategy used to extend patents over products that are about to expire in order to be the sole distributor for a longer period of time than is permissible. Using evergreening gives them more time to be the only sellers of the medical product on the pharmaceutical market. When they use evergreening, they are using different methods to keep the generics manufacturers with the generics product off the pharmaceutical market by using weak spots in the laws protecting the large company. The main goal of the European Patent Reform is to make it cheaper and easier to achieve a patent in more countries. The secondary goal is to try to minimize the use of evergreening.
The Danish law regulating the patents will be analyzed in our assignment. At the same time we will look at the differences that occur when the company has patent and when it does not on the pharmaceutical market. Lastly, we will discuss and analyze what evergreening does to the economy and what can be done to reduce evergreening.

EducationsMSc in Commercial Law, (Graduate Programme) Final Thesis
LanguageDanish
Publication date2016
Number of pages115