Propofol and the Economy

Written by Mark Terry 

The unfortunate death of Michael Jackson and the trial of Dr. Conrad Murray has made a little-known drug, propofol (marketed as Diprivan by AstraZeneca), into a household name. What is fundamentally important about drugs like propofol may not only be what they’re used for but their impact on the economy.

Propofol was originally developed in the UK by Imperial Chemical Industries (see U.S. Patent No. 4056635). Though clinical trials followed in 1977, due to negative reactions, the formulation was withdrawn from the market and subsequently reformulated as an emulsion of a soya oil/propofol mixture in water. The emulsified formulation, which is not a complex formula, was relaunched in 1986 by ICI (now AstraZeneca) under the brand name Diprivan. Propofol emulsion is a highly opaque, white fluid due to the scattering of light from the tiny oil droplets that it contains. There are 4 patents (5714520, 5731355, 5731356, 5908869) for Diprivan that are set are to expire in 2015.

            The relatively simple formula for Diprivan, which generates annual sales of $400 – $500 Million for AstraZeneca, may make it easy for generics to enter the propofol market. True generics are not expected until 2015, but generics with different formulas are expected to come to market before 2015. It has been reported that propofol is a low profit-margin product. Thus, once generic-like products and generics hit the market, the margins will likely fall further. This brings up fundamental questions about the patent system. Should patent protection be extended in order to protect a patent owner’s investment in a drug? Inventors and investors must justify the return on investment (ROI) on millions and billions of dollars spent on developing new drug products, otherwise, they simply won’t do it anymore. Is 20 years enough time to obtain an adequate return on those large R&D; expenditures? For instance why has Pfizer drastically cut its research and development spending and why has Amgen decided to buy back $5 billion of its stock? Are those indications that they don’t have the incentive to invest in new products?

            Creating an incentive to invent, via recovery of R&D; expenditure and production of profits, is the premise of the U.S. patent system. We would be wise to review the current system to make sure this is still the case.

            Mark Terry is a Board Certified Intellectual Property attorney in Miami, FL who specializes in helping companies and individuals protect their ideas and creations using patents, trademarks and copyrights.


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