INTELLECTUAL PROPERTY PRIORITIES 2
If you were the CEO of a pharmaceutical manufacturer that had spent many years and
millions of dollars in creating, developing, testing, and getting government approval for a
new drug, how would you address the issues of protecting your intellectual property while
meeting the patient/public needs for that drug?
As the CEO of a pharmaceutical manufacturer, one must recognize the fiduciary duties
that are charged with maintaining such an executive position. In assessing this particular case,
the CEO’s fiduciary duty that should be highlighted is the duty of loyalty which entails the CEO
acting in the best interest of the pharmaceutical manufacturer and its owner(s). If the
organization has spent many years and millions of dollars in creating, developing, testing, and
getting government approval for a new drug, shareholders expect a return on their investment.
According to4industry group PhRMA, on average, it takes 10-15 years and costs $2.6 billion to
develop one new medicine, including the cost of the many failures (2024). As the CEO, it is
critical to safeguard the organization’s intellectual property in order to satisfy the return on
investment expectations of shareholders. The practice of filing several patent applications is
common in the pharmaceutical industry as to allow for the companies to monopolize the sell of
the new drug over a period within which companies seek to recover their R&D investments
(Caetano et al., 2021).
While obtaining a patent in the pharmaceutical industry is deemed a common practice,
organizations must ascertain that the dynamics of their intellectual property is adequately
protected from infringement opportunities or patent protection gaps industry competitors may
attempt to leverage. As an example of potential inadequacies, a CEO may reference the 2023
case that hinged on whether Teva had the right to patent CGRP antibodies as a whole based on it
being the first company to prove, and then commercialize, its ability to treat migraines with its
INTELLECTUAL PROPERTY PRIORITIES 3
G1 antibody. Eli Lilly argued successfully that its own antibody, galcanezumab, was
substantively different to G1, and that the process used to create these antibodies was widely
known in the industry (Hansen, 2023).4Missing complete coverage of the product of research and
development investments can mean the difference between generating a profit, breaking even, or
presenting a negative gross margin to shareholders.
While it may be simple to recognize the duty of loyalty within a CEO’s fiduciary duties,
the same CEO must not forget the intent of pharmaceutical developments/offerings to patients,
practitioners, and society. As the CEO, this does not mean that the use of intellectual property
protections will be ignored, but through various market analysis, there are opportunities that can
benefit multiple stakeholders (e.g., shareholders and possible patients). When pharmaceutical
manufacturers are granted approval of its new drug from the Food and Drug Administration
(FDA), that newly approved drug does not come with a federally regulated price point. In
acknowledgement of this, the pharmaceutical manufacturer may implement a tiered pricing
model as an organizational policy to not only generate revenue for shareholder, but also improve
the affordability of the drug in different markets. Tiered pricing is “the practice of setting
different prices for different groups of potential buyers”.4For instance, GlaxoSmithKline (GSK)
agreed to sell its 10-valent vaccine at a price as low as $7 per dose under an 8-year agreement
negotiated with the government of Brazil, but leverage a tiered pricing model to sell the same
vaccine at $56 per dose in Europe and $71 per dose in the U.S. (Abbas, 2021).
Despite the FDA not regulating drug pricing, what is encouraged is the development of
generic drugs. The issue other manufacturers will have in developing the generic drugs or
comparable drug for specific patient illnesses is the fact that there are intellectual property
protections in place. However, this presents another opportunity for patients and the
INTELLECTUAL PROPERTY PRIORITIES 4
patentholders; licensing agreements. In the pharmaceutical industry, licensing provides a
beneficial aspect in business strategies by allowing companies to gain access to new products,
technologies, and intellectual property. Two primary types of licensing agreements in this
industry are in-licensing and out-licensing, and by leveraging either patients may see greater
accessibility to needed medications from licensees in more feasible fashions. As the CEO of the
licensing manufacturer, the company may realize reduced risks and fixed revenue streams from
licensing agreements.
In shifting the CEO to the Biblical worldview, said CEO should turn to Luke 12:48. Here,
the Bible tells us “But the one who does not know and does things deserving punishment will be
beaten with few blows.4From everyone who has been given much, much will be demanded; and
from the one who has been entrusted with much, much more will be asked” (NIV). This
particular verse speaks on the acknowledgement of stewardship we all have, so it can easily be
applied directly to the case of a CEO for the pharmaceutical manufacturer. It would be that of the
CEO that should exercise due care in protecting the asset of their employer without materially
increasing the barriers to access the drug/medication for patients, practitioners, and society.
While one might state that the message of stewardship can only be applied to the relationship
between the CEO, the reason drugs are developed is to address the need of patients with
illnesses. A pharmaceutical CEO cannot be oblivious to the patients/public need of their
company’s product as it would epitomize the message of James 4:17, “If anyone, then, knows the
good they ought to do and doesn’t do it, it is sin for them” (NIV).
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References
Abbas, M. Z. (2021). COVID-19 and the global public health: Tiered pricing of pharmaceutical
drugs as a price-reducing policy tool. Journal of Generic Medicines., 17(3), 115–121.
https://doi.org/10.1177/1741134320963146
Caetano, R., Cordeiro Dias Villela Correa, M., Villardi, P., Almeida Rodrigues, P. H., & Garcia
Serpa Osorio-de-Castro, C. (2021). Dynamics of patents, orphan drug designation,
licensing, and revenues from drugs for rare diseases: The market expansion of
eculizumab.4PloS one,416(3), e0247853. https://doi.org/10.1371/journal.pone.0247853
Hanson, I. (2023). Signal: Eli Lilly’s $176.5m Teva patent infringement loss overturned in US.
Clinical Trials Arena. https://www.clinicaltrialsarena.com/news/eli-lillys-176-5m-teva-
patent-infringement-loss-overturned-in-us/#:~:text=A%20District%20Judge%20sided
%20with,(CGRP)%20that%20cause%20pain
Pharmaceutical Research and Manufacturers of America. (2024). Research & Development
Policy Framework. PhRMA Org. https://phrma.org/policy-issues/Research-and-
Development-Policy-Framework
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