LSPN 19: AI ‘explosion’ and drug costs in Canada

Uncertainty surrounding the patentability of artificial intelligence (AI) and changes to patented medicine pricing in Canada were two topics discussed yesterday, October 15 at  Life Sciences Patent Network Fall in San Francisco.

Karen Potter, partner, and Anna Yuan, associate, of Morrison & Foerster delivered a session on how the growth of AI is disrupting the patent strategies of life sciences companies.

Sampling peer-reviewed publications over the past five years, more than 80% of those mentioning AI or deep learning were published in the last two years.

And, as of March 31, 2018, 340,000 published patent applications concern AI-related inventions, with more than half of these filings having been published since 2013, according to the  World Intellectual Property Office.

Approximately 12% of the applications relate to life and medical sciences, with AI-related life sciences patent filings growing 40% from 2013 to 2016.

However, despite efforts by IP offices to provide guidelines, the patentability of AI-related inventions is still unclear.

Potter said: “The US Patent and Trademark Office has introduced guidelines that offer more promise and certainty … Of course, the courts may not agree.”

The office’s 2019  guidelines have been revised, and even cite an example of a claim (a method for training a neural network for facial detection) that does satisfy patent eligibility requirements.

“Many clients ask me: once you have training and feed data into a computer, of course you’re going to get output. How is that patentable? But there is a lot of human ingenuity involved in how you implement machine learning. Ensure your specifications show those advantages,” added Potter.

Yuan advised those looking to protect their AI invention to review the entire pipeline. This includes the untrained neural network model, where you should consider the structure and configuration of the network.

“For the training dataset, where do you get it from, does it have some sort of unique data structure before being fed into the neural network? We find a lot of companies sitting on vast amounts of data. One of the challenges in life sciences, is making sense of data and inputting it in an appropriate structure into the network,” said Yuan.

Towards the end of the pipeline, reviews should focus on how the trained model is used.

“Basic machine learning is not new. Reciting every single aspect of the pipeline in a claim is not necessarily going to pay dividends. What are the technology challenges the inventor has to overcome and what are the solutions they come up with to overcome these?” concluded Yuan.

Canada

Nancy Pei, partner at Smart & Biggar, provided an update on changes to Canada’s drug-pricing regime and the response of industry.

Canada’s federal drug price regulator, Patented Medicine Prices Review Board (PMPRB), aims to ensure that the prices of patent-protected drugs are not excessive.

“The PMPRB is a quasi-judicial body created in 1987. It was created because the Patent Act was amended that year to drop the system of compulsory licensing for drugs. The concern was that prices would go up as a result, so there needed to be some level of control,” said Pei.

In early August, Canada  published the final regulations, which change the guidelines applied to tests undertaken by the board in deciding whether a patented medicine is priced excessively.

The new regulations, which come into force July 1, 2020, change the ‘basket’ of countries with which PMPRB compares domestic prices.

She added: “It’s an increase from seven to 11 [countries], but most notably, Switzerland and the US have fallen off the list. It’s interesting that 20% of Canadian patented medicines are only [sold elsewhere] in the US. We’re left with not being able to use the price factor for these drugs.”

In addition, price and revenue reporting must be net of rebates, and certain categories (such as generic drugs and drugs for veterinary use) are no longer subject to the reporting requirements.

Pei also outlined two legal challenges brought against the overhaul. In August, six drug companies filed a constitutional challenge against the new regulations, claiming that price regulation falls within provincial jurisdiction.

Then, in September, Innovative Medicines Canada (an association representing Canda’s drugmakers)  filed an application for a judicial review of the plan, claiming that the federal government doesn’t have authority to  “fundamentally alter” the role of the PMPRB.

“It’s going to be quite different. You need to consider the patent status of each drug in Canada,” she added.

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