The use of Markush structures in pharmaceutical patenting and their effect on R&D competition in drug development

• Applicant: Professor Dr. Stefan Wagner
• Subject Area: Economic Policy, Applied Economics ; Accounting and Finance
• Term: since 2021
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 460047178

Markush structures are molecular skeletons that contain not only specific atoms but also include several placeholders which represent a set of broad set of chemical (sub)structures. They are used by pharmaceutical companies to claim a large class of compounds without the necessity of writing out every fully defined single chemical entity in a patent application. For instance, it has been estimated that the Markush structures claimed within a single patent underlying a blockbuster drug (the European patent EP 0810 209 protects the HIV drug “Prezista”) contain a total of 7*10^13 different compounds. While advantageous for pharmaceutical companies, the use of Markush structures in patent claims has sparked controversial debates amongst policy makers and practitioners. First, Markush structures pose considerable challenges for patent prosecution. Patent offices have voiced that claims involving Markush structures covering many compounds require a disproportionate amount of examiner time and patent office resources compared to simpler claims involving a single molecule. Second, Markush structures create significant uncertainties surrounding patent enforcement. Most importantly, the question to what extent patents based on Markush claims effectively protect all molecules contained in the structure is contentious. It is not clear whether the disclosure of a broad Markush structure is novelty destroying for subsequent selection patents claiming a molecule belonging to the initial Markush claim. Third, it has been questioned whether pharmaceutical companies strategically use Markush structures to obtain overbroad patents to block follow-on R&D by competitors. Such behavior might effectively slow down the pace of innovation and thus reduce overall welfare as incumbents’ market power likely increases and the availability of novels drugs might be reduced due to reduced entry.Against this backdrop, it is surprising that no quantitative evidence exists regarding the prevalence of Markush structures in pharmaceutical patenting and their effect on subsequent innovation activity. This project intends to fill this gap in the literature regarding the strategic use of Markush structures by empirically addressing the following research questions: Q1 – to what extent are Markush structures used in patenting activities, by whom, and in what therapeutic fields? Q2 – what is the effect of Markush patents on product market competition within given therapeutic indications, namely, the set of drugs that seek to address the same disease? Do Markush patents slow down the entry of substitutes and slow down horizontal competition? Q3 – what is the effect of Markush patents on follow-on innovation? Do Markush structures slow down the introduction of next generation drugs?

• DFG Programme: Research Grants