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On The Proposed EU "Biotech" Patent Directive

By Cornerhouse, 13 Apr 1998

The proposed EU Biotech Patent Directive is one of the most controversial pieces of legislation the European Union has ever considered. Its impacts will be significant for - and detrimental to - health care and food security the world over. The Directive will have its second reading in the European Parliament sometime in May this year. There is still time to persuade Members of the European Parliament to amend the legislation.

As it currently stands, the Directive would, if it becomes law, permit the patenting of:

The draft Directive would specifically extend the boundaries of European patent law. Currently, this excludes from patenting plant and animal varieties; essentially biological processes for the creation of animals or plants; diagnostic tests for humans or animals; and surgical processes to treat humans or animals. Under the proposed Directive, however, all of these would not be excluded. The draft legislation is not, therefore, mere harmonisation of patent legislation across the 15 EU states, as has been claimed.

When the European Parliament voted in favour of the draft Directive at its first reading in July 1997, many Members of the European Parliament (MEPs) were misled by a "no patent, no cure" lobbying campaign that organisations representing people with genetically inherited conditions were in favour of the legislation. In fact, many patient organisations - which were not aware of the extensive lobby being carried out in their name - have expressly stated that they oppose patents on human gene sequences because of the negative impacts on research into the diagnosis and treatment of genetic conditions.

The European Parliament did, however, make 66 amendments to the draft Directive, aiming to restrict biopiracy, animal suffering and the patenting of human clones and body parts. Since July, the (unelected) European Commission and the EU Council of Ministers have substantially changed these amendments. Between them, they have either altered them in subtle but significant ways by deleting or changing words, or have moved them from the legally-binding substantive part of the legislation (the Articles) into the guidelines to the Directive (the Recitals) which are not legally binding.

The Commission totally removed a key Parliamentary amendment, Amendment 76, designed to limit "biopiracy": this states that when an application is made to patent plant or animal material, the application must provide evidence of complicance with legislation of the country of origin governing access to and export of such material; when an application is made to patent human material, meanwhile, the application must contain evidence of the informed consent of a person to the patenting of their genetic material.

Without this amendment, human biological material could be patented without the knowledge or consent of a person. Without this amendment, the proposed Directive would legalise and encourage biopiracy, particularly from the countries of the South. Much of the biological material in these countries has been developed and nutured through successive generations of farmers who stand to lose access to such material without reaping any benefits.

Although the Council reinserted this amendment in the non-legally binding Recitals, it did so in such a watered-down form that it remains as good as deleted.

At a minimum, therefore, when the European Parliament considers the draft legislation at its second reading in May this year, it should vote to reinstate the "biopiracy" amendment 76 as a legally-binding article.

Another Parliamentary amendment shifted to the non-legally binding section bans patents on the artificial production of human embryos containing human genetic information identical to that of a living or dead person. The Directive is now so vague and unclear on the issue of cloning that many believe that, if it becomes law, it will be possible to patent the processes and "products" of human cloning.

Two examples of where the Parliament's amendments have been signficantly changed concern animal welfare and ethics:

- Animals which have been genetically engineered for use in medical research could be patented if they do not appear to be suffering, even though they have physical handicaps;

- The Parliament passed an amendment for an Ethics Committee to be set up to review the ethical implications of a biotech patent before it is granted; this has now been replaced with the European Commission's own existing, in-house and overstretched Group of Advisors. This Group's remit is to be enlarged to consider the ethics of all new technologies, not just biotechnology, with no particular consideration of the special problems of patents.

Given the extent to which the proposed EU biotech patent Directive has been altered since the Parliament approved it last July and given the lack of support for the legislation from genetic interest groups - who are supposed to be the main beneficiaries - a wide range of NGOs are calling on Members of the European Parliament to rethink the while Directive when it comes before them in May.

At a minimum, they should vote for their amendments to be reinstated as legally-binding articles, particularly the amendment for prior informed consent and compliance with national legislation on access and export.


* write to or telephone your MEP expressing your concern about the scope and implications of the Directive, pointing out that it is not supported by genetic interest groups, and urging them to reinstate Parliamentary amendments.

To obtain the name and home address details of MEPs, telephone the London office of the European Parliament Information: 0171-227 4300.

FOR MORE INFORMATION "Guide for the second reading on the European Life Patent Directive", available from the European Campaign on Biotechnology Patents in Brussels;

E-mail: <>

No Patents on Life: A Briefing on the Proposed EU Directive on the Legal Protection of Biotechnological Inventions" and "Memorandum from Concerned Citizens of the South" outline some of the general implications of patenting genes (restricting research, increasing the cost of health care, underming health care, encouraging biopiracy and undermining livelihoods in the countries of the South).

Available from The CornerHouse, Tel: +44 (0)1258 473795; Fax: +44 (0)1258 473748; E-mail <>.

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The below article shows us why legislation is so badly needed world wide to remove food from the definition of "drug". In America we badly need to pass HR 2868. If you don't know about HR 2868 please visit the IAHF website. If we don't pass HR 2868 (and get the foods are not drugs amendment passed in Canada) all the small to mid sized vitamin companies are going to be put out of business. Here is why.

Profits in Supplements Market Too Large for Biotech Firms to Ignore

by Kim Stewart with Allen and Carol Sherman

After years of watching the natural products industry, the same pharmaceutical companies that brought us Tagamet®, Robitussin® and Pamprin® are venturing inside. After $3 billion in sales and the passage of DSHEA, pharmaceutical firms are waking up and discovering that this once-purported fad is a huge money maker, says Wayne Silverman of the American Botanical Council (ABC) in Austin, Texas.

Some of these pharmaceutical giants are changing the way business is done by mixing the principles of natural medicine with conventional drug manufacturing processes. The resulting products could blur the lines between pharmaceuticals and supplements.

To date, more than two dozen pharmaceutical companies have ventured into this uncharted territory (see "Pharmaceuticals Crossing Over Into Supplements," page 148). Some are waving fistfuls of dollars at supplement companies for acquisitions, and still others are shaking hands with likely and unlikely partners.

This "can't beat 'em" response could well be a plus for the industry. As these new entrants enter into the naturals side they bring money to empirically test products. The most notable change is the patenting of lucrative substances and conducting Phase II trials for naturally derived compounds.

They also bring the technological capacity and marketing know-how to evoke new consumer interest in herbal, vitamin and mineral supplements. Calling the trend an "avalanche," Loren Israelsen, president of Salt Lake City-based LDI Group, notes that four pharmaceutical companies could outspend the entire founding industry in advertising and marketing. Conversely, there is concern from smaller companies that they could get pushed out after working diligently for decades to establish market share, Silverman says.


The first category, patenting manufacturing methods or derivatives of natural substances, has been a contentious issue for the natural products industry. Obtaining a patent for a natural substance is difficult because most natural products are not "new" by government standards. Also, until now, the high cost of obtaining a patent has been prohibitive. However, recently a few companies with the money and the technology patented either manufacturing processes or active components derived from plants.

The earliest companies to patent and market a natural product were German multinational Boehringer Ingelheim; Pharmaton in Ridgefield, Conn.; and Sunsource International, now based in Chattanooga, Tenn. (purchased by Chattem Inc. in June 1997). The patented product GinsanaTM, a trailblazer herbal product for the mass market, was passed among these three companies for almost a decade until its final marketing rights were assumed by Pharmaton in 1996.

Martek BioScience in Columbia, Md., also found a large market when it began selling a patented DHA (docoshexaenoic acid) supplement called NeurominsTM through natural products companies including Solaray, Nature's Way, GNC and Solgar. The company's lead product is Formulaid, a DHA additive to infant formula. DHA is naturally found in human milk but, up to now, not in formula.

Another company, Irvine, Calif.-based PharmaPrint (NASDAQ: PPRT) signed an agreement in October 1997 with Madison, N.J.-based American Home Products Corp. (NYSE: AHP) to market process-patented standardized herbal products (see PharmaPrint To Patent Herbal Formula, NFM, November 1997, page 1). The process could add a new dimension to the OTC market. The company claims that it has the only known method that identifies bioactive components of herbal products and assures optimal potency levels. Critics who cite the lack of standardization as a downside to the supplement industry could be squelched if PharmaPrint is successful.

PharmaPrint has agreed to apply its technology to a line of seven standardized herbal products that will be available by summer 1998. In turn, Madison, N.J.-based American Home Products will pay $43.5 million for research, development, marketing and licensing fees. American Home Products plans to use the large market-presence of its Centrum® line to introduce the new herbal products. The first two proprietary products to debut this new technology will be saw palmetto berry (in Phase II trials) and St. John's wort (awaiting IND).

Shaman Pharmaceuticals Inc. (NASDAQ: SHMN) in San Francisco chose to take a more select route than PharmaPrint by manufacturing only naturally derived prescription drugs. The company discovers and isolates active compounds from Amazon tropical plants, develops and patents pharmaceutical products using these active ingredients, and then takes them through the necessary trials for FDA prescription drug approval.

One of these products, ProvirTM, a naturally derived prescription product used to treat AIDS-related diarrhea, completed a Phase II double-blind study in October 1997. The trial results will be presented at the 12th World AIDS Conference in June 1998. Shaman also recently filed an IND for a diabetic compound. Shaman's Type II diabetes research is a collaborative effort with Lipha s.a., a wholly owned subsidiary of Merck KGaA, Darmstadt, Germany, and Ono Pharmaceutical Co. Ltd. of Japan.

Another biotech company, Paracelsian (NASDAQ: PRLN), in Ithaca, N.Y., has taken on a much larger segment of the industry--2,764 TCM extracts representing nearly 1,000 plant species. Although it does not have any patents pending, it is seeking partnerships with companies that would like to use Paracelsian's findings to manufacture plant-derived pharmaceuticals and dietary/ herbal supplements. Scientists in the company assayed all TCM extracts for their potential to address multiple diseases. Thomas Tachovsky, the company's president and CEO,says the findings are significant because they identified functional activities in TCM extracts not seen before.

Another biopharmaceutical company, Bionutrics Inc. (NASDAQ: BNRX), manufactures patented products derived from rice bran. The Phoenix-based company claims its products maintain cardiovascular health.

The company's product, ClearesterolTM, was one of the first natural products to contain an active patented ingredient, P25(didesmethyl-tocotrienal). Bionutrics' newest product, evolvETM, a cardiovascular supplement, is now available in approximately 38,000 stores.


Pharmaceutical companies also are purchasing botanical and supplement firms to enhance their own product lines. This tactic, called direct-line extension, aligns the pharmaceutical company's strong branding and marketing with a lesser-known supplement or herbal extract.

Last year, AMBI Inc. (NASDAQ: AMBI), a biotech company, purchased privately owned Nutrition 21, based in San Diego. Before the purchase, AMBI entered the functional foods market when it developed CardiaTM salt, an alternative salt product for the dietary management of hypertension. Now the company plans to differentiate itself further by marketing Nutrition 21-patented chromium picolinate products and other cardiovascular dietary supplements.

Pharmaceutical giant SmithKline Beecham also entered the herbal market in January 1996 when it acquired Abtei, a German-based nonprescription drug and supplements company. SmithKline, headquartered in London and Philadelphia, manufactures a variety of products that are counter-aligned with the natural products industry, such as antibiotics, antidepressants and vaccines, as well as OTC products such as Tagamet HBTM, TumsTM and ContacTM. It also manufactures the smoking cessation products Nicorette and Nicoderm.

The company began test marketing its herbal products in November 1997 in San Francisco, Phoenix, Minneapolis-St. Paul and Dallas-Ft. Worth. Its product line includes the following standardized herbals: Abtei Mood (150 mg St. John's wort), Abtei Memory (60 mg ginkgo biloba), Abtei Stamina (100 mg Panax ginseng) and Abtei Prostate (100 mcg selenium and 160 mg saw palmetto extract).

Another standout in this category is Chattem Inc. (NASDAQ: CHTT), an OTC distribution company based in Chattanooga, Tenn. Last May,Chattem came a few million dollars closer to becoming a $200 million dollar company when it purchased all assets of Sunsource International including exclusive worldwide rights to five leading dietary supplements: Garlique®, Rejuvex®, MelatonexTM, EchinexTM and PropalmexTM.

The purchase is a boon for Chattem because the two companies share the same consumer base--seniors with minor ailments who have disposable income. Sunsource consumers are as likely to buy supplements as they are Chattem's OTC line of products including Gold-Bond, Icy-Hot, Flex-All, Corn-Silk cosmetics and Bull Frog sunscreen.

The final acquisition matches Phoenix-based Zila Inc. with Oxycal Laboratories, based in Prescott, Ariz. Oxycal is a well-known company among manufacturers of vitamin C products. The company manufactures and markets a patented and enhanced form of vitamin C under the trademark Ester-C®. Industry experts aren't yet sure how the parent company will incorporate Oxycal into its operations. Zila has four other company divisions that offer products ranging from oral health care to dental radiology equipment.


Partnerships are another strategy that allows companies to gain from the strengths of the other. For instance, one company's strong distribution system can help improve the profits of another company that is perhaps mired down by the cost of pricey R&D.

Although the following companies have obvious strengths, the first alliance is one that even the best industry fortune-tellers did not predict. Pittsburgh-based GNC (NASDAQ: GNCI) partnered with St. Louis-based Monsanto (NYSE: MTC) (see NFM, December 1997, page 13). This quarter, GNC introduced a Monsanto-manufactured DHA-omega-3 nutraceutical line of products in its stores. The products contain Monsanto's patented and proprietary brand ingredient SeaGoldTM, a DHA oil.

Monsanto is trying to reposition itself as a life sciences company, and this product is the first in its food and nutrition sector. The company is best known for NutraSweet®, herbicides and rBGH. GNC says the alliance meets its desire to pursue the development of specialty ingredients and branded proprietary products in the nutraceutical category.

International Inc. (NYSE: WNI), which has strong distribution and advertising resources, with Nutraceutix Inc. (OTC BB: NUTX), a manufacturer of patented glucarate. Nutraceutix, based in Redmond, Wash., says that ongoing National Cancer Institute studies show that glucarate may provide protection against chemical carcinogens such as cigarette smoke. Nutraceutix also announced in July 1997 the acquisition of worldwide marketing rights for the patented compound calcium D-glucarate from BioChemix Inc. in Austin, Texas. Nutraceutix also manufactures natural foods ingredients and animal health products.

More new players will likely enter into the natural products world. The question remains whether these giants are in it for the money or whether they will maintain the integrity characteristic of the industry. "We used to live in a little village, and I knew everyone," says Israelsen."We were off the highway and no one paid attention to us. Suddenly, we are in the high-rent district."

(From The March 1998 Issue of Natural Foods Merchandiser)

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