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Good for iPods, bad for patients
05-14-2008
by John Maraganore  |  Email the author
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In the coming months, the U.S. Senate is poised to vote on a sweeping set of fundamental changes in patent law that, if enacted, will erode our nation's "innovation environment" required for medical breakthroughs. Upon its potential approval, the information technology (IT) industry will celebrate a hard-fought victory as patents are generally viewed as a nuisance. After all, the time it takes to introduce new products in the IT industry is measured in months and third-party patents could decrease profits due to costly litigation and needed royalty payments.

No one wants to have to pay more for their BlackBerry or iPod, but these patent changes risk putting innovation in the biomedical sciences in jeopardy and would be nothing short of disastrous for the millions of patients around the world that stand to benefit from breakthroughs in diagnosing, treating, and curing disease.

Indeed, we are living in a time where an unparalleled pace of discovery offers great hope and new solutions for patients. In recent years, we have witnessed truly incredible medical advances in cancer therapy, the treatment of heart disease and autoimmune disorders like arthritis and multiple sclerosis; all fueled by discovery in the biomedical sciences. And still, there are many more diseases where new therapies have been absent and where recent progress in our understanding of the human genome offers new hope for breakthroughs.

Enabling these discoveries is a delicate and often fragile relationship between the scientists and clinicians in academic institutions, the entrepreneurs and product champions in the biopharmaceutical industry, and private and public company investors. A fundamental requirement for the success of these companies is the simple economic return and financial incentive for investors. The risks within this industry are truly unlike any other; companies need to spend about $750 million over the period of a decade to generate a single approved drug and must invest anywhere from $1 to $2 billion over the period of up to two decades to build a sustainable and profitable company. 

Despite these daunting financial challenges, U.S. innovators have consistently delivered the world's most important new medicines. However, this has only been possible due to the availability of substantial capital investments to fund breakthrough medicines, which are in turn only possible due to the financial incentives that patents provide to investors. Indeed, patents are a fundamental part of a system where innovators are rewarded for the risks they take; patents allow companies to recover their significant R&D investment during the period of patent-protected sales.

Today, a "perfect storm" in Washington is currently building against patent protection for breakthrough medicines which could essentially cause the industry to collapse.

The storm is the culmination of simultaneous effects from at least three outright assaults on innovation in the biomedical sciences. First, recent U.S. Supreme Court rulings (KSR v. Teleflex and MedImmune v. Genentech) have significantly shifted the "goal line" for inventiveness standards in patents and have unfavorably destabilized the character and predictability of patent licensing. Second, the U.S. Patent and Trademark Office (PTO) is seeking to change its review process for patent applications by, among other things, placing limitations on the needed time to mature biotechnological inventions. This action has just now been halted by a suit brought forward by GlaxoSmithKline, but the timing of potential rule changes is possibly only just delayed. And now, the third assault comes from drastic IP "reforms" by Congress; the Patent Reform Act of 2007 (HR 1908) was passed in the House recently and a Senate bill (S 1145) is soon expected to come to the Senate floor. These legislative reforms will introduce new opposition procedures after patent issuance, resulting in prolonged periods of patent uncertainty and also limit the scope of damages to those who violate patents. Per the latter, infringers will stand to receive a "parking violation," not a "jail sentence," creating an "infringement environment" that erodes the value of biomedical innovation.

For biomedical discovery, the aggregate set of enacted and pending events by the Supreme Court, PTO, and Congress could fundamentally change the IP landscape within the life sciences industry to such a degree that in a decade we may not have an industry remaining. In short, it would make it much harder to obtain patent protection that, if obtained, would be both less certain and less valuable. Investors, without the opportunity to recognize a needed and earned reward from the high costs and long time frames required for the advancement of medical innovations, will simply stop funding research.

The result: the potential decimation of an entire industry that has relied on a strong patent system to discover, develop and deliver breakthrough medicines to patients.

The Supreme Court rulings and potential PTO changes are certainly not fully baked into the IP and competitive environments as of yet. There is still time, and an urgent need, for the Senate to reject or substantially alter the pending bill, considering its potentially devastating impact upon the innovation environment for biomedical research and its translation from the lab bench to the bedside of patients. Before moving ahead with new legislation, the consequences of recent judicial rulings such as KSR v. Teleflex must first be evaluated over time, perhaps over several years, to understand their import on IP protection.

For the sake of patients, this is a time where legislators need to join in the Hippocratic Oath, designed to protect patients, and, "above all else, do no harm."

John M. Maraganore is chief executive officer of Alnylam Pharmaceuticals, based in Cambridge, Mass.

Editors note: A similar version of the story appeared in the March 22 edition of the Boston Globe.

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