“The more the conversation tilts towards anti-patent, punitive measures, ‘the less likely you are to have the best and brightest working together to solve the problem.’” – Wendy Holman, Ridgeback Biotherapeutics
It may seem odd, as unprecedented public/private sector R&D alliances work to discover and develop therapies to counter COVID-19, that some are trying to punish the companies trying to get us out of this mess. For example, House “Progressive” leaders unveiled the “three protections” they will try to insert in the next Congressional aid package, beginning with this:
NO EXCLUSIVITY: Pharmaceutical manufacturers should not be granted exclusivity for any COVID-19 vaccine, drug, or other therapeutic-whether it has been developed with U.S. taxpayer dollars and publicly funded, or not.
Consider the last phrase. They would take away rights to technologies developed entirely with private funding without evidence of any public need for doing so.
There’s a reason why we’re seeing a groundswell of articles supporting the “progressive” viewpoint. Politico’s Prescription Pulse reports the House leadership is “wary” of following the progressive lead on this issue, concluding “It’s basically going to be up to the outside groups to create pressure around these principles.” Their supporters see the current crisis as a golden opportunity to portray patents as a threat to public health. Countering that narrative is critically important.
Getting the Message Out
That’s why the Bayh-Dole 40 coalition conducted a webinar, with help from the Information Technology and Innovation Foundation (ITIF). It included leaders from government, industry and academia to explain why our patent-driven system is essential for getting out of this crisis and avoiding future repeats. Here are some of the highlights.
Wendy Holman, CEO and Founder of Ridgeback Biotherapeutics, explained the nature of COVID-19 and why this challenge is particularly difficult. The world only learned about the virus in January. While our knowledge has grown considerably, there’s a good reason why no coronavirus vaccine has ever been developed- the virus mutates and different therapies are needed for various stages of the disease. Thus, we won’t have a single vaccine or drug to solve the crisis, but rather many platforms developed by many companies.
“More than 50 clinical trials are underway for COVID-19 related therapies, Holman said. “For a disease that was only characterized in January, that’s amazing. The American innovation system is working. ”
Mark Rohrbaugh, Special Advisor for Technology Transfer at the National Institutes of Health (NIH), explained that NIH funded research compliments that of industry, as it is focused on early stage, very broad topics or for high risk areas outside the scope of the private sector. Companies developing COVID-19 related inventions made with NIH funding are taking on considerable risk and expense. That won’t be done without patent protection. Several panelists agreed that for every $1 NIH spends on research leading to an invention, the licensee must spend $100 of their own money in development- and the odds against that investment paying off are staggering.
The Impact of Proposed Policies
The fundamental principle of the Bayh-Dole Act, which allows these technologies to be developed, is that inventions made with federal support are best managed by those who create them in academic institutions or federal laboratories. However, critics argue that this should be set aside with any COVID-19 related discoveries; either they should not be patented or only licensed non-exclusively to ensure they are broadly available. The panel was asked what impact imposing such policies would have on our ability to meet the current crisis.
I think that you kill innovation… It would have been irresponsible for me to have licensed our technology non-exclusively if I couldn’t have been able to raise the venture funding to develop it… If we had licensed our technology non-exclusively, there’s no chance I could have raised money around it.
Her small company is developing the only direct acting antiviral for COVID-19 being studied in humans right now, without any government funding. “We couldn’t afford to sit around and wait to see if the government was going to pick up the tab. Otherwise, this technology would have only been an interesting science experiment without the possibility of having it help people.”
Holman licensed the invention from a nonprofit spinout of Emory University. Her researchers are working 24/7 to move the technology along, while home schooling their children and facing other pressures of the current lockdown. If the product fails, Ridgeback Biotherapeutics takes the hit, not the government.
When asked if any federally funded invention has ever been licensed non-exclusively that resulted in a new drug or vaccine, Rohrbaugh replied: “Not for patents on the composition or the core technology… it can’t be one size fits all.” Non-exclusive licensing is appropriate for technologies that can be applied as is, or developed at low cost but “core technologies needed for an FDA approved drug, vaccine or therapeutic requires some level of exclusivity for a company… in the last 40 years, new technologies are being developed by small companies that need venture investment,” Rohrbaugh added.
Jon Soderstrom, Managing Director for University Technology Commercialization and Faculty Innovation at Yale University, said he wasn’t aware of any drug or vaccine arising from an academic invention that was licensed non-exclusively. He added that in the last 15-20 years, six new drugs were developed from Yale inventions, but even more impressively, 35- 40 new ventures are underway, with 40 drugs in various stages of development. “Those companies have collectively raised $1.7 billion in professional venture capital, and $7 billion in overall support from the public and private sectors has been dedicated to develop these drugs, just to give you an idea of the sheer size of what it takes to bring them to the market,” Soderstrom said.
Companies developing new drugs typically spend 10-12 years of effort before finding out whether the drug works or not. Soderstrom continued: “People take great pride in how many drugs get over the FDA threshold because it’s not many.”
Wendy’s company represents how NIH funded inventions are moved to the market place and these companies are reliant on venture capital which must receive a return on investment. These small companies must raise hundreds of millions of dollars through the pre-clinical stage. And clinical trials cost $1 million a day– and the government doesn’t pay for that.
Bayh-Dole Was Made for This
Stephen Ezell, VP for Global Innovation Policy at ITIF, gave a quick overview of the development of the U.S. life science industry since Bayh-Dole passed in 1980. In the late 1970s, Europe introduced twice as many drugs as the U.S. and only 10% of new drugs were first introduced here. Twenty years later, the U.S. was far and away the international leader in the life sciences. Currently, many of the companies fighting COVID-19 are developing therapies based on federally-funded inventions licensed under the Bayh-Dole Act.
Patent rights are critical for this system to work. Before Bayh-Dole, the Comptroller General found that not a single new drug had been developed from NIH funded R&D when the government took the invention and tried to license it non-exclusively.
Ezell added that 155 novel coronavirus treatments are being developed because of our patent driven system. “We’re incredibly fortunate that we put in place a system which enabled us to respond so quickly and effectively to this crisis. This would be the worst time to undermine intellectual property rights, which are foundational to that system.”
Soderstrom discussed how unpredictable medical breakthroughs can be. A compound called D4T was synthesized at the Detroit Cancer Center in the 1960s. It remained in the freezer for many years because no one had found an application for it. During the HIV crisis of the 1980s, Yale researchers discovered that it was one of the most effective treatments for the disease. It was licensed, got fast track approval and became Zerit, the fundamental drug in the “AIDS cocktail” that transformed the disease from being a death sentence into a manageable chronic disease.
The panel discussed the use of Bayh-Dole’s march in rights provision, which allows the government to step in if an academic invention is not being developed, or the developer can’t meet public health and safety needs. Opponents of the law have tried to use the provision to impose government price controls on successfully developed drugs. Rohrbaugh said that NIH consistently rejected these efforts because that interpretation is not authorized under the law.
Soderstrom added that one reason the government hasn’t been required to march in is because universities effectively manage their portfolios, cancelling the license if milestones are not being met. Most often, if a technology isn’t working as intended, the company willingly returns it and often a new licensee is found to develop it.
The Way to Kill Innovation
Holman was asked, “When you hear politicians and critics hold over your head threats to use compulsory licenses, price controls, march in rights and other punitive measures against companies like yours who are working to develop desperately needed therapies, does that make you more eager to get out of bed each morning?”
The biggest thing that worries me when we talk about march in rights, compulsory licensing and other punitive measures is not that it’s actually going to happen, because it’s irrational, but how much it deters others from coming in to help solve the situation. The implementation of it is ridiculous because it’s the number one way to kill innovation. We need hundreds of thousands of companies coming in to try and solve these problems… COVID-19, thank God, doesn’t have a 50% mortality rate, so we need to not just be working on this pandemic, but ones that come in the future.
Holman added that the more the conversation tilts towards anti-patent, punitive measures, “the less likely you are to have the best and brightest working together to solve the problem.”
Ezell stated while some are saying that IP is a barrier to solving COVID-19, the real problem is that we don’t have effective therapies yet, so talking about compulsory licenses or other anti patent efforts just doesn’t make sense.
When asked about attempts to impose “reasonable pricing” requirements on NIH licenses and agreements, Rohrbaugh said this approach was tried in the 1990s and rather than reducing prices, it only reduced cooperation with NIH. After five years, an expert panel recommended dropping the provision and partnerships immediately increased. “If price constraints are placed on government funded IP, it makes them less valuable to developers who might then turn to foreign created inventions, which would not be in the national interest,” Rohrbaugh added.
What’s Being Done
Soderstrom said that he’s never seen such a singular focus as is occurring to combat COVID-19. Academic researchers have adopted an “all hand’s on deck” approach, working on everything from designing protective gear to repurposing drugs. “We have academia, industry, government and venture capital all working on a common purpose.”
He added that companies like Gilead are pledging to make their drug, Remdesivir, available at cost, while others like Pfizer and the Gates Foundation are gearing up to help make massive amounts of any effective vaccine readily available. But we should be mindful that COVID-19 therapies can involve considerable cost to produce. Holman gave as an example vaccines, whose costs rapidly decrease, versus therapies like antibodies that are very expensive. She advised that in a global pandemic, we should emphasize therapies that can be made cheaply, like pills.
Regarding availability, the panel remarked that the current situation is more like our response to polio than to other diseases. Then, like now, public health services will likely be the distributor of resulting vaccines rather than going to your doctor to get a prescription. That means that the government will be buying vast quantities, making purchases through the Federal Acquisition Regulations which gives it significant leverage to control prices.
Holman added that an untried market-driven approach is designating COVID-19 as “a material threat to national security,” which allows the government to pre-purchase drugs that could be approved in the next 10 years. That would do a lot to keep prices down as the government could in effect, set the price. Thus, there are many more productive ways to make resulting technologies affordable than to take them from the developers as the progressives propose.
Hold the Top of the Hill
It’s important to remember that the entrepreneurs in our private and public sectors fighting so hard to protect our health hold the moral high ground in this debate, despite the attempts of the critics to intimidate them into giving it up.
Doing so brings to mind the words of General Meade at the Battle of Chancellorsville. When ordered to pull his troops back from the high ground dominating the battlefield they had won because his commanding general lost his nerve, Meade declared in disgust: “If we can’t hold the top of the hill, how in the hell are we supposed to hold the bottom?” They didn’t, and neither can we.
It’s time to stand our ground.
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