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Patents, Drugs and the Moral High Ground


Written by Gene Quinn
President & Founder of IPWatchdog, Inc.
Patent Attorney, Reg. No. 44,294
Zies, Widerman & Malek
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Posted: April 3, 2014 @ 8:00 am
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Recently I had a frustrating morning dealing with a particular anti-patent “do-gooder” who seemingly thinks that everything wrong with the world today is because of the patent system. As is typical with this type of zealot, he intentionally misrepresented what Dr. Kristina Lybecker wrote in her recent article titled Compulsory Licenses Won’t Solve a Healthcare Crisis. Then this ignorant fellow turned on me to say that I supported 9,000 people a day dying in order to preserve patent rights. As you can see, this fellow is not a deep thinker, and not at all capable of honest debate, but isn’t that the case with all those who hate the patent system?

This level of asinine attack would hardly be worthy of my time if it were only the ranting of one particular lunatic, but sadly there are many people who seem to believe that the greater good can be served by stripping pharmaceutical companies of their patent rights and allowing generic drug manufacturers to make the latest drugs in the name of a health crisis. As if preventing a corporation from making money will lead that corporation to simply shrug and start all over again only to have rights stripped away again after billions of dollars of further investment.

The average cost of drug development by a major pharmaceutical company is at least $4 billion per drug, but can be as high as $11 billion per drug. Of course, as is self-evident to anyone capable of critical analysis, no drug company is going to invest billions of dollars to take a drug from laboratory idea to market reality if at the end of the successful trip generic drug manufacturers are allowed to ignore patent rights and immediately start making cheap versions of the patented drug. The generics didn’t have to do any research or engage in the costly and time intensive FDA approval process.

If you know anything about economics, even basic economics, you know that without exclusive rights there is no way for the innovator of the desirable drug to recoup the sunk costs. If you know anything about the pharmaceutical industry you also know that 70% or more of drugs lose money, about 10% of drugs break even, about 10% of drugs make a little more than the break even point, and only about 10% or less of drugs make real money for the pharmaceutical companies. Of course, at the outset no one knows which of the drugs will make the money, so significant time and extraordinary investment is necessary to develop 100% of the drugs. Thus, what seems like a ridiculous price for a particular patented drug is really not just for that drug. The amount made on the successful drug must make up for 90% that are market failures or never make the market, plus provide enough of a profit to make investing billions of dollars a worthwhile endeavor from a risk-reward perspective.

Failure to understand basic economics isn’t the biggest problem of the zealots, or the ignorant patent haters who don’t know better. What really irritates me the most is the fact that these zealots and ignorant haters are among the biggest hypocrites you will ever meet in your life! They are simply not interested in saving lives unless it can be done by abrogating patent rights.

Generally speaking the zealots and haters talk about wanting to abrogate patents on AIDS drugs, or whatever illness is the celebrity cause of the moment. They cry that people are dying at extremely high rates and something has to be done. If you are not with them then you are evil, or as one particular zealot ridiculously accused — you are in favor of people dying. Such a ridiculous, asinine argument is the refuge of someone bereft of intellectual honesty. The full frontal assault with such ridiculous, over the top accusations is done to hide their motivations and make the argument about the motives of those who support patents. Of course, those who support patents know that with patent rights come investment, which leads to research and development, which leads to innovation. But reality doesn’t matter to a zealot.



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Truthfully, it is those who are focusing on busting patents and demanding generics be immediately available that are the ones who are morally bankrupt. This is true for several reasons, but it is true primarily and most provably because of their own hypocrisy, which they so carefully try and hide.

Zealots and patent-haters are simply NOT interested in saving lives! If they were they easily could save lives, but they don’t. This is true because the very nature of the patent system that an innovation will be locked up by exclusive rights for only a very limited time. Once the exclusive rights vanish the innovation can be freely used. It is this freedom to use in the very near term future that justifies the patent exclusion in the first place.

There are millions and millions of people dying each year from all kinds of illnesses that are easily preventable using simple technologies and drugs that are off patent.  None of the zealots or patent haters seem to want to help these people who were dying, sometimes from horribly painful diseases that are easily preventable in the first place and then easily treated even if acquired. Rather zealots and ignorant patent haters only want to help those dying of a disease that can only realistically be treated by a patented drug.  And these hypocrites cry foul? They don’t care about people, or saving lives at all!

Did you know that approximately 1.2 million children will die from diarrheal disease this year alone? That translated into 3,338 deaths a day, 139 every hour and one death ever 26 seconds. Furthermore, 800,000 children under 5 die each year worldwide from diarrhoea, which makes diarrheal diseases the second leading killer of children under 5 worldwide. And I bet you didn’t know that the Center for Disease Control (CDC) says that diarrheal diseases kill more children every day than AIDS, malaria, and measles combined. The CDC says that “[m]ost diarrheal deaths are preventable using simple, low-cost interventions.”

In almost all situations death from diarrheal disease is preventable.   Technology dates back to Roman times that could prevent much of these diarrheal diseases, which is caused by unsanitary water. Off-patented drugs could rather easily treat most of the acute illnesses even if they were not prevented. In fact, the off-patent drugs that would treat such diarrheal diseases could be purchased for pennies on the dollar compared to even generic versions of the latest and greatest patented drugs. Yet nothing is being done by the zealots and patent haters to address the terrible problem presented by diarrheal diseases.

Thankfully, there are consortiums within the industry that do care about even those unlucky enough to be stricken with a disease that off-patented drugs will treat. The Infectious Disease Research Institute is an example of a group dedicated to helping transform science into global health solutions while respecting patent rights of those companies that they work with and partner. Of course, few individuals have done more to prevent disease worldwide than Bill and Melinda Gates.

The undeniable, sad truth in all this is that this debate is not about helping people, but rather it’s about helping people only if patented drugs can be vilified and rights stripped.

It sickens me that anti-patent advocates use the AIDS epidemic as a rallying cry against patents, particularly pharmaceutical patents.  Aren’t these the same people that vilify the pharmaceutical industry for spending so much time producing lifestyle drugs instead of focusing on life-saving drugs?  If we want pharmaceutical companies to continue producing life-saving and life-prolonging drugs, we should not allow for the usurping of patent rights.

The goal of AIDS treatment today is to make it a chronic disease, but how are we going to do that if the pharmaceutical companies cannot make a justifiable return on investment for drugs that are obviously incremental advances towards that ultimate goal?

The sad reality is that we cannot save everybody on the planet who is ill.  On some level there is always the need to ration scarce resources, and for the most part there are really only two ways to do this.  First, we can do this through a capitalistic approach whereby those who are economically advantaged obtain the resources.  Or second, we can attempt to ration resources via some arbitrary approach such as a first in first out system, or perhaps even worse, provide the resources only to those individuals with political power connections.  The western world has decided, for the most part, to follow a capitalistic approach, and that is what our patent system chooses.  We provide an incentive laden structure for allowing those who come up with unique inventions to be able to reap the rewards associated with bringing useful products to the market.  Nowhere is this incentive structure more necessary than in the world of pharmaceuticals, where advancement of drugs is critical necessary to save lives.

But what is the greater good? The question is really quite easy and overwhelmingly in favor of patent rights. When you factor into the equation how early in the process pharmaceutical patents are applied for and then consider the extraordinary length of time it takes to get a drug through the Food and Drug Administration (FDA) approval process, most drug patents provide at best 10 to 14 years of exclusive rights, sometimes less. What that means is that patent rights are provided to protect drugs for about half of a single generation. During that half of a single generation patented drug prices are much higher than you or I would like them to be, there is no doubt about that. But during that half of a single generation the pharmaceutical company needs to make enough money on that drug and all the other failures to make continuing to look for the next drug a financially feasible endeavor. Then after that half of a single generation the once patented drug becomes freely available to the public, including generic manufacturers, for free.

Simply stated, patent rights for half of a single generation in exchange for cheap generic drugs forever thereafter is an outstanding bargain. Only the most blinded zealots and patent haters could ever question the bargain. If you are one of those who do question the bargain notice the next time you feel terrible — like absolute crap. When you go to the pharmacy to fill the prescription given to you by your doctor see how much it costs. It seems to me without fail that the worse I feel the cheaper the drugs prescribed. Why is that? Those drugs are off patent and now each pill costs pennies.

The moral high ground is not occupied by those who demand patent rights be abrogated in order to treat disease. The moral high ground is occupied by the researchers and scientists that dedicate their careers to saving lives, and to the companies and investors that make it possible for those blockbuster life saving drugs to become freely available once a very limited patent life has expired.

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Posted in: Anti-patent Nonsense, Gene Quinn, IP News, IPWatchdog.com Articles, Patents, Pharmaceutical

About the Author

is a Patent Attorney and the founder of the popular blog IPWatchdog.com, which has for three of the last four years (i.e., 2010, 2012 and 2103) been recognized as the top intellectual property blog by the American Bar Association. He is also a principal lecturer in the PLI Patent Bar Review Course. As an electrical engineer with a computer engineering focus his specialty is electronic and computer devices, Internet applications, software and business methods.

 

9 comments
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  1. And for drugs, there is simply no alternative method of paying for research than a patent. There are no other alternative forms of protection of the intellectual property developed. Drug formulations, exact chemical structures, even methods of manufacture are required to be disclosed, and become freely available to competitors even before the drug is on the market. There can be no trade secret protection as exists for other manufacturing sectors or even for dietary supplement formulations, and copyright protection, which many tout as sufficient for protection of software, is completely useless for drugs.

    So if your patent doesn’t allow you to pay for your research program, why bother with a research program? There would be better, and certainly more profitable, ways to spend the money.

    There are certainly philanthropists, charitable foundations, and government programs that provide money for drug research, but it is only a fraction of what is spent by commercial entities with the expectation of receiving a profit. Those who would devalue drug patents do have a point – take away the profit incentive, and of course, the entire problem of high prices for new drugs will disappear.

    There simply won’t be any new drugs.

  2. Bamacare will take care of all drugs you can possibly need :)

  3. and copyright protection, which many tout as sufficient for protection of software, is completely useless for drugs

    The protection of copyright is thin, and I know of no one in the know that thinks that such is sufficient protection for software.

    It is a protection of a different kind, for a different aspect than what patent protection provides.

    This point cannot be stressed enough.

  4. copyright protection might suck, but at least it’s easy to prove copyright violation.. mmm sort of….. when they do a blatant copying and not a careful clean-room rewrite
    With patent you have an uphill battle proving infringement, that’s even assuming your patent is valid :)

  5. Gene, you may know all this already. But generics can be and are sued for patent infringement. And generics also must have their ANDA approved by the FDA. If the brand company did a good job to make sure their patents are strong and enforceable, generics will have to wait until the brand patent expires or some type of agreement with the brand to enter the market. It is not entirely correct to say “generic drug manufacturers are allowed to ignore patent rights and immediately start making cheap versions of the patented drug. The generics didn’t have to do any research or engage in the costly and time intensive FDA approval process.” Generics do not “ignore” patents, instead they challenge the validity of the patent. On the contrary, they pay very close attention to patents. Sometimes generics win and sometimes they lose the patent fight. And generics do have to support their ANDA with clinical studies. Generics have to follow good manufacturing practices and are inspected by the FDA and can be fined. Granted, the amount that generics spend per drug is less than the brand, but at the same time it is not like generics get a free ride, like you seemed to suggest. They don’t. If the brand had a strong patent in the first place, then the brand would have protected their investment. The rules are all well known to both brand and generics and generics challenge patents with the limits of the patent laws and Hatch-Waxman statutes.

    There is absolutely a need for the investment that brand make to create and market drugs. The World is better off. Both brand and generics have a role to play in making drugs accessible and affordable.

  6. PatentAgent-

    First, you obviously either didn’t read the article or you didn’t understand what you read. The article does not talk about bad patents that get challenged, or criticize generic drug companies for challenging patents. The article criticizes the myopic believe that compulsory licensing of patents is an appropriate solution for a healthcare crisis. The article has nothing to do with anything you talk about in your comment.

    Nevertheless, is there any particular reason that you severely mischaracterize what I wrote? Seriously, what you selectively quote makes it seem as if I said something I didn’t say. That type of nonsense is not tolerated here. If you want to engage in that type of drive by mischaracterization to make yourself feel better please go elsewhere.

    What I wrote was this: “[N]o drug company is going to invest billions of dollars to take a drug from laboratory idea to market reality if at the end of the successful trip generic drug manufacturers are allowed to ignore patent rights and immediately start making cheap versions of the patented drug. The generics didn’t have to do any research or engage in the costly and time intensive FDA approval process.”

    The message is that no one in their right mind would spend billions if there are no exclusive rights. That is, of course, 100% correct.

    Furthermore, why do you want to pretend that filing an ANDA and going through the FDA process is at all onerous? The generic merely piggybacks on all the research, science and trial data paid for by the brand name.

    -Gene

  7. Gene, some people would say you are a zealot on the other extreme of the patent versus non-patent debate. At least that is how your writing comes through. And I say this respectfully. You need to relax and don’t take everything so personally. Look, there is a middle ground in this debate. And those in the middle ground have well balanced arguments that stick with reality. The extremes are not good. If you don’t want readers to think about your article what you did not mean it to be, then write clear and concise. That way people like me would not read what we read from your article. If you meant no exclusive rights, then write that. Don’t write a full paragraph with an “if” clause talking about ignoring patent rights. Ignoring patent rights does not mean there is no exclusive rights.

  8. PatentAgent-

    First, I find your response about me being a zealot humorous. You made a comment criticizing what I wrote, but it is apparent from your comment that you didn’t read the article or you didn’t understand the article. You were the one who so severely mischaracterized what I said that what you said bordered on being maliciously false. So you calling me a zealot is a real riot! Perhaps you should get the facts straight, quote what people say accurately and read before you comment.

    Second, I’m aware that some folks erroneously consider me a zealot. Of course, those that do are only pointing to the articles I write that they disagree with. I write all kinds of articles. Being in favor of a strong patent system doesn’t make me any more a zealot than the founding fathers, or any more a zealot than folks at IBM, Qualcomm and many other great companies. To call me a zealot is really quite insulting. As if I don’t write that bad patents have no place or that there is truly evil, abusive patent litigation that needs to be stopped. Do you know that I wrote about those things? So believe I’m a zealot if you like, but like the others who believe that you would be wrong.

    Finally, words actually matter. If you choose to read to quickly to understand that is a YOU problem.

    -Gene

  9. Nowadays everyone wants a free ride on the back of thoses who invest much time and money developing new ideas and products. This country is not going in a good direction. Welcome to the United Socialist States of America.