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BIO and AUTM Defend Patentability of DNA-Based Inventions

The Biotechnology Industry Organization (BIO) filed an amicus brief in the U.S. Court of Appeals for the Federal Circuit on Friday, October 29th, in an appeal of a lawsuit brought by the American Civil Liberties Union on behalf of a number of plaintiffs against Myriad Genetics, the U.S. Patent and Trademark Office, and others. The brief, which was filed jointly with the Association of University Technology Managers (AUTM), supports the patentability of isolated DNA molecules, noting that invalidating the patentability of these molecules would discourage future biotechnological innovation.

DNA-based patents are a critical tool that help enable the fundamental research and development of new biotech products, therapies and technologies to fight deadly diseases, expand agricultural production, clean the environment, and reduce our dependence on foreign sources of oil.  Patents are critical to innovation of products which benefit patients and other consumers.  Biotech patents, like all other patents, offer exclusivity for a short term in exchange for the innovation to be freely used by the public forever once the patent expires.  In exchange for the full and fair description of the innovation those that innovate are provided exclusive rights so that they can recoup research and development costs and achieve a profit suitable to reward investors for funding the creation of the innovation, which many times is a quite speculative endeavor, as in the biotechnology field.

Isolating a DNA molecule, in addition to creating a new chemical molecule that does not exist in nature, imparts new utilities and functions that are not available from native DNA. The utility of isolated DNA molecules derives from their chemical structure, which is developed by human ingenuity using complex scientific expertise and equipment. As a result, isolated DNA molecules are patentable subject matter based on decades of U.S. case law.  The district court, and the Department of Justice who has filed a brief supporting the non-patentability of isolated DNA, are mistaken on the science and mistaken on the law. For the Federal Circuit to affirm the district court ruling or to follow the suggestion of the DOJ would require the Court to ignore well established Supreme Court precedent set forth in Diamond v. Chakrabarty.  See DOJ Seeks to Cripple Biotech Industry.

[Bio-Pharma]

“Unless reversed, the district court’s ruling will seriously harm the U.S. biotechnology industry, which consists largely of small firms that are engaged in foundational research and dependent on private investment to fund their work,” stated BIO President & CEO Jim Greenwood. “Patent protection is critical for the ability of biotechnology firms to secure the private investment necessary for the research and development of innovative diagnostic, therapeutic, environmental and agricultural products. This innovation will lead to domestic job creation and help sustain our country’s global competitiveness.”

If the Court of Appeals affirms the district court’s categorical rejection of the patentability of isolated DNA molecules, it would cast a cloud of uncertainty over thousands of similar patents and compromise the ability of biotechnology firms to pursue groundbreaking discoveries in human healthcare, renewable energy, and sustainable agriculture.  Patents are the lifeblood of the biotechnology industry, and investors abhor uncertainty.  Supplanting decades of regulatory treatment by a variety of federal agencies and altering the well established and directly on point law would create a 180-degree change in course, which is the very type of uncertainty that causes investors to run for the hills.

When I interviewed Jim Greenwood back in the Spring of 2010 he explained the need for patents in the biotechnology industry as follows:

For most [biotech] companies the only thing that they have is intellectual property. They may have a folder with their IP portfolio in it and not a place to file it. They start off with that and then they have to raise money to even begin to have microscopes and bricks and mortar and staff. It is on the strength of that intellectual property that they have to raise all of those dollars for a very long time.

How long a period of time must biotechnology companies rely on investor dollars? Greenwood said in my interview with him that it can be a decade or longer.  He explained:

[M]any of these companies go on a very, very long and protracted journey that can be 10 or 12 years or longer in which they may have to attract hundreds of millions, if not as much as $1 billion dollars if they are fortunate enough to go public before they actually get to the point where the FDA has actually approved their product and they start generating their first dollar of revenue. So it is a long and risky process.

For universities the patentability of isolated DNA molecules is also extremely important, which is why AUTM jointly filed the brief with BIO.  “Patentability of isolated DNA molecules is critical to the translation of university research discoveries for the public good. Without this, many promising discoveries would not make their way from the university research lab and into the hands of companies for development of products which improve the public health,” stated AUTM President Ashley J. Stevens.

To echo Stevens point, allow me to observe that there is an unrealistic and counter-factual understanding by many about the role of universities.  Universities engage in basic research and then from the point in time that the basic and highly speculative research takes place to the time a product or service reaches a consumer there is a great deal of additional time, investment and translational research necessary to ever have something fit for consumption.  Without protections for the fundamental level of innovation the secondary levels, which are far more time consuming and capital intensive, simply wouldn’t happen.

“From the mass production of life-saving medicines by cell cultures to the screening of our blood supply for life-threatening viruses, patented DNA molecules have been put to countless uses that have benefited society,” concluded BIO President and CEO Jim Greenwood.  Those that believe that these innovations would have happened without the rights conferred by patents are naive in the extreme.  They also choose to ignore the teachings of history.

There is no greater example of the manipulative power patents hold than passage of the Orphan Drug Act.  After passage of the Orphan Drug Act there was a 1300% increase in the number of treatments for rare diseases, which generally speaking is defined by diseases affecting fewer than 200,000 people.  Congress sought to manipulate by using a carrot.  By offering exclusive rights for a limited time far more drugs and treatments were created to treat rare diseases that otherwise would have had to remain untreated.

Like it or not, the patent system is a great motivator, and used appropriately to incentivize the type of behavior we want to encourage it is a powerful tool in the government arsenal.  To fundamentally alter what is considered patentable subject matter will not only negatively impact cutting edge biotechnology research, but it will also have a chilling effect.  Uncertainty causes business paralysis and forces investors to the sidelines.  The uncertainty that would be created by the curtailing of patentability would not be isolated to the biotechnology sector, and is exactly the opposite of what our economy presently needs.

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11 comments so far.

  • [Avatar for Bobby]
    Bobby
    November 1, 2010 09:03 pm

    Again you cite the Orphan Drug Act without proper context. The number of orphan drugs produced per year has greatly increased. However, the number of non-orphan drugs produced has dramatically increased over the same time period, and the ODA also gave direct financial incentives that dramatically lower the cost of producing an orphan drug. If you don’t control for these factors, as well any other factors that may have played a significant role, the numbers are not useful for claims of the effect of the patent parts of the ODA. For example, if the pharmaceutical industry today was four times larger than it was when the ODA was passed, and the cost of producing a drug was reduced to a third of what it was before, you could expect a roughly 1200% increase in orphan drugs (assuming that the effects of growth and regulatory changes on developing orphan drugs are roughly proportionate to the effect when developing non-orphan drugs) meaning the patent element played a relatively small role, but actually helped. If the industry grew by 400% and the costs were cut to a fourth, then we’d expect 1600% growth, and the patent element was clearly harmful.

  • [Avatar for Gene Quinn]
    Gene Quinn
    November 2, 2010 10:52 am

    Bobby-

    You are, once again, misguided. If you think the Orphan Drug Act did nothing than you obviously do not understand economics.

    Do you realize just how small a market 200,000 people is? Your unsubstantiated belief that drug companies would spend massive amounts of money finding drugs that treat rare diseases without exclusivity and despite the miniscule market defies logic. It also defies history and the facts.

    -Gene

  • [Avatar for Bobby]
    Bobby
    November 2, 2010 03:11 pm

    I’m not claiming that the ODA didn’t do anything. I’m not claiming that the patent part of the ODA didn’t do anything. I’m claiming that the numbers you use don’t have valid scientific controls. Scientific controls are essential to clinical trials, and they are essential to any evidence you want to be considered valid.

    There are clearly other factors involved even within the ODA, and you fail to acknowledge them and the effect that they had. Are you not willing to admit that making it much easier to get federal funding to cut the cost probably played a significant role? If the “massive amounts of money” they have have to spend are not as massive, it is clearly going to make developing these drugs more appealing, and yet you ignore this factor to make sure patents work. If patents work as well as you claim, then you should have no problem with using good scientific numbers instead of the flawed methodology that is used by claimed inventors of perpetual motion devices or the hundreds of years where people thought blood letting was a cure all.

  • [Avatar for Gene Quinn]
    Gene Quinn
    November 2, 2010 05:29 pm

    Bobby-

    If you are right then you will explain this…

    Why did the “other factors” that you speak of only miraculously start to matter for the creation of treatment of rare diseases AFTER the passage of the Orphan Drug Act?

    You want to ignore history, and I am not going to allow you to do that. You also want to ignore economic realities, which I won’t stand for either. 200,000 people with a disease does not make a market. Without the exclusive rights over time the drugs for rare treatments would NOT have been made. Your refusal to accept what historically and provably happened and the need to make up possibilities is astonishing and irresponsible.

    -Gene

  • [Avatar for Bobby]
    Bobby
    November 2, 2010 06:28 pm

    Gene, the two other factors I am mentioning are 1) the pharmaceutical industry as a whole produces significantly more new drugs, orphan and non-orphan, today than it did in 1983 and 2) the provision in the ODA making it easier for companies developing orphan drugs to get federal money.

    1 has been happening for a rather long time, and you can see this kind of trend over any set of 30 years. 30 years from now, we’ll be producing several times as many new drugs as we are today even with horrible policies.
    2 happened after the ODA because it was PART OF THE ODA.

  • [Avatar for Gene Quinn]
    Gene Quinn
    November 2, 2010 07:05 pm

    Bobby-

    You are just flat wrong. No point continuing to go back and forth, although I am happy to do so. Neither of us will ever convince the other.

    The fact of the matter is businesses go where there are profits. Absent exclusive rights under the Orphan Drug Act there are no profits to be had in creating drugs that treat diseases that affect fewer than 200,000 people. That truth should be self evident, but it is apparently not to you. You would rather speculate that what DID happen as a direct result of the Orphan Drug Act WOULD have happened even despite the passage. So your hypothesis is that the Orphan Drug Act did nothing. Moreover, your true thesis, as explained above, is that there would have been MORE drugs to treat rare diseases without the Orphan Drug Act. This is apparent because you say that based on the overall increase in drugs you should expect a 1600% increase and there was only a 1300% increase.

    Your position is absurd. You are naive to the extreme if you think the Orphan Drug Act didn’t directly result in more treatments for rare disease. You obviously have not spoken to anyone in the industry, and your ridiculous thought games that ignore history before and after passage of the Orphan Drug Act defy logic and common sense.

    -Gene

  • [Avatar for Bobby]
    Bobby
    November 2, 2010 07:27 pm

    You see my position as absurd because you aren’t reading what I’m saying.

    “So your hypothesis is that the Orphan Drug Act did nothing. Moreover, your true thesis, as explained above, is that there would have been MORE drugs to treat rare diseases without the Orphan Drug Act. This is apparent because you say that based on the overall increase in drugs you should expect a 1600% increase and there was only a 1300% increase.”
    I said that as a hypothetical. I also gave a hypothetical 1200% increase, which would mean that it still lead to a nice increase. I don’t have the data, but I know we produce more drugs today and that producing an orphan drug costs a pharmaceutical company less today because it’s far easier to get more federal funding, so we would have more orphan drugs produced this year than we would in 1983 even without the special patent protection portion of the ODA.

    I’m not saying what the exclusivity did. I am asking you to acknowledge that MAKING THE DRUG CHEAPER TO GET TO MARKET probably played a significant role in the increase of orphan drugs, and that the entire 1300% increase can’t be attributed to the patent protections alone.

    Do you think that reducing the cost of getting a drug to the market doesn’t lead to more new drugs being produced?
    I repeat, do you think that reducing the cost of getting a drug to the market doesn’t lead to more new drugs being produced?

  • [Avatar for Gene Quinn]
    Gene Quinn
    November 2, 2010 08:22 pm

    Bobby-

    I know you don’t have the data and are guessing. Thanks for finally admitting that what you are saying is not supported in fact.

    Sent from iphone

  • [Avatar for Bobby]
    Bobby
    November 2, 2010 08:26 pm

    I made that clear from the beginning by listing two hypothetical situations that explain the problem with your reasoning. I made it clear that they were hypothetical by the use ‘for example’ and ‘if’

    You still haven’t answered my question. Do you think that reducing the cost of getting a drug to the market doesn’t lead to more new drugs being produced?

  • [Avatar for Gene Quinn]
    Gene Quinn
    November 2, 2010 08:54 pm

    Bobby-

    Why would I answer a made up, pretend hypothetical that is based in imagination and ignores fact?

    Why can’t you accept you are wrong?

  • [Avatar for Bobby]
    Bobby
    November 2, 2010 09:16 pm

    Because the ODA includes a provision that effectively reduces the cost of producing an orphan drug through federal aid.

    GRANTS AND CONTRACTS FOR DEVELOPMENT OF DRUGS FOR RARE DISEASES AND CONDITIONS

    SEC. 5. [360ee](a) The Secretary may make grants to and enter into contracts with public and private entities and individuals to assist in (1) defraying the costs of qualified clinical testing expenses incurred in connection with the development of drugs for rare diseases and conditions, (2) defraying the costs of developing medical devices for rare diseases or conditions, and (3) defraying the costs of developing medical foods for rare diseases or conditions.