But they’re great for international bureaucrats
The pending report of the UN Secretary General’s High Level Panel on Access to Medicines not only attacks the patent system as predicted, but proposes giving the organization oversight of drug development. If you think United Nation functionaries would be more effective than entrepreneurs, you’ll be delighted. If you live in the real world where bureaucracy is the enemy of innovation, you don’t know whether to laugh or cry.
Like so many attacks on the patent system, the panel’s report is driven by emotion. They cry that patents are to blame for drug shortages so governments should seize expensive therapies and control future development in the name of fairness. Unfortunately, emotion is a poor prescription for fighting disease. If implemented the recommendations would collapse the drug development pipeline– an unmitigated disaster for those praying for someone to alleviate their suffering.
The panel rejected pleas from our State Department that all relevant factors preventing greater availability of health care in developing countries including poor transportation systems, rampant corruption (a topic, unlike drug development, where the UN has extensive first-hand experience), lack of basic health care and education, poverty, and trade barriers together with the cost of drugs must be considered to reach reasonable solutions to the problem. But such an approach steps on too many toes at the UN, so the patent system was pre-selected as the scapegoat.
Frantic efforts are underway to make the report politically palatable. It may be disguised but establishing international control over our life science industry is the ultimate goal. While that may seem far-fetched, this is a long term game and keeping guardians of the patent system on the defensive is a highly effective tactic. The report spells out the next moves. We can’t say we weren’t warned.
Here are the pending recommendations:
- Countries should adopt automatic compulsory licenses for drugs on the forty-five page list of essential medicines compiled by the World Health Organization (WHO);
- No medicines on the list should be patent protected;
- The World Trade Organization’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) should be amended to incorporate these recommendations;
- Publicly funded inventions developed with government support should be freely available or under irrevocable nonexclusive licenses;
- TRIPS should remove any obligation to grant patents for publicly funded research tools and data;
- New models “delinking” R&D financing (i.e. having government, not industry, run drug development) should be gradually introduced;
- Delinking should start immediately to develop treatments for threats like Zika and then move to all medicines for non-communicable diseases;
- Companies should report their costs of R&D and clinical trials along with any public funding they receive into a WHO database;
- Drugs developed with publicly funded clinical trials would not be eligible for patenting or market exclusivity;
- A taskforce established under the UN Development Group will create a binding treaty for financing and sharing the fruits of R&D for health technologies; and
- The taskforce will be financed through a irrevocable commitment by member states to participate in the fund and to share results in order to ensure drugs and therapies are available at “socially acceptable” prices.
Guess which country the UN will expect to pick up the tab.
New drugs come from countries with strong patent systems, with the vast majority made in the United States of America. Consider this is from Where Drugs Come From: By Country:
… the US leads in the discovery of approved drugs, by a wide margin (118 out of the 252 drugs) (emphasis added), then Japan, the UK and Germany are about equal, in the low 20s each. Switzerland is in next at 13, France at 12, and then the rest of Europe put together adds up to 29. Canada and Australia put together add up to nearly 7, and the entire rest of the world (including China and India) is about 6.5, with most of that being Israel.
But while the US may be producing the number of drugs you’d expect, a closer look shows that it’s still a real outlier in several respects. The biggest one, to my mind, comes when you use that criterion for innovative structures or mechanisms versus extensions of what’s already been worked on, (emphasis added) as mentioned in the last post. Looking at it that way, almost all the major drug-discovering countries in the world were tilted towards less innovative medicines. The only exceptions are Switzerland, Canada and Australia, and (very much so) the US. (emphasis added). The UK comes close, running nearly 50/50. Germany and Japan, though, especially stand out as the kings of follow-ons and me-toos, and the combined rest-of-Europe category is nearly as unbalanced.
What about that unmet-medical-need categorization? Looking at which drugs were submitted here in the US for priority review by the FDA (the proxy used across this whole analysis), again, the US-based drugs are outliers, with more priority reviews than not… (emphasis added)
And here’s the last outlier that appears to tie all these together: in almost every country that discovered new drugs during that ten-year period, the great majority came from pharma companies. The only exception is the US: 60% of our drugs have the fingerprints of biotech companies on them, either alone or from university-derived drug candidates (emphasis added). In very few other countries do biotech-derived drugs make much of a showing at all…
And the contributions of universities – especially those in the US – has been strong, too. While university-derived drugs are a minority, they tend to be more innovative, probably because of their origins in basic research. (emphasis added)
Taking new drugs from the laboratory to the market is an expensive, high risk endeavor. In the US, drug companies spend about $60 billion in R&D each year. The life science industry employs nearly 4.5 million Americans. It’s easy to predict what will happen to this critical piece of our economy under UN control.
Tragically, we’ve already tried the policies the UN advocates. Before enactment of the Bayh-Dole Act, federally funded inventions were owned by the government and made readily available under non-exclusive licenses. But rather than creating the Utopia of innovation the UN anticipates, it was a disaster. Not a single drug was ever developed despite billions spent on R&D. It was precisely this failure which spurred Congress to overwhelmingly pass Bayh-Dole which decentralized technology management from the bureaucracy into the hands of entrepreneurs. The impact was immediate and dramatic.
Under Bayh-Dole more than 300 new drugs and vaccines are available world-wide from our publicly funded research and the US is far and away the leader in the life sciences. Rather than relying on centralized planners, our system rests on the incentives of the patent system to drive innovation. It’s not a coincident that we are one of the only countries where small companies are important sources of new drugs. Mandates for nonexclusive and compulsory licensing are death knells for start-up’s which continually create revolutionary new treatments.
Ironically, I got the summary of the UN report the same day I learned that the Chinese version of PBS is running its long awaited series on innovation. They sent film crews around the world investigating why innovation thrives in some nations and not others. I was interviewed about the US model and cited how a strong patent system coupled with the Bayh-Dole Act helped pull our economy out of the doldrums of the 1970’s into an unprecedented era of innovation.
After saying that my segment airs next week, the producer added: ” The significance of Bayh-Dole has already been proven in the US, we hope the show will encourage and inspire China to follow these great steps as well.” The day the show runs a Chinese delegation is meeting with the Patent and Trademark Office to discuss Bayh-Dole and how to foster patent based innovation. Competing in the life sciences is one of China’s top priorities.
You can bet the Chinese won’t subject their life science industry to the control of a UN taskforce. Let’s hope we are equally wise. If not, the plight of those suffering from disease is about to get a whole lot worse.