We Won’t Stop Coronavirus Without IP

By James Edwards
March 10, 2020

“Any of the IP-robbing proposals on the policy table would weaken our nation’s biopharmaceutical sector, diminish IP exclusivity, deny Americans the innovations patients enjoy the earliest access to, and take away from our patent system, which has already endured repeated assaults by Congress, courts and administrative bodies for two decades.”

https://depositphotos.com/122798564/stock-photo-fresh-perspective-ahead-road-sign.htmlThe recent White House meeting with leaders from American pharmaceutical companies sought their help in solving the coronavirus that originated in Wuhan, China and is currently gripping the globe. The meeting was part of the U.S. government marshaling our nation’s private and public medical research and development (R&D) resources in a race to create therapeutics, vaccines, diagnostic tools and cures.

The Wall Street Journal has noted that “a core U.S. strength is the breadth of its private medical resources. That’s on display now as the government is calling on private actors to buttress the federal response.”

A Bad Proposal

Ironically, the same U.S. government urging the same private industry whose intellectual property rights enable it to develop medical miracles to help is targeting American pharmaceutical firms with a number of IP-killing policy proposals. One such bad idea comes from the Food & Drug Administration in a rulemaking titled “Importation of Prescription Drugs Proposed Rule (Docket No. FDA-2019-N-5711).”

This regulatory proposal would allow states and other entities to import certain prescription drugs from Canada. The plan constitutes an assault on private intellectual property rights. Losing IP strength disincentivizes American innovators and investors from pursuing R&D into solving the knottiest, most challenging diseases with therapies and cures — including the spreading coronavirus pandemic.

Of course, the right to private property ranks among the unalienable rights the Founders of the United States referenced in the Declaration of Independence and secured by the U.S. Constitution and the Bill of Rights. Private property rights undergird the R&D business model and IP-intensive sectors of our economy. Those industry sectors lead our nation, and often the world, in innovation.

Now More Than Ever, We Need IP

The right of exclusivity that IP, particularly patents, provides innovators is critical to developing and commercializing cutting-edge inventions in biopharma, medical device, 5G wireless, artificial intelligence, aeronautics, quantum computing and other sophisticated fields.

American IP, including the right to exclude competitors during the limited duration of a patent term, is essential to our solving the current global medical crisis, continually introducing new cures and better therapies and sustaining the high-skill jobs in the life sciences sector.

Prescription drug importation would dampen incentives to take the arduous path of R&D in biopharmaceuticals. R&D in pharmaceuticals assumes great risk of failure on any given potential drug. About nine out of ten drug candidates fail to make it through clinical trials and to the market. The average cost to research and develop a medicine approved to market is conservatively $2.6 billion.

In other words, failures along the way are the norm and successes the exception. And most of the funds invested in drug discovery and development are private dollars. The few but impactful commercial successes fuel the very R&D by which U.S. drug companies come to the rescue during public health emergencies.

Erasing Value

These brand medicines must recoup billions and billions of sunk costs for themselves and the nine of ten that fell short. That’s why assaults on IP such as drug importation are so harmful. They effectively steal patent value from inventions. The proposed importation would erase value with each prescription importing Canada’s artificially low, government price controls.

Any of the IP-robbing proposals on the policy table — importing foreign drugs, compulsory licensing, reference pricing to foreign government-set price controls, ex post facto inflationary penalties, march-in outside of Bayh-Dole’s narrow conditions for such exceptional action, etc. — would weaken our nation’s biopharmaceutical sector, diminish IP exclusivity, deny Americans the innovations patients enjoy the earliest access to, and take away from our patent system, which has already endured repeated assaults by Congress, courts and administrative bodies for two decades.

Misguided proposals have other real-world consequences. With pharmaceutical importation, the consequences involve government taking away private investments’ rewards on successful products that would have paid investors a return as well as replenish the R&D pipeline for future breakthroughs. This causes a disincentive to invest and, thus, risks reducing the number of prospective new medicines.

The flaw underlying each of these short-sighted, IP-attacking proposals is the sponsors don’t acknowledge the tremendous value achieved only through expensive, extensive invention, experimentation, engineering and scientific rigor. Rather, they treat high-value inventions as though they were commodities. They see the after-the-fact cost of unit production and say, “See!  They’re overcharging for their products.”  Of course, R&D- and IP-centered creations are expensive!  We’d never have those treasures without IP exclusivity to prime the investment pump.

A High Price for Cheap

President Trump recently referred to Tesla CEO Elon Musk as “one of our great geniuses, and we have to protect our genius. You know, we have to protect Thomas Edison and we have to protect all of these people that came up with, originally, the light bulb and the wheel and all of these things.” The President’s right about preserving, protecting and defending what empowers our inventors to lead the world in invention, IP and commercialization.

I believe all Americans want foreign freeloader countries to pay their fair share for American-made new medicines. But drug importation would disincentivize pharmaceutical innovators by attacking their intellectual property. That would be a high price to pay for “cheaper” medicine.

Image Source: Deposit Photos
Image ID: 122798564
Copyright: mstanley 

The Author

James Edwards

James Edwards consults on intellectual property, health care innovation, and regulatory and policy issues. Edwards advises companies, trade associations, and conservative organizations on patent policy and is Co-Director of the Inventor's Project. He participates in the Medical Device Manufacturers Association's Patent Working Group. Edwards mentors start-ups and early-stage companies, largely in the med tech space, and is involved in several IP-centric projects.

Edwards served as Legislative Director to Rep. Ed Bryant, R-Tenn., then a member of the U.S. House Judiciary Committee, and handled IP legislative matters. Edwards also worked on the staffs of Rep. John Duncan, R-Tenn., the U.S. Senate Judiciary Committee, and Sen. Strom Thurmond, R-S.C. In addition, he was an association executive at the Healthcare Leadership Council. Edwards earned a Ph.D. at the University of Tennessee, and bachelor's and master's degrees at the University of Georgia.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 16 Comments comments.

  1. Concerned March 10, 2020 7:39 pm

    It is a bad idea to allow inventors to get a terrible deal, regardless of who is profiting at our expense.

    The patent process is very disingenuous.and suspect. Many inventors feel it will take a crisis to finally correct and restore patent rights.

  2. angry dude March 10, 2020 9:58 pm

    Trump is just protecting US stock market and its biggest corporate constituents (FAANG) … from inventors of the “wheel”

  3. Paul Smith March 11, 2020 12:37 am

    This article should be in r/unpopularopinion.

  4. Paul Smith March 11, 2020 12:38 am

    This article should be in r/unpopularopinion.
    And quoting Trump with reverence??

  5. MaxDrei March 11, 2020 4:50 am

    The Coronavirus spread has brought Europe to the realisation that 100% of its masks and protective clothing and much of its hospital requisite inventory is manufactured in China and that more or less 100% of its pharmaceuticals are made either in China or in India.

    Would this be the case, if we did not enjoy a strong and flourishing international system of IPR? After all, it’s the IPR owners, including the clients of Mr Edwards, who decide where they are going to make the products that they will sell to their customers in the USA, at the prices they charge those customers.

    Drug importation? What drugs are NOT imported, these days?

    The issue preoccupying Mr Edwards seems to be that of “exhaustion” of rights, the notion that drug manufacturers can take two successive bites out of the monopoly profits cake, the first in the country of manufacture and a second in the USA, after importation to that market. Gene, how about a discussion on your blog about the pro’s and con’s of international exhaustion of patent rights?

  6. angry dude March 11, 2020 6:28 am

    Paul Smith @4

    “And quoting Trump with reverence??”

    reverence or reference ? Lol

    Dude, u r funny
    what is exactly your business here ?
    My business is stated very clearly if you bother to read my posts

  7. Anon March 11, 2020 7:54 am

    Would this be the case, if we did not enjoy a strong and flourishing international system of IPR?

    Between the negative in the statement (“if we did not”) and the negative nature of IPR itself (a mechanism for negating a granted property right), I cannot parse what position you are advancing MaxDrei.

    If I hazard a guess, you appear to be stating that a strong ability to negate patent coverage is a reason why we would have a different ability to have manufacturing be differently distributed around the world.

    You are known for throwing cr ap at the wall to see what sticks — here, I think all that you get is cr ap on the wall.

  8. MaxDrei March 11, 2020 10:49 am

    For me, IP= intellectual property, IPR = intellectual property rights and IPR owners = owners of intellectual property rights. I had forgotten that these days some people on seeing “IPR owners” think of something else. Quite what they think though, I’m not sure.

    Another good one is “PSA”. What it means depends on the context.

  9. Ternary March 11, 2020 11:32 am

    Of course we can stop the coronavirus without IP.

    Patents and IPR are NOT the “sine qua non” for research and development. R&D is a human effort that takes place under almost any circumstances, be it with or without IPR.

    Patents and their financial results most certainly can be a great incentive for doing R&D. And I am all for it. But to say that it is the essential incentive in the current situation is nonsense. Governments and their unlimited resources are a much better way to force certain developments. See: nuclear weapons, radar, Internet, space flight, etc. Some problems do not lend themselves to government solutions, for obvious reasons. But communal medical problems like the coronavirus are of the type where government can play a breakthrough role without relying on IP.

    Once a vaccine or an anti-viral medicine has been developed, it can be manufactured in almost unlimited amounts for extremely low cost (and consumer cost.). There is no inherent need for any product to demand ungodly returns on investments, as the micro-electronic industry (or virtually any consumer product) demonstrates on a daily basis.

  10. angry dude March 11, 2020 1:03 pm

    Ternary @9

    Dude,

    US government circa 2020 is not the same as back in the glory days

    Most of those dudes need to be on welfare rolls or worse – jailed

    Failed country

  11. Anon March 11, 2020 1:45 pm

    MaxDrei – in the US Sovereign (and make no mistake, this blog is first and foremost about US Sovereign law), IPR is taken as the AIA post grant review mechanism.

    You spend enough time inhabiting this (and other US forums) that YOU should be aware of this. That you admit to “not sure” just shows that you enter these fora with your mindset of advocating “the EPO way” without calibrating for the actual fora. This only leads to even more loss of credibility for you as a shill.

    This is not a new problem for you, by the way, and the fact that this problem is SO persistent also leads in the same ‘shill’ direction.

  12. Ternary March 11, 2020 4:26 pm

    AD@10. You should not spout this utter claptrap. We are not a failed state. Don’t say these foolish things intended to infuriate dissatisfied readers.

  13. Benny March 11, 2020 4:58 pm

    The quote from Trump was meant to be a joke, right? Protecting people who came up with the wheel ? ( Trump is surely unaware that US patent number 1 – not the first patent, the first in the current numbering system – was for a wheel). Also, the lightbulb was invented in the UK, not the US (Joseph Swann).

  14. Benny March 11, 2020 5:03 pm

    Here’s a likely scenario – vaccines will be developed outside the US, and be granted US patents, effectively blocking US pharma companies from innovating further. Subsequent litigation or invalidation procedures will profit US law firms.

  15. Anon March 11, 2020 9:01 pm

    It’s comment like “and be granted US patents, effectively blocking US pharma companies from innovating further” that show just how much of a t001 and anti-innovator that you are Benny.

    Repeat after me: Necessity is the Mother if invention.

    That blocking action of patents is an invigoration of further innovation — exactly opposite your view.

  16. Anon March 12, 2020 7:26 am

    Of invention rather than
    If invention

    (Damm autocorrect)