“It is hardly a shock that research and development into medical diagnostics has stalled. The interesting thing about intellectual property and innovation policy is that it works. Much like the case with the tax code, society gets what society incentivizes.”
“The COVID-19 crisis has once more highlighted the need for incentivizing investment and innovation—and thus, for patent laws that duly “promote” and protect such “progress,” precisely as our Founders envisioned,” writes Chief Judge Paul Michel, now retired from the Federal Circuit. As he so often is, Judge Michel is absolutely correct.
Many are asking why testing for the coronavirus that causes COVID-19 has been slow to roll out, and why tests in many countries are inaccurate. Those familiar with U.S. patent laws understand the problem. There has been a de-emphasis on medical diagnostics in America as the result of a series of Supreme Court and Federal Circuit rulings, coupled with Congressional inaction.
It is hardly a shock that research and development into medical diagnostics has stalled. The interesting thing about intellectual property and innovation policy is that it works. Much like the case with the tax code, society gets what society incentivizes. If it is impossible to protect medical diagnostics in the United States little research and development is done with respect to medical diagnostics, it is that simple.
A Perfect Storm
Because medical diagnostics are no longer patentable in the United States, investors are uninterested, which causes a series of unfortunate, but entirely predictable, cascading effects. Unable to receive funding— the true lifeblood of research and development— many leading research entities have simply abandoned medical diagnostics altogether. Witness the Cleveland Clinic and St. Jude electing to pursue other avenues of innovation.
When courts and Congress do not value medical diagnostics, and continue to view medical diagnostics as laws of nature or natural phenomena, is it any wonder that we don’t have more medical diagnostics? In addition to poorly considered patent policy disincentivizing diagnostic innovations, add the fact that payors of healthcare services refuse to compensate for diagnostics, and you have a perfect storm that explains why testing is lacking.
To put it simply, without diagnostics it is impossible to know who has what. With respect to the COVID-19 pandemic, this has led to a series of policy decisions by lawmakers that have effectively shut down the economy in hopes of preventing transmission of the coronavirus. While that strategy appears to be working, no one thinks that shuttering the economy on a long-term basis is desirable, or even feasible.
Even the prospect of keeping the economy shuttered for another few weeks, months or several months causes policymakers extraordinary anxiety. As we watch many of our friends and colleagues get sick and hear reports of mounting deaths, we are also seeing the very real economic pain and tragedy of workforce dislocation. And while policymakers who looked into the abyss of what could be can hardly be questioned for trying to save as many lives as possible, there has to be real compassion for the vast majority of the world that lives paycheck to paycheck. This pandemic has and will continue to affect many lives, directly and indirectly.
The Consequences of Shifting Focus
Of course, innovation policy that recognizes the importance of medical diagnostics and actually encourages appropriate levels of investment in research and development would not have stopped the coronavirus or COVID-19. We are, however, no doubt suffering the consequences of the best and brightest minds within the scientific community being incentivized to focus their mental energies elsewhere, which is precisely the problem.
To the extent there is a silver lining emerging it is that the innovation community is coming together to respond to this unprecedented crisis. Universities, big tech, biopharma are all working together, but working to address a problem that has already surfaced is backward looking. Innovation policy cannot be reactive, it must be proactive.
Innovation policy should not artificially pick winners and losers, which is precisely what the U.S. Supreme Court and the Federal Circuit have been doing with every patent eligibility ruling that prohibits the patenting of groundbreaking life sciences innovations. We have heard the most ridiculous excuses and explanations—”yes, this is a revolutionary innovation, but it simply isn’t the type of thing that can be patented in America.” Utterly ridiculous gobbledygook, particularly in light of what has transpired over the last several months.
Sometimes you will hear those who analyze the stock market say that when the American economy catches a cold the rest of the world economy catches the flu, as a testament to how resilient the U.S. economy is, generally speaking. With respect to life sciences research and development, the U.S. has been the global leader since the early 1980s, when the United States Supreme Court decided Diamond v. Chakrabarty. Since the Supreme Court fundamentally undercut its reasoning in Chakrabarty when it decided Mayo v. Prometheus, less and less has been protectible in the United States, which means less and less has been investible in the United States. And while there is great research happening all over the world, commercialization research and development simply does not happen if the U.S. marketplace does not allow for the exploitation of solutions to problems.
Stand Up, Save Lives
So, here we are. Congress has allowed the Supreme Court to fundamentally rewrite U.S. innovation policy and now the public wants answers. The question is whether Congress will stand up and prevent unelected judicial activists to continue to throttle U.S. innovation policy or will Congress stand up and say enough is enough. In our Constitutional form of government, the actions of the Supreme Court have been anything but Constitutional, and we are seeing firsthand just how unprepared the nation is to handle a pandemic.
The good news is that universities and biopharma companies are working at breakneck speed to develop accurate testing, identify drug cocktails that may save lives, and race to create vaccines. The bad news is this level of cooperation cannot be a long-term strategy for the poor policy decisions that have unilaterally dismantled America’s engine of innovation.
The COVID-19 pandemic needs to be viewed as a shot across the bow. It is time to get serious about correcting the unforced errors of the past decade and opening America up to innovation of all types and without any discrimination based on technological content.
We are lucky this pandemic is not worse, and with a higher mortality rate. We might not be so lucky the next time.
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