Patent News

Jul. 15, 2015

Morning Consult: America’s Patients Benefit From Strong Patents, by John Castellani

This post originally appeared in Morning Consult on July 15, 2015.

Congress continues wrestling with legislation intended to stop abusive practices by so-called patent trolls – those financial mischief-makers who abuse loopholes in patent law to get rich at the detriment of scientific progress.

It’s critical that Congress get this legislation right. And America’s biopharmaceutical industry is committed to working with Congress and others to help make that happen quickly and fairly.

This kind of collaboration is critical on issues of such national importance; indeed, our industry depends on it. Because patents are our industry’s fundamental lifeblood, our reliance on them is unique compared to other industries. Strong patents are a reason why U.S. HIV/AIDS death rates are down nearly 85 percent from their peak in the early 1990’s. They’re a reason why cancer death rates are down 22 percent from their peak, and the five-year survival rate for people with all cancers has risen to 68 percent. They’re why hepatitis C is now curable in more than 90 percent of treated patients.

Those patients are why we’ll fight to protect the reliability of the patent system.

Patents help provide certainty for private investors, declaring that the intellectual property to which they’ve trusted their investment will be protected fairly and consistently. That the rules of the game will not change once the game is underway. This is particularly critical for the biopharmaceutical industry, since the R&D process demands deep investment over a decade or longer and offers no guarantee of Food & Drug Administration approval or financial return.

Unfortunately, H.R. 9 fails to remedy problems at the Patent and Trademark Office (PTO) relating to a new petition process intended to make it quicker for people to challenge patents at the PTO. Unfortunately, this process is being abused by greedy hedge funds that short sell shares of patent-holding companies on the NYSE or NASDAQ; challenge those companies’ legitimate patents at PTO, sending ripples through the stock market; then aim to profit from any drop in the patent-holding company’s share price.

These abuses could also disrupt the carefully calibrated patent challenge procedures Congress put in place to allow generic and biosimilar pharmaceutical products to come to market. Both the Hatch-Waxman Act and the Biologics Price Competition and Innovation Act (BPCIA) helped ensure development and introduction of new medicines – as well as generics and biosimilars. And they are both working. But the predatory investors abusing these patent processes could upend this well-functioning system, endangering American patients as investors pull back from an unfair, suddenly opaque market and drug development pipelines dry up.