Patents – They Are Important Now More Than Ever
As I look back at our country’s infancy, I’m amazed at how smart those early leaders were. They realized how important some basic rights and governing organizations were to the growing colonies and then to our young country. They quickly established the rule of law that allowed us to feel safe both physically and financially. Benjamin Franklin understood the importance of a secure method of communication by establishing the post office even before the Declaration of Independence was signed. The early leaders recognized how important patents were and wrote it into the Constitution. Just two years after the Constitution was ratified our leaders implemented Article I, Section 8, Clause 8 of the U.S. Constitution, the Intellectual Property (IP) Clause. They knew the value of ideas and how important they were to the growth of our country. They understood that the freedoms granted to the people allowed anyone to have an idea and established rules that protected the creator’s rights to their inventions and writings for a limited time.
Patents have been a big part of the growth and prosperity of our country.
I think that the desire to invest time and resources into inventions, innovations, and discoveries, is based on the knowledge that a person, or organization, will be rewarded for their risk. I also believe it is a big reason why America has become a leader in discoveries, especially in medicines. While I have often been critical of our short-sighted lawmakers, there have been two laws that they passed that I think were forward thinking and were key to the U.S. becoming the center of innovation for pharmaceuticals. They are the Bayh-Dole Act and the Hatch-Waxman Act. I wrote earlier about IP and these two laws in this blog. Bayh-Dole established a way for academic and government funded research to be passed on to commercial entities so the discovery could be finalized, tested, approved, and manufactured. Hatch-Waxman set the period of exclusivity and established an efficient pathway for generics to be introduced resulting in 90% of the prescription drugs we take today being generics. Our lawmakers did a good job with these two acts.
Our early leaders did a great job in recognizing how important patents are. Our lawmakers, way back in the early 1980s, did a great job in passing laws that encouraged innovation and paved a way for new drugs to become quickly accessible to patients. We historically have done a good job in encouraging innovation. Unfortunately, it seems that lately many lawmakers have been focused on slowing down this efficient environment.
I’ve written more than 25 blogs on the threat to innovation contained in the Inflation Reduction Act (just search on IRA at our website) where I outlined what parts are detrimental to getting new prescription drugs to patients. I’m not sure the new administration is going to quickly take my advice and your encouragement and fix these problems but there is one area where I have hope. It’s what is called the “pill penalty”. I wrote recently about this penalty in this blog but I want to give you a little more information about why fixing this problem is important and why now is the time to take action.
In short, the “pill penalty” contained in the IRA gives nine years of patent protection for small molecule medicines, which are almost always the pills that we take orally. This is opposed to the 13 years of protection granted for large molecule drugs (biologics), which are most often infused at a doctor’s office or hospital. It seems lawmakers are trying to encourage more competition in these biologics and penalizing the pills that we are used to taking. Maybe it was the mistaken assumption that the biologics will be where the new discoveries will be, and the penalty wouldn’t hurt investment. Let me squash that error in judgment.
According to a paper written by Kristopher J. Hult titled “Incremental Innovation and Pharmaceutical Productivity”, incremental innovation—new drugs created by modifying existing FDA-approved molecules—accounts for 49% of the health impact of new innovations while new discoveries productivity stayed neutral. Lawmakers have previously recognized the worth of encouraging follow-on research. The Best Pharmaceuticals for Children Act (BPCA) allowed 6 months of extended exclusivity for drugs that were initially approved for adults but were studied and tested for children as a follow-on discovery. How come Washington decided to do an about face? Wall Street recognizes that there has already been changes in the investment in small molecule drugs. According to Incubate Coalition:
A recent Incubate survey found that 87% of investors are less interested in funding small molecule research because of the IRA's pill penalty. Investment in small-molecule treatments has dropped a staggering 70% since lawmakers first considered the pill penalty.
Since the IRA was passed into law, biotech companies have been forced to cut 40 research programs and discontinue 22 drugs, according to Incubate's Life Sciences Investment Tracker.
It seems there are multiple voices from all directions that think this particular part of the IRA is a bad idea. The good news is that a bi-partisan group of lawmakers also think this is something that ought to be fixed. They have put together a non-partisan bill that would fix the “pill penalty”, it is the Ensuring Pathways to Innovative Cures (EPIC) Act. This Act extends the small molecule exclusivity to 13 years, matching that of biologics. The even better news is there’s some movement toward including the EPIC Act in some part of the upcoming budget legislation. Let’s make our voices heard and tell our lawmakers we want to correct this error and get the benefits of the follow-on discoveries in small molecule medicines.
Contact your Senators and Representative and tell them that future life-altering and lifesaving medications are important to you, your children, and your grandchildren, and they need to vote for the EPIC Act. Click here to see how to contact your lawmakers. Now’s the time to Speak Out, you really can make a difference.
Best, Thair