What’s IP and Why Is It Important?
IP stands for intellectual property and this is national IP month, which is probably the least understood, least celebrated national month event of the year . . . yet it has had a huge effect on all of our lives from the very beginning of our country’s history. Intellectual property assigns ownership to an idea, an invention, even an improvement, which guarantees that the owner will receive any financial benefits that come from their idea or invention. This concept is enforced through patent protection and is key in fueling innovation. Many think it was one of the reasons that our country prospered since its birth 250 years ago. James Madison was the one most responsible for proposing that patent protection be included in the constitution to encourage “useful knowledge and discoveries.” It certainly did that - fueling the growth and our nation’s success.
As it is with any good idea, this concept of protecting IP is fraught with those who want to steal the idea and gain the financial benefits. I remember when I was young that “bootleg” VHS tapes of movies were sold at a fraction of their true value since they were just copies of the originals without the cost of the required royalties. This went on to include DVDs - and even more egregious was the pirating of software. I had just begun my journey into the software development profession, and I knew what it took to create new software and the impact it could have on the expected financial return if someone could just steal it and flood the market with pirated copies. Microsoft fought this problem as they released the next generation of their software. While they weren’t the only culprit, China was possibly the biggest source of pirated IP. China’s lack of IP enforcement, its massive exportation capability, and its goal to become a major player in the worldwide marketplace, fueled its growth in this illegal business.
Over the years the value of intellectual property has increased, with prescription drug development leading the way. While there is still the threat of someone stealing the research behind a new medicine, the real long-term value - both monetary and in lifesaving benefits - is investing the resources to be the first to make these discoveries. Our lawmakers clearly saw this value when they passed the Bayh-Dole Act in 1980. This legislation laid the groundwork and created an environment that encouraged the innovation necessary to discover new medicines. The act protected the innovator’s intellectual property and ensured that the investors were rewarded for the costs required to make those discoveries. The threat we face now is less about who might steal the IP, but who might create an environment where these discoveries and their resulting IP are created by someone else. Our access and even our security are threatened if this happens.
Lawmakers were wise in creating the environment for innovation in 1980, yet now it seems that our government is passing laws, instituting regulations, and issuing executive orders aimed at reducing drug prices but in reality, threaten to chill innovation. Whether it’s fixing the price of drugs in the Inflation Reduction Act, tying drug prices to those in other countries using the Most Favored Nation criteria, or assigning tariffs on drug raw materials and foreign manufacturing, the outcome often does nothing to save out-of-pocket costs for you and me - instead it causes uncertainty for those who would invest in drug R&D. Some may think these are baseless assumptions but there is a real-world example that supports this argument.
An open letter authored by the Chairs of AstraZeneca, Boehringer Ingelheim, Chiesi Group, Ipsen, GSK, Novo, Novartis, Roche, and Sanofi, raised a warning to Europe’s pharmaceutical industry. They detailed that “In 1990, Europe accounted for 43% of global pharmaceutical R&D. Today, it is 31% and falling. Europe's share of commercial clinical trials, which provide vital revenue for public hospitals and improve patient outcomes, has halved in a decade to 9%. China has overtaken Europe in clinical trials, pharmaceutical patents, and the development of new medicines”. They said that this decline was “the result of decades in which Europe treated medicines as a cost to suppress rather than one of the best investments a government can make.” They further pointed out that, “For patients, the consequences are clear: around 40% of newly approved therapies never reach European patients. Among those that do, patients wait nearly 600 days for treatment. Cancer survival in Europe trails the US. Too many patients are diagnosed late or treated with medicines that fall short of the standard recommended by medical guidelines”. This is what happens when the focus changes from innovation to cost suppression.
Our lawmakers should pay attention to this real-world example. We seem to be headed down this same path. The innovation required to create this very valuable intellectual property needs a fertile environment with a long-range commitment to encouraging investment in pharmaceutical R&D. We can’t afford to risk delaying our access to these life-saving medicines. We can’t leave ourselves open to the security risk of unfriendly countries controlling critical treatments. We had forward thinking lawmakers in 1980 that recognized the value of innovation and its resulting intellectual property. We need to return to focusing on the long term and once again see the true importance of increasing the conditions that support the development of new medicines.
Best, Thair