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Biotech experts urge industry to work with researchers or risk federal action

Public release date: 14-Oct-2008

WASHINGTON, DC—(14 October 2008) – The intellectual property (IP) system in the United States is broken and must be transformed if it is to foster biotechnological advances and ensure that treatments and cures for diseases reach patients, national and international IP and biotech leaders said today.

At a briefing on Capitol Hill, McGill University’s Richard Gold, SJD, and Duke University’s Robert Cook-Deegan, MD, revealed the results of a case study that documents for the first time mistakes made by a US company in protecting and enforcing patent rights on breast cancer genes in the United States and abroad. And contrary to what industry has argued, they said, Myriad Genetics’ “hardball” tactics are the norm in the biotech and pharmaceutical industry.

“Our findings suggest that patent holders are not doing a good job of sharing information and biotechnological tools to foster innovation and access to vital genetic data,” said Cook-Deegan, “and government must be prepared to intervene when they do not.”

The conclusions presented by Gold and Cook-Deegan today are echoed in a new groundbreaking report – Toward a New Era of Intellectual Property: From Confrontation to Negotiation – from the International Expert Group on Biotechnology, Innovation and Intellectual Property, chaired by Gold, and in a series of new case studies prepared by the Expert Group and by Duke University, chronicling the development and commercialization of several genetic diagnostic tests.

The authors of the report say that the pharmaceutical and biotechnology industries’ heavy reliance on patents and aggressive enforcement of IP—the era of “Old IP”—are creating an environment of intimidation that prevents scientists from using tools that are vital to innovation, while blocking access to diagnostic tests that may have important implications for science and for public health.

Based on consultations with more than 100 researchers and other representatives of industry, government, academic research centers and non-governmental organizations, and more than 10 years of data from 17 countries, the Montreal-based International Expert Group found “there is universal acknowledgment that the biopharmaceutical innovation system is broken,” Gold said.

“As a result, the biopharmaceutical industry has fewer and fewer products in their pipelines,” he added, “and more and more of those products are ‘me-too’ drugs, which target diseases for which treatments have already been developed.”

According to Gold and Cook-Deegan, if patent holders don’t change their behavior and government agencies don’t act, pressure will grow on legislators to intervene.

“The solution in the United States is not to prevent patenting activity, but for government to make clear it will step in and exercise rights it has already,” said Cook-Deegan, director of the Center for Genome Ethics, Law & Policy at the Duke Institute for Genome Sciences & Policy. He notes that under the 1980 Bayh-Dole Act, universities, small businesses and non-profits are allowed to control their inventions and other IP that results from federal funding. But the government retains the right to “march-in,” or intervene on behalf of the public and grant additional licenses, if it sees the need.

“The fact is, in the 28 years since the Bayh-Dole Act was enacted, the government has never asserted its right to ‘march-in,’ whether for health or safety reasons, or to push for action to achieve practical application of a given invention,” said Cook-Deegan. “And industry knows that.”

When Aggressive Tactics Backfire

Cook-Deegan and Gold point to the case studies discussed in Washington today as illustrations of the fundamental problems of “Old IP.” In Myriad Genetics: In the Eye of the Policy Storm, they follow the story of Utah-based company, Myriad Genetics, and document mistakes the company made in protecting and enforcing patent rights on breast cancer genes in the United States and abroad.

“The mistakes in the Myriad case were not illegal actions, but political and strategic errors,” said McGill’s Gold. “In the United States this meant the company failed to reassure those conducting research on breast cancer that they would not be sued. Internationally, in nations with public health care systems, Myriad’s hardball tactics led to resistance from governments and in most places prevented Myriad from being able to license its diagnostic tests.”

Instead of securing international markets, he added, aggressive tactics undermined Myriad’s interests—not only for the breast cancer test, but for future products the company might want to market abroad.

And contrary to what industry says, according to the new research discussed today, the Myriad model of fiercely protecting patents is being replicated throughout the biotech and pharmaceutical industry. Cook-Deegan presented preliminary observations based on studies in progress about the behavior of a number of companies and institutions with patents on genes and diagnostic tests. He observed that companies are ignoring at their peril the lessons of Myriad and of the other examples cited in the International Expert Group’s report.

“Some of the same tactics that damaged Myriad’s reputation and harmed its business interests are being repeated by other companies, which are aggressively enforcing patents against university laboratory testing services,” Cook-Deegan said. “Such actions are affecting genetic testing for several diseases, including Alzheimer’s disease and Long QT syndrome, a condition that can make carriers extremely vulnerable to sudden cardiac death.”

Based on their research, Gold and Cook-Deegan conclude that such actions are decreasing the size of potential markets and alienating the payers that reimburse for testing, as well as the physicians who order tests and the consumers who seek them.

“In the end, the companies are undermining their long-term viability,” said Cook-Deegan. “Rather than treating their patents as clubs, the companies should use them as tools to foster collaboration with other companies, physicians, disease-group constituencies, reference laboratories, universities and academic researchers, as well as attending to the needs and expectations of purchasers of health care services both in the United States and around the world.”

‘Don’t Mess with Natural Allies’

Cook-Deegan notes that patents alone are not enough to guarantee the success of a patent holder. At least as important, he said, are the reimbursement policies of payers such as Medicare and Medicaid, the behavior of physician specialists who order genetic tests, collaborations with academic researchers and the support of advocacy groups.

“One lesson emerging from the case studies is that patents are important, but they are not enough to ensure financial success,” said Cook-Deegan. “Indeed, if patents tempt companies to overplay their hand, they can damage their own long term business interests. The warning to industry is, ‘Do not mess with your natural allies.'”

And patients, physicians, and payers are likely to push for access to the results of diagnostic tests, and greater and more flexible licensing of patents, Gold said. The report he and his team produced, drawing on the work of an extensive team of contributors, concludes that innovation occurs best when all parties – researchers, companies, NGOs, and governments – work collaboratively. They point to information technology as a model for how a new system might be designed.

“This doesn’t mean we don’t need a system for protecting intellectual knowledge,” Gold said. “But we need a system that is flexible enough to allow research to encourage innovation and benefit those who need it most.

“If companies adapt to the needs of consumers and payers through more open and flexible licensing, the biotechnology industry will thrive. Look at the way that change has swept through the world of information technology and brought benefits to millions, merely by engaging in broad and transparent licensing that results in a great deal of creativity and new products that address existing problems.”

Other recommendations from the International Expert Group report for national and international IP systems include:

Fostering greater trust between actors: A lack of trust has blocked collaborations to deliver lifesaving technologies, such as diagnostic tests, and has led to ineffective legislative reform. Independent trust builders who educate and encourage dialogue between industry, government, researchers and non-governmental organizations are essential.

Creating better ways to develop and deliver biotechnology products: This will require governments, researchers, industry and NGOs to collaborate through partnerships designed to:

encourage the sharing of molecular libraries and basic environmental technologies;

allow for exchanges of data, materials, and patents;

overcome concerns about high risk through joint public and private funding of promising avenues of research;

create patent pools to unblock the development, production and sale of medicines and technologies that the developing world needs to have a sustainable and secure economy.

Promoting more transparency and communication: Because the stakes are so high, the level of conversation about IP and science and technology policy must be raised and objectives and motives clearly stated.

Improving how data are collected and measured: Right now, the United States measures the wrong things about IP, particularly at public institutions and universities. The U.S. needs to figure out what it wants from innovation and how to measure it. New computer tools and digital information, much of it available on-line, will allow policy makers to explore a variety of factors in deciding how to proceed in patenting—or not—a piece of federally-funded research.

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