American Healthcare: The Challenge to Stay on Top

The Healthcare Leadership Council hosted a webinar which highlighted the relationship between intellectual property (IP) and innovation, a linkage that is critically important in healthcare. The panel was comprised of:

• Joe Allen, Executive Director of the Bayh-Dole Coalition
• Eric Aaronson, Pfizer’s Chief Counsel for Corporate Affairs, Intellectual Property and Intellectual Property Enforcement Departments
• Catherine Burch, Vice President of Innovation at ChristianaCare Health System
• Paul Higgins, Vice President of Law, Head of Global IP Policy at Johnson & Johnson

The webinar was an open discussion covering the history and role of IP laws, as well as the importance of partnerships and collaboration in achieving new discoveries. It was acknowledged that not all that long ago the United States not the world’s global leader in life sciences, as it is today. The Bayh-Dole Act, enacted in 1980, decentralized technology from Washington bureaucracy and allowed the people creating biopharmaceutical and medical technology innovations to own and manage them, integrating incentives into the patent-and-licensing process and jumpstarting a renaissance in healthcare innovation.

The panelists agreed that the IP system encouraged investment in risk. A robust IP system provides two key benefits: (1) the assurance of intellectual property rights that are protected from bad actors who would diminish their value, and  (2) the creation of mechanism to transfer knowledge to those who can commercialize it for the greater public good. It enables collaboration between innovators, governments, universities, research partners, all of which are focused on exchanging information to speed up progress to finding solutions. Innovation is iterative and enables scientists to build off the discovery of others. Collaborations are key because it they enable to essential distribution of risk. It can require 10-15 years to develop a drug, cost upwards of $2.6 billion on average, and only about 10 percent of drugs evaluated in Phase 1 clinical trials are ever approved. Entities will not take on this level of risk without strong IP protections.

The pro-competitive nature of IP was also emphasized. Given that a drug or medicine may not be best option for every patient, having multiple solutions is important. Once the exclusivity period expires for a drug, it facilitates low-cost generic entry. There are those who like to pit the innovator versus generics, but it is really two sides of the same coin. To encourage new generics getting to market there must be support for strong IP systems, because the generic pipeline is the innovator pipeline.

The concept of march-in rights, a provision in the Bayh-Dole Act was also discussed. It was inserted to ensure that inventions didn’t sit dormant and were licensed to serve the public good; otherwise the government could “march in” and license them to entities who would move forward with production. Recently, there has been a push to use march-in rights to force price reductions for pharmaceuticals by shifting licensing from the current manufacturer to a company that could presumably make the drug cheaper. All petitions using this theory have been rejected by multiple administrations, because it is not what the Bayh-Dole authors intended. This would create a slippery slope in which holders of any intellectual property for which government funding played a role at some point in the process could have their license taken away. This would destabilize a system that has made the U.S. the technological innovation center of the world by discouraging investment in research and development.

Given the level of exchange of technologies that are required for the fast-paced collaboration and eventual production of the COVID-19 vaccine, none of the current vaccines would have occurred without an IP system that supported incentives and created an environment where information could be exchanged so that the iterative scientific process of discovery could work to the benefit everyone. Not only the discovery, but scaling the supply once a drug is approved requires researching manufacturing sites globally to find partners that are able to produce safe and effective vaccines to meet global demands. Every one of those partnerships rely on a sound and robust IP system.