A guest writer in a recent article in the Wall Street Journal repeated the oft quoted Jonas Salk statement about his Polio vaccine: “There is no patent.  Could you patent the sun?”  Many use this statement as the moral impetus for refusing patents on medically important innovations (see Michael Moore’s Capitalism: A Love Story).  Unfortunately, Jonas Salk created a myth that day by leaving out several crucial details.

As pointed out by Robert Cook-Deegan at Duke University, “When Jonas Salk asked rhetorically “Would you patent the sun?” during his famous television interview with Edward R. Murrow, he did not mention that the lawyers from the National Foundation for Infantile Paralysis had looked into patenting the Salk Vaccine and concluded that it could not be patented because of prior art – that it would not be considered a patentable invention by standards of the day. Salk implied that the decision was a moral one, but Jane Smith, in her history of the Salk Vaccine, Patenting the Sun, notes that whether or not Salk himself believed what he said to Murrow, the idea of patenting the vaccine had been directly analyzed and the decision was made not to apply for a patent mainly because it would not result in one. We will never know whether the National Foundation on Infantile Paralysis or the University of Pittsburgh would have patented the vaccine if they could, but the simple moral interpretation often applied to this case is simply wrong.”

While the debate on whether patents are the best way to incentivize medical innovation and commercialization continues, that debate should proceed without reliance on this myth regarding the history of the Polio vaccine.

The story of Acheflan highlights the role of patents in homegrown innovation in developing countries.  Professor Michael Ryan of Georgetown reviewed several case studies (including Acheflan) in Brazil that highlight the differences in biomedical innovation both pre- and post-intellectual property reforms.

In the early 1980’s, Ache Laboratorios Farmaceuticos (a Brazilian generics manufacturer) became aware of a plant that grew near coastal cities that local fishermen would mash into an oil rub to serve as an anti-inflammatory and anti-scarring medicine.  Ache wanted to develop the plant into a product they could bring to the Brazilian and worldwide markets.  Ache realized that to develop the product they would need to isolate the active ingredient and then take it through toxicology studies, animal testing, and human clinical trials to demonstrate the safety and efficacy of the product.  However, Brazilian patent law at the time prohibited patenting of pharmaceutical patents.  While Brazilian patent law allowed for process patents, Ache quickly realized that competitors could easily reverse engineer the product and make their own version.  Ache did not pursue the project.

When Brazil reformed its patent law in 1996 to allow patents on pharmaceutical products, Ache resumed work on the shelved project.  Now they could finally invest in the project with a promise of a return guaranteed by a patent.  Not having the capacity to conduct research, Ache established research partnerships with Brazilian professors.  From 1998-2004, some 100 university agronomists, biochemists, pharmacologists, and medical doctors were involved in taking the product through isolation and toxicology studies.

The company launched the product, Acheflan, in 2005 and the years of hard work paid off.  Acheflan is the first medicine innovated and introduced in the marketplace by Brazilians and within a year the product received a 30 percent share of the anti-inflammatory market.  By the end of 2007, its market share exceeded 40 percent (beating out competitors among established global pharmaceutical companies).  The company is in the process of launching the product worldwide.

While Brazilian patent laws still require much improvement to lay the foundation for its future as a developed country, this case study is one of many suggesting that even incremental positive changes to the IP environment can catalyze commercialization of Brazilian innovation.

The National Institutes of Health (NIH) has developed a new short-term licensing arrangement they hope will encourage licensing of NIH and FDA inventions to start-up companies.  The NIH Start-Up Exclusive License Agreements targets start-up companies less than 5 years old, with less than $5M in raised capital, and fewer thans than 50 employees.  By offering an exclusive license, they hope to accelerate the technology transfer process.  However, this temporary pilot program runs only until September 30, 2012.

The most unique aspect of this program is the one-year exclusive license for $2000 with the option to amend to a permanent exclusive license.  Through the use of this mechanism, the NIH is creating a one year trial period where the parties can come back to the table and reevaluate where they stand before they enter a more standard license agreement that includes milestone payments, performance benchmarks, royalties, etc.

We will soon see whether this program garners enough interest in a tough economy to be effective.

A recent study presented at the Patent Statistics for Decision Makers Conference organized at the United States Patent Office questions the logic behind a nonexclusive license preference often found in U.S. government technology transfer policy.

In “The Role of Exclusive Licensing in Follow-on Research of Academic Patented Inventions” presentation the authors demonstrate that, contrary to the belief by some, exclusive licensing does not impede future research.

The authors ask two questions.  First, does exclusive licensing affect licensee follow-on research?  Second, does exclusive licensing affect non-licensee follow-on research?  The first question addresses the concern that a company will take a license of a university invention and not develop it.  The second question addresses the concern that follow-on research will not occur without the license thereby limiting the amount of knowledge available.  And the results…

With respect to the first question, the researchers find that exclusive licensee patent citations increase significantly after exclusive licensing.  In other words, the company or entity that receives the exclusive license continues to research and invent as evidenced by the numerous patents that follow based on the licensed technology.

With respect to the second question, the authors find that non-licensee citations increase significantly after exclusive licensing.  In other words, even the people/companies that have no license to the technology continue to research and invent as evidenced by their numerous patents that follow based on the licensed technology.

Maybe it is time to rethink the rationale behind a government lab preference for non-exclusive licenses.

BIO filed an amicus brief in the Prometheus v. Mayo Clinic case.  In this case the Supreme Court is being asked to decide whether diagnostic and personalized medicine claims that depend on a correlation of observed phenomena should be excluded from the patent system at the outset, as patent-ineligible abstract ideas or “laws of nature.”

BIO’s brief argues that these judicially-created exclusions from patent-eligibility have traditionally been used only under narrow circumstances, and that their expansion to biomarker-assisted therapeutic methods is unwarranted, legally unsound, and fraught with serious unforeseen consequences on investment and R&D incentives in the field of personalized medicine.

Read the full amicus brief

The BIO Intellectual Property Counsels Committee Fall Conference featured an update on the implementation of the Leahy-Smith America Invents Act by Janet Gongola, Associate Solicitor of the U.S. Patent and Trademark Office (PTO).

Some provisions of the Leahy-Smith America Invents Act took effect immediately when it was signed into law in September. Ms. Gongola reported that of the 20 provisions that must be implemented by the PTO, eight have been implemented and another ten are in final review and will be posted in the Federal Register in mid- to late-January for a 60-day notice and comment period.

The law required the PTO to undertake seven studies, two of which have begun. The PTO recently held public hearings on prior user rights and international patent protection and is accepting comments on both topics until mid-November. BIO provided testimony on the importance of international patent protection for small businesses.

Ms. Gongola encouraged the audience to submit comments throughout the process as the PTO is eager for feedback from the users of the patent system.

The PTO has an online guide to the Leahy-Smith America Invents Act where you can subscribe to alerts, listen to archived webcasts of public hearings, and view a timeline of implementation highlights.

As part of the implementation of the Leahy-Smith America Invents Act, the U.S. Patent and Trademark Office (PTO) recently held two public hearing on international patent protection.  Stanley C. Erck, President and CEO of Novavax, Inc., testified on behalf of BIO in support of an initiative to reduce filing and prosecution costs for international patent protection of biotech inventions.

Stanley C. Erck, President and CEO of Novavax, Inc.

In his testimony, Mr. Erck explained the important role patents play in the biotechnology industry. The vast majority of BIO members do not yet have a product on the market and must raise the funds necessary to finance the long and expensive process to bring a new vaccine or therapy to market (an average of $1.2 billion over ten years, according to the Tufts Center for the Study of Drug Development).   Intellectual property, in the form of U.S. and international patents, is often the main assets of these small biotech companies.

The importance of international intellectual property protection has increased as biotech companies seek to expand the markets for their products.   Small biotechnology companies face unique challenges in securing international IP protection as biotechnology patent prosecution in foreign jurisdictions can be more expensive and complicated and subject to greater non-uniformity of the law than many other technologies.  The scope of patent claims and what is allowed can differ significantly from country to country, which further complicates and increases the cost of international patent filing for biotech inventions.  Without procedural or substantive harmonization, these problems are likely to increase costs for small biotechnology companies.

“For our small biotechnology businesses, securing IP protection can be as important as obtaining laboratory equipment, leasing space, or hiring creative, dedicated employees.  There is no reason, therefore, to exclude efforts to secure patent rights from publicly funded small business assistance programs that are available for more tangible assets such as capital equipment, hiring, or leasing space,” Mr. Erck testified.  “Securing international patent rights, a necessary protection for even the smallest biotech companies, can be an expensive proposition, so permitting public assistance programs to defray such expenses would give these companies greater flexibility to focus resources on important development efforts.”

BIO has urged the U.S. PTO to consider ways it can help small biotechnology companies file and prosecute patents internationally more efficiently, so that these companies can dedicate more resources to research, job creation, and product commercialization for the benefit of patients, farmers and other consumers.

A webcast of the hearing is available on the PTO website.

It’s tough presenting programs on technology transfer because so much has already been said that it’s hard to find something new. However, that was not a problem this week in San Francisco at the BIO Technology Transfer Symposium.

The Symposium began with an overview of the efforts by the Obama Administration to spur innovation including funding macro and micro grants to encourage the development of regional technology clusters, and proof of concept centers to help bridge the “valley of death” between early stage research and the point where private capital will pick up development.   However, a wise caution was added that the US must avoid federal micromanagement of innovation, which is deadly to entrepreneurs. The participants agreed that “valley of death” issues are intricately linked with the prospect of marketing approval and commercialization of a potential product, which are in turn linked with job creation and economic growth.

A key discussion addressed “Enhancing America’s Competitive Edge.”  The US originated 62% of the top 50 drugs on the market, and between 2001- 2010 fostered 57% of new chemical entities.  However, participants agreed that there is room for improvement in the R&D and collaborative process given the increased need for innovative products. Suggested areas for improvement included better and more predictable animal and disease models, a more streamlined and less burdensome federal regulatory system, and ways to ease commercial pressure that often forces companies to terminate projects earlier in the pipeline.  The participants agreed that these factors, if addressed, would not only bring venture funding back into biotech, but would also encourage global uptake of biotechnology products, to the benefit of patients, farmers and other consumers.

The Symposium touched on the fact that even new drugs are viewed  as “costly innovation ”– despite evidence that such drugs actually save as much as seven times in non-drug expenditures otherwise used to treat patients.  It was suggested that one way to address this concern may be to involve patient groups in the review process as the interests of those with the most as stake—the patients—are commonly absent.  Given that the thrust of the current system is to “do no harm”, regulators tend to shy away from risk taking.  A representative from the patient community indicated that perhaps a better motto is “do some good” focusing on the need to relieve human misery in addition to insuring drug safety and efficacy. The efforts of AIDs activists in the 1980s which compelled the U.S. Food & Drug Administration to speed review times were cited as a model for how this can work.

In a lively discussion of efforts to improve the commercialization of university research, participants suggested that universities could shift the focus from  licensing income to the positive impact the discovery could have on society.  With 49 of the 50 states[i] encouraging the development of a biotech industry, moving research to the marketplace appears to be a key part of the economic development strategy for not only the national government, but also at the state and local level.

The Symposium wrapped up by stressing the need for increased collaborations between all stakeholders and for creative approaches in the biotech ecosystem. Participants agreed that while there is room for improvements, in particular to the regulatory review process, the licensing of inventions through university tech transfer offices in general works well. In fact, a proposal in the recently-issued report of the Jobs Council to President Obama which called for a “free agent” inventor system was quickly dismissed as being of little interest to the Administration by Paul Corson, Acting Director of the Office of Innovation and Entrepreneurship of the U.S. Department of Commerce.

A great article in the Economist titled European science stemmed addresses the recent and controversial decision by the European Court of Justice regarding the patentability of certain inventions derived from embryonic stem cells.

ANY country, you might think, would relish being able to call itself the world’s leader in scientific research. America and Europe, however, seem to be in a bizarre parallel contest: which can make its scientists’ lives more difficult by imposing the most muddled rules. This week the European Union edged ahead. On October 18th the European Court of Justice (ECJ), the highest court which opines on EU-wide matters, ruled that methods to derive embryonic stem cells could not be patented. The ruling sets Europe apart from the rest of the world—even America, long averse to stem-cell research, has no such qualms.

The ruling has sparked immediate uproar among academics. The decision, they warn, will not just undermine basic research. It will prompt companies to funnel cash to more welcoming jurisdictions, such as South Korea, Singapore or China, or deter them from investing in the field altogether.

Earlier this week, Joseph Damond joined BIO as Senior Vice President of International Affairs.  He brings extensive experience in international affairs, trade and economics, most recently serving as Vice President of International Government Relations at Pfizer, Inc.  He previously served as Deputy Vice President for International Affairs at PhRMA and as the Deputy Assistant for the Asia-Pacific region in the Office of the U.S. Trade Representative.

Joe will spearhead BIO’s international trade policy and help lead the organization’s advocacy efforts for global market access, intellectual property and regulatory issues.  Over the past few years, BIO has significantly expanded its international portfolio, launching partnering meetings in China and India and increasing its advocacy efforts on global policy issues critical to the industry.

One of Joe’s first actions was to issue a statement in support of the enactment of the Korea-U.S. Free Trade Agreement (KORUS):

“America’s biotechnology industry benefits from trade agreements such as the KORUS FTA, which contains strong intellectual property provisions and sections which level the playing field in Korea for American companies that are developing new treatments and cures for disease as well as other innovative biotechnology products. The U.S. biotechnology industry is one of our most dynamic and globally competitive sectors but can face obstacles in foreign markets.  Agreements such as the KORUS FTA help to eliminate those obstacles and allow the industry to remain competitive globally.   We support prompt consideration and enactment of this agreement by Congress followed by rapid implementation of its provisions by Korea so that our companies can expand access to innovative therapies and other biotech products abroad while increasing the number of high-wage, high-skill jobs in the U.S.”