Patent “Reform” Bill Could Harm MI Patients, Economy

By on July 2nd, 2015

Columns
Tom Watkins

By: Tom Watkins

Patent “Reform” Bill Could Harm MI Patients, Economy

July 3, 2015

Researchers in Ann Arbor will soon begin testing a new schizophrenia treatment. That’s great news for the 84,000 Michigan residents who suffer from this disease.
By volunteering to receive this new therapy, people with schizophrenia will join 23,000 of their fellow Michiganders who participate in nearly 1,500 clinical trials statewide.  Such research produces the treatments of tomorrow, improving Michigan’s health and it’s economy.

Clinical trials add half a billion dollars to Michigan’s economic output.  As a whole, the state’s biopharmaceutical industry supports 74,000 jobs and contributes $18 billion to our economy every year.

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But, misguided patent “reform” laws from Washington could undercut medical research that propels this economic growth and deny hope to people suffering with diseases. Congress will soon vote on the Innovation Act, which could weaken the patent system that enables companies to defend their patents and invest in costly and risky medical research.  

Michigan lawmakers must protect patients and ensure a healthy research environment by rejecting this law.
 
Without patents, medical innovation would decrease, leaving patient needs unmet. Drug development is enormously expensive. Bringing a new medicine to market can cost over $ 2 billion.  Patents give biopharmaceutical companies exclusive ownership and marketing rights to the drugs they create, offering them a chance to earn back their expenses.  While a drug is under patent, competitors can’t copy it to sell knockoff versions at a discount. If they attempt to do so, the drug’s inventor can sue them for patent infringement. 

However, a federal patent review board has weakened patent protections.  Created by the 2011 America Invents Act to stop “patent trolls”—shell companies that file junk infringement lawsuits to pry settlement money out of productive businesses—the “Patent Trial and Appeal Board” (e.g. PTAB) was supposed to review the overly broad patents that trolls rely on.  Congress established the PTAB so companies could challenge the validity of potentially weak patents.
 
Instead, the board has struck down many legitimate patents. Because the PTAB evaluates patent validity using lower standards than regular courts, its rulings overwhelmingly favor patent challengers. It has even overturned patents that district courts previously upheld.
 
The PTAB’s unfair procedures may discourage companies from investing in drug research, since the product of that research—a patented drug—can be more easily invalidated. To promote further medical progress, Congress should instruct the PTAB to stop considering challenges on biopharmaceutical patents. 
 
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Rather than protect medical researchers from the threat of the PTAB, Congress’ new Innovation Act would further harm them. The law would require anyone defending a patent against infringement to file massive amounts of paperwork.  It would delay key parts of lawsuits for months, preventing a timely resolution. And, it would force patent holders to disclose sensitive proprietary information. 
 
These measures are purposefully burdensome.  They’re meant to deter trolls by driving up the cost of filing patent lawsuits.  But, the provisions apply to everyone defending a patent—including biopharmaceutical innovators.
 
The added costs and time of complying with these provisions could prevent innovators from defending their designs.  That’s especially true for small companies and universities that have limited funds.
 
The Innovation Act would especially burden research universities, which often license their scientific, patented discoveries to biopharmaceutical companies in exchange for fees and royalties.  Nearly 150 schools nationwide—including Michigan State, Michigan Tech, the University of Michigan, Western Michigan University, and Wayne State University—have signed a letter to Congress explaining that the Innovation Act could weaken their patents and cut off this flow of funding.
 
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Congress should rework the Innovation Act to ensure it only targets patent trolls. Lawmakers should also protect biopharmaceutical patents from the Patent Trial and Appeal Board’s biased reviews.  Until these changes are made, Michigan lawmakers should oppose the Innovation Act. Failure to do so would put Michigan’s economy—and the health of its most vulnerable residents–at risk, as potential new treatments are pulled from the drug development pipeline.

Congress needs to follow the Hippocratic Oath: “First do no harm.”

Tom Watkins is president and CEO of the Detroit Wayne Mental Health Authority (www.dwmha.com). He has served the residents of Michigan as State Superintendent of Schools and state Mental Health Director. He can be emailed at: [email protected], or followed on twitter at:@tdwatkins88

Tom Watkins

Tom Watkins has an eclectic career in both the public and private sectors. He served the citizens of Michigan as state superintendent of schools and director of the department of mental health. He has held leadership positions in higher education, business and behavioral health. Watkins has a interest and passion in all things China and has written hundreds of article on the value of this most important bilateral relationship in the world today.

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