America’s Patients Benefit From Strong Patents

Congress continues wrestling with legislation intended to stop abusive practices by so-called patent trolls – those financial mischief-makers who abuse loopholes in patent law to get rich at the detriment of scientific progress.

It’s critical that Congress get this legislation right. And America’s biopharmaceutical industry is committed to working with Congress and others to help make that happen quickly and fairly.

This kind of collaboration is critical on issues of such national importance; indeed, our industry depends on it. Because patents are our industry’s fundamental lifeblood, our reliance on them is unique compared to other industries. Strong patents are a reason why U.S. HIV/AIDS death rates are down nearly 85 percent from their peak in the early 1990’s. They’re a reason why cancer death rates are down 22 percent from their peak, and the five-year survival rate for people with all cancers has risen to 68 percent. They’re why hepatitis C is now curable in more than 90 percent of treated patients.

Those patients are why we’ll fight to protect the reliability of the patent system.

Patents help provide certainty for private investors, declaring that the intellectual property to which they’ve trusted their investment will be protected fairly and consistently. That the rules of the game will not change once the game is underway. This is particularly critical for the biopharmaceutical industry, since the R&D process demands deep investment over a decade or longer and offers no guarantee of Food & Drug Administration approval or financial return.

Unfortunately, H.R. 9 fails to remedy problems at the Patent and Trademark Office (PTO) relating to a new petition process intended to make it quicker for people to challenge patents at the PTO. Unfortunately, this process is being abused by greedy hedge funds that short sell shares of patent-holding companies on the NYSE or NASDAQ; challenge those companies’ legitimate patents at PTO, sending ripples through the stock market; then aim to profit from any drop in the patent-holding company’s share price.

These abuses could also disrupt the carefully calibrated patent challenge procedures Congress put in place to allow generic and biosimilar pharmaceutical products to come to market.  Both the Hatch-Waxman Act and the Biologics Price Competition and Innovation Act (BPCIA) helped ensure development and introduction of new medicines – as well as generics and biosimilars. And they are both working. But the predatory investors abusing these patent processes could upend this well-functioning system, endangering American patients as investors pull back from an unfair, suddenly opaque market and drug development pipelines dry up.

Again: if the rules of the game can be changed once the game’s underway, who would possibly join in? No prudent American investor would.

Congress can solve these nagging problems by exempting certain patents from the review process covering approved biopharmaceutical products – products that are already subject to unique and specialized patent challenge procedures under the Hatch-Waxman Act and the BPCIA. And contrary to some pundits’ beliefs, these changes would have no effect on the high technology sector.

Our industry remains open and engaged on the subject of broad patent reform. In the meantime, we will continue working with Congress and other parties interested in getting the existing legislation right for America’s patients. They deserve nothing less.

John Castellani is president and CEO of PhRMA.

John Castellani

John J. Castellani is President and Chief Executive Officer of the Pharmaceutical Research and Manufacturers of America (PhRMA), an organization that represents America’s leading biopharmaceutical research companies. The biopharmaceutical sector directly employs over 810,000 Americans working to develop new medicines that help patients fight disease and live longer, healthier lives. Working at the intersection of public policy, health and business, Mr. Castellani leads PhRMA’s efforts to preserve and strengthen a healthcare and economic environment that fosters medical innovation, new drug discovery and access to life-saving medicines. He is a passionate advocate for a strong, innovative and growing American biopharmaceutical research industry that plays a critical role in helping to improve the health of patients in the U.S. and around the world.

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