Looking Beyond the Patent Cliff - Pharmaceutical Executive


Looking Beyond the Patent Cliff

Pharmaceutical Executive

Pharm Exec: Another issue is how scientific advances have opened up new therapeutic pathways and modes of delivery that expand the commercial opportunities for industry. How does IP relate to these emerging areas of engagement?

Waldron: We are a knowledge industry, where in addition to developing and delivering medicines we share with customers the vast stock of expertise and capabilities that go with it. Patents allow us to push this parameter hard and venture into new areas like companion diagnostics or gene sequencing that expand the research community's overall awareness of disease states. Current case law is a bit muddled on what can be patented in these new areas, particularly gene sequencing and follow-on uses. It is in the interest of society to clarify the terms so that all parties—including the academic research institutions—have the incentives to keep moving the science forward. Academia is increasingly important to industry, for a simple reason: Universities are very good at explaining to us what these complex new tools mean for drug development and identifying useful pathways to commercialization. The odds are that if you multiply these collaborations you will have a better hit rate than by acting alone. You need to have more people with means and resources working on these disease challenges, not less.

Pharm Exec: The past few years have seen an increase in the regulatory and compliance burden on industry, driven largely by risk-averse government agencies. Don't patents contribute to the burden by raising the bar on entry to the business?

Waldron: We are a highly regulated industry—for reasons that are pretty clear. Regulators should continue to challenge us so that we retain our contract with society and thus our license to operate. It is important to remember that a patent is itself a form of disclosure that expands the knowledge base. By distributing know-how more broadly and establishing a temporary financial incentive through market exclusivity for follow-on improvements, it leads to the development of better products that surpass the requirements of the regulator and fulfill real medical needs. Of course, regulation needs to be done right so that it helps move promising ideas forward rather than inhibiting them.

Pharm Exec: What are the best new messages that the industry should employ in defense of a strong patent system?

Waldron: New messaging is important, but the old arguments still count. Policy makers continue to confuse patents with monopoly, a premise we must refute because it carries the assumption that if you weaken IP, more people will be able to initiate new projects. The monopoly thesis also provides a rationale for those, like some regulators, who believe that patents restrict competition. In both cases, the reality is the opposite. Money follows incentive, and without incentive you will have more rent-seeking activity rather than the long-term investments required to commercialize something as risky and complex as a new drug. One new approach is to align ourselves with the interests of a key business constituency in emerging and developing countries: the small and medium sized enterprise (SME). SMEs, not the multinationals, are the backbone of local industry. Patents provide the stability that leads to compound growth rates and the competitive scale required for SMEs to become global players.

Pharm Exec: So is this new approach actually one of leading by example and precedent instead of trying to educate people around technical elements of the function?

Waldron: Exactly. Industry can only prove the merits of the case with real-life evidence. We should not be afraid of anecdotes and testimonials, as building new constituencies to support a strong IP system is fundamental; for a message to resonate, you must begin with an audience that shares an interest in the topic. For example, the university community is a key ally in promoting IP because of the income-generating potential from patenting new medical technologies. New York University holds more than 500 patents, and 60 percent of these have been licensed to the private sector for commercialization.


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