I was honored that the Wall Street Journal asked me last month to participate in an in-print debate regarding whether pharmaceutical patents should get a longer life.
My contribution was limited to 1,000 words, so there was much I could not say. Of this, probably the most interesting material involved each side answering questions taken from the other contributor's essay. What follows are the questions that were posed to me, and my response.
Q: There is no reason to expect that extending patent protection would encourage innovation, because patent duration and scope have increased since the 1980s but the number of new drugs reaching the U.S. market has dropped over that period of time, with few of the new drugs, at least since 1996, offering a clear therapeutic advantage. How do you explain this decline in new drugs coming to market despite an increase in patent protection, and why doesn't that suggest that extending patent protection now would do little good?
A: I completely disagree with the premise. In fact, one could argue that the time period in question is among the most innovative ever, addressing a considerable number of unmet medical needs. Some of the areas where innovative drugs introduced during this time include: Infectious diseases (virtually all the HIV drugs and Zyvox, the only first-in-class antibiotic discovered in the past 35 years); Vaccines (RotaTeq and Rotarix for rotarirus prevention, Gardasil for prevention of HPV infection and cervical cancer); Autoimmune diseases (Enbrel for rheumatoid arthritis and several drugs for multiple sclerosis); Lipid disorders (Lipitor, Crestor); Asthma (Advair and Singulair); and Cancer (Gleevec, Rituxin, Herceptin, Avastin). There are many others.
Furthermore, the clinical burdens placed on companies today are very different than those 15 years ago, making developing a new drug riskier. Trials require many more patients, and take more time and capital. In today's regulatory climate, the development of some of the above medicines would probably have been discontinued due to economic considerations. For drugs that are now in development, it will be even worse. Their fates are too often decided by remaining patent life. With longer development times on the way, we will see fewer new drugs if patent life remains static. Increased patent life can only promote more innovation, not less. This is self-evident.
Innovation primarily originates in academic research labs and research institutes, and that pharmaceutical companies focus on producing drugs with the greatest market potential rather than taking the risk of spending money on innovations that address urgent medical needs--so extending patent protection would protect drug companies' profits from drugs that largely tweak existing treatments, but would do little to spur innovation. It suggests that a better spur to innovation would be for the FDA to request that new drugs show a therapeutic benefit over existing treatments before giving market approval. How do you respond?
This is a common fallacy that is often repeated, but still wrong. About 90-95% of drugs come from industry. Academic groups are very good at studying the basic biology of a disease, enabling screens to be set up and new compounds tested. While important, this is only the very beginning of a long, difficult process. Some programs begin by screening one million compounds. Drug companies have large collections of compounds. Academic labs do not. But even when a good screening lead is discovered, the chances of it becoming a drug are about 1 in 10,000. The subsequent ten-to-fifteen years involve the study of lead optimization, absorption, metabolism, toxicity and efficacy--any one of which can stop the candidate drug dead in its tracks. Assay development is the easy step in the process. Academic and government labs are not remotely equipped to do the rest, which probably makes up at least 95% of the total effort. Nor can they possibly assume the $1 billion+ risk that, even when resulting in an approved drug, will rarely return the development costs.
With regard to demonstrating a "therapeutic benefit," this would require even longer (and maybe impossible) clinical trials, and probably still not answer the question. Differences are often not revealed until millions of people have tried the drug. Furthermore, it is essential to have multiple members of a drug class available. Different people react differently to a given drug. Antidepressants are probably the best example of this. People can have bad reactions or no response to one SSRI and flourish with another.
The purpose of the patent system is to benefit society through innovation, but that purpose is defeated to some extent because the system produces drugs that are too expensive for many people to afford. How do you respond?
This is both an existential and an economic issue. If not for the high initial price, the drug wouldn't exist in the first place. The AIDS drugs are a prime example. During the decade beginning in the mid-1990s, miraculous drugs for HIV were coming out in rapid succession. Many were quite expensive, resulting in vitriolic protests by patients against the very companies working to save their lives. Now, generic versions of these drugs have lowered costs, but without the higher initial prices required by the inventing company to recoup development costs, few companies would have participated in the first place and there would be no generics, so the cost issue is not related to innovation.
Furthermore, drug expenses are exaggerated, since the way insurance coverage works skews the perception. A visit to an emergency room for a heart attack may cost a patient a small co-payment, but the out of pocket price of the statin to prevent the heart attack may be thousands of dollars per year. Thus, the patient may perceive drugs as expensive because of inadequate or non-existent coverage. The hospital costs are far greater, but are covered more thoroughly and costs are hidden by complex reimbursement policies.
History has shown that innovation can thrive without patents--for example penicillin and the polio vaccine. It also says that Switzerland developed an innovative and successful pharmaceutical industry without introducing patents on medicines until 1977. How do you respond?
The examples cited are poor indicators of innovation. Penicillin was discovered by accident, and although vitally important, its discovery was an exception rather than the rule. The drug was so difficult to make at first that it was recovered from the urine of patients and re-administered to them. It is unlikely that the FDA would be especially enthusiastic about doing this now. Fermentation techniques now used to produce penicillins are patented. The polio vaccine was discovered because of the tireless obsession of Jonas Salk, who was supported by the March of Dimes. Some of the methods used during these trials would land you in jail today. The polio example is completely irrelevant to this issue.
Editor's Afterword: Abraham Lincoln recognized that patents add "the fuel of interest to the fire of genius." But certainly not every industry needs patents to spur innovation - the fashion industry seems to get along quite well without them, for instance, as do other industries where the costs of entry and innovation are relatively low (like the restaurant industry).
But, as Josh argues very articulately, there are large differences between fashion and pharmaceuticals, including, but not limited to, extensive premarket drug testing for safety and efficacy required by the FDA, the immense costs and time required to complete human clinical trials, and - ironically - the fact that making the first pill costs about a billion dollars, but copying it costs pennies. Without patents, very few companies would develop new medicines, and the world's supply of innovative medicines would dwindle to a trickle.
The question then, is one of balance: Does the existing patent system offer innovative companies enough of a recompense for their immense risks and costs, given ever more extensive demands from the FDA? Josh makes an excellent argument that they do not, and that we should reconsider patent length - an issue that I also addressed in a recent IBD op-ed.
I would add one more thought that was not covered in Josh's debate: patents would not have to be extended if companies could bring innovative drugs to market faster and less expensively than at present. Drugs would still become generic when their patents expired, but companies would also be under less pressure to maximize prices (and thus profits) during the relatively few years that new medicines currently enjoy patent protection.