How to Stall America's Medicine-Making Engine
By John Stanford
Five of the world's leading Covid-19 vaccines were invented in the United States, saving untold lives worldwide. Two-thirds of all prescription medicines originate in our laboratories. Research conducted in America has yielded breakthroughs in treating everything from cancer to HIV.
This is no accident. Our laws and market encourage investment, research, and development from companies big and small. That recipe for success, however, is under attack from U.S. lawmakers.
Many of those policymakers have laudable motives. They say they're trying to make drugs cheaper for patients. While that fits nicely on a bumper sticker, these politicians don't want to face the facts: our healthcare payer system is broken. They deem reforms to lower out-of-pocket insurance costs too complicated. Instead, they're pushing an agenda that does little to help patients today and would freeze investment in new drugs -- harming the patients of tomorrow.
Several efforts revolve around weakening intellectual property rights. IP rights grant inventors an exclusive period during which to sell their products, allowing them to recoup investments before copycats enter the market.
One of the attacks on IP rights came last summer, when 100 members of Congress signed a letter to Health and Human Services Secretary Xavier Becerra, urging the administration to pursue one of two dubious legal strategies.
One calls on the government to use "march in" rights. This strategy invokes the Bayh-Dole Act, which allows universities that receive federal funding to patent resulting discoveries and license them for development. A Bayh-Dole provision says that such patents can be breached in certain cases -- like if a company failed to commercialize a needed product during a public health emergency.
The letter writers would have the government "march in" on patent rights whenever it deems a drug price too high, which was never the law's intent.
The other strategy relies on a law known as Section 1498, which allows the federal government to appropriate a patent without the patent holder's permission. But this law was intended for crises such as wartime, not to impose the government's preferred price.
In August, President Biden signed into law a bill installing de-facto price controls, under the guise of "negotiating" lower prices on proven medicines. What the new law overlooks is that roughly nine out of ten drugs fail in development -- whose cost must be recouped by the few winners. This measure shows a limited understanding of the life sciences ecosystem and will push drug investment off a cliff.
Collectively, these policies and proposals amount to an attack on the system that has worked successfully to prevent, treat, and cure thousands of diseases. It costs as much as $2.8 billion to develop a single new drug. Without reliable patents or markets, investors will not take the risk to fund research into a new cancer therapy, Alzheimer's medication, or drug for any of the 95% of rare diseases with no treatment today. Long-awaited treatments for countless diseases might never materialize.
If policymakers really want to make treatments more widely available, they need to protect the rules and institutions that have made the United States the pharmacy to the world.
John Stanford is executive director of Incubate, a Washington-based coalition of life-science venture capitalists. This piece originally ran in RealClearHealth.
