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Pharma Patents – A Good Bet For Casino Heavy Native Americans.

Posted on | September 11, 2017 | No Comments

 The Latest Pharma Campus?

Mike Magee

In the immediate aftermath of WW II, the U.S. government decided to join hands with industry and academia and fund a campaign to “defeat disease” as they had defeated the Nazi’s. Defeat disease and health will be left in its wake was the thinking of the day. What they could not have predicted was that a native American tribe in Upstate New York would ultimately be one of the recipients of this food chain.

Nor would the starch collar academic William Wardell, the inventor of the phrase “drug lag” in 1973 that ultimately unleashed four decades of FDA liberalizing legislation, have predicted its long term impact. While these actions arguably have accelerated scientific progress, in many ways they’ve left human progress to fend for itself. 

But this is America’s Medical-Industrial Complex where profit trumps patients at every turn. The latest episode began early this year when a Dallas law firm, Shore Chan DePumpo, successfully defended their client, the University of Florida, in a medical device patent dispute with Covidien. They claimed that the state owned institution had state soverign immunity, and thus its patent could not be challenged. They went before a specially liberalized administrative-review panel created to shield industry from the trials and tribulations of normal patent law and they won!

What happened next was predictable. The law firm went trolling for their next client. As one legal expert noted, “Indian tribes have sovereignty that is stronger than states.” So they identified an Upstate New York tribe, the St. Regis Mohawks, that had done a patent protection deal with a Tech firm. They were anxious to continue to diversify being over-weighted in Casinos. Now all that they needed was a desperate partner with deep pockets. They found that in Allergan who’s #1 product is Botox. But right behind it is their billion dollar winner Restasis – for desperately dry eyes.

As patent expiration on Restasis approached, the company filed six extra patents of dubious merit a year or two ago that were accepted by the new and very accommodating Patent Trial and Appeal Board.  This would have protected Allergan against generic intrusion till 2024. But again predictably, the litigious generic company, Teva, challenged the patents.

The patent gold rush is not a new phenomenon. It’s origins date back forty years. In 1978, five years after the “drug lag” accusation had first surfaced, with the economy still lagging, 28,000 federally controlled scientific patents had accumulated and sat largely idle. Historically, there had been a prohibition on private ownership of patents that emerged from research discoveries supported by federal grant dollars. As the thinking went, such discoveries, supported by public dollars, should be available to all, without the patent restrictions of a private company. But in reality, the lack of ownership of the intellectual property, and any market products or applications that would derive from it, frightened away private investors.

Over the years, fewer than 5% of these federal patents had been commercialized. At that time, Indiana’s Purdue University was sitting on a number of new health related discoveries that had emerged from their research departments, supported by NIH grants. In face of the country’s “economic doldrums”, they decided to invest a bit of money on lobbyists to see if they might somehow wrest control of the patents, and future profitability tied to their inventions. They approached their senator, Birch Bayh (D-IN), and were delighted to see that he was receptive.

At about the same time, the lobbyists discovered that Bob Dole had been exploring the same legislative territory. With Dole’s support, the technology transfer legislation swept through the Senate Judiciary Committee with unanimous support. Bayh then negotiated the Bill’s inclusion in the House’s version. With just a few days left in his single term Presidency, Jimmy Carter signed the bill.

The results were dramatic, at least for health care institutions. While 380 patents were granted to them in 1980, that number soared to 3088 by 2009. Those patents, now under the control of individual scientists and their parent academic institutions, were subsequently licensed to corporations for the development of a range of products and applications. According to one estimate, the resultant impact on the nation’s Gross Domestic Product (GDP) reached $47 billion in 1996, and soared to $187 billion a decade later. Since 1980, 2,200 new companies appeared and generated more than 1000 new products. As important, the new technologies spawned entirely new industries in the United States including the field of biotechnology.

As an economic change agent, few legislative actions could compete with this one.  Of course, over time, it became clear that the legislation did have some unintended consequences. The licensing bounty for industry and academics was not insignificant. It rapidly grew from just over $7 million in 1981 to $3.4 billion by 2008. And major pharmaceutical companies were at the top of the food chain. Over the first three decades with the Bayh-Dole Act in place, 154 new drugs were approved by the FDA with worldwide sales attributed to these products of $103 billion.

This led The Economist in 2005 to headline their appraisal of the legislation, “Bayhing for blood or Doling out cash?”(67) As the article states, “Many scientists, economists and lawyers believe the act distorts the mission of universities, diverting them from the pursuit of basic knowledge… it makes American academic institutions behave more like businesses than neutral arbiters of truth…”

What will happen next on the Indian reservation is anyone’s guess. Chose your favorite – Teva or Allergen. In American Medicine’s Wild Wild West, the winner will be either bad or worse. And not one American will be the healthier for it.

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