Ask any American living with a chronic disease about the cost of necessary pharmaceuticals and they’ll tell you: prices are soaring. What’s more, the entire U.S. healthcare system is getting more expensive, with healthcare costs currently outpacing the GDP by 1.1%. For people who require a supply of pharmaceuticals or medical products on a day-to-day basis just to stay alive, this is an alarming pattern.
There has been extensive conversation and speculation about the different factors that cause this trend and what we can do about it in the near future, with experts across the country weighing in on causes and fixes. The U.S. patent system has become one key target for reform, as healthcare and patent professionals discuss the shortcomings of the current medical patent environment.
In a recent New York Times opinion piece, the Editorial Board dug deep into the problems and advantages of the current system, while also oversimplifying some of the challenges facing the patent world.
The patent system does absolutely need reform, particularly in the areas of quality assurance and patent challenges. But while the article gets so much right, and effectively calls attention to many of the cardinal issues with the system, it doesn’t fully explain some of the obstacles that stand in the path towards progress.
1. Patent Requirements Aren’t the Problem
The article first examines the enforcement and issuing of patents in recent years. The writers come to the conclusion that soundly enforcing the rules of patent issuing requires more time and resources than the United States Patent and Trademark Office (USPTO) currently has.
They point to the Theranos scandal currently being litigated to illustrate their point: that none of Theranos’ inventions actually worked, and so they shouldn’t have been issued patents.
This is a misunderstanding of a key requirement for obtaining a patent.
There’s actually no requirement for an invention to have to work in order for it to receive a patent. To suggest anything else would promote a revisionist way of looking at patents that might discourage people from trying to patent many new inventions. If a patent could be taken away just because an invention didn’t end up working the way it was originally intended to, we’d have a huge problem on our hands.
While there’s little doubt that elements inside of Theranos were acting in bad faith to get these patents approved, this take promotes a potentially dangerous misunderstanding of the way that patent licensing works. It’s perfectly fine to issue a patent that doesn’t have a working prototype, as long as the party applying for the patent is acting in good faith and meets the requirements.
If we didn’t allow this type of patenting, it would further discourage small-scale inventors with few resources from attempting to patent ideas and would give even more power to larger R&D corporations with the resources to prototype anything.
The primary reason that Theranos was able to reap so many patents on inventions that turned out not to work doesn’t necessarily indicate a flaw in the requirement system or a lack of resources on the part of the USPTO. Instead, it is largely due to the massive legal and financial resources that Theranos was able to pull from.
In the company’s early days, it received massive amounts of early-stage funding, allowing them to amass a legal team of expert silicon valley lawyers capable of throwing every legal precedent in the book at the USPTO examiners. While a system that rewards massive legal and financial advantages is certainly something that we might want to consider changing, the regulations themselves are not at fault.
2. It’s Important to Protect Patents Both Big and Small
The USPTO was originally designed to protect novel and original advancements in technology or Intellectual Property (IP), no matter how big or small they might be.
While the NYT’s article claims that “nearly 80 percent of the drugs associated with new patents between 2005 and 2015 were not new,” and that “twelve of the drugs that Medicare spends the most on are protected by more than 600 patents in total … Many of those patents contain little that’s truly new,” this doesn’t tell the whole story. These incremental advancements in technology and IP represent protected progress and pave the way for organizations to make larger breakthroughs.
While it’s certainly frustrating to see large pharmaceutical corporations changing what may seem like inconsequential qualities of a drug or treatment to retain control of their IP, this system also has its advantages. Drug development takes decades, and these tiny changes can sometimes accelerate the process.
When faced with the critical and seemingly insurmountable task of producing an effective and safe COVID-19 vaccine in months instead of years, pharma companies like Pfizer relied heavily on their portfolio of incremental advancements to accelerate the process.
While this isn’t to say that the current system doesn’t have downsides, it can have crucial benefits in times of crisis as well.
3. Confidentiality Goes Both Ways
Another important point that the NYT’s article draws attention to is the current lack of communication between the USPTO and other government agencies, in particular the Food and Drug Administration (FDA) and the Environmental Protection Agency (EPA). Companies of all kinds that are applying for patents often play government agencies against each other, exaggerating claims to one, while downplaying the same characteristics to others.
While this practice is extremely unethical and requires some kind of solution, confidentiality problems complicate the issue.
When companies attempt to do this in the current patent climate, they are sometimes caught in patent challenge litigation, when legal challengers point out in court that the applicants told a different story to the USPTO than the one that they presented to the regulatory agency that their product was subject to. The barrier to increased communication between the USPTO and an agency like the FDA is that most FDA findings are expressly confidential, while all USPTO proceedings are published.
One possible solution to improve accepted patent quality might be to require the patent applicant to submit records (e.g., FDA filings, Small Business Innovation Research (SBIR) or grant final reports) related to the invention to the USPTO as part of their filing records. But even this solution is unlikely to work well, as many of the filings outside of the USPTO are considered confidential, and applicant companies draft patent applications with publication in mind. If a USPTO examiner is provided with confidential information from the FDA, then how could that confidential information be considered in the patent prosecution without entering public record?
This issue of differences in confidentiality is difficult to solve and requires a more elegant and complex solution to work.
4. There are Other Factors Behind Rising Healthcare and Drug Costs
Within this context of rising drug costs that the NYT’s opinion piece examines, it’s important to remember that patent issues aren’t nearly the only thing driving rising drug and healthcare costs. While there’s no doubt that the patent system can be reformed to help mitigate future cost spikes, it’s far from the only factor involved.
For example, while the patent process can be extremely expensive for both the government and for applicants, alleviating some of that cost or eliminating it simply moves the burden to other agencies in the government, possibly resulting in a similar overall healthcare cost.
For example, the Open COVID Pledge signed by many companies owning large amounts of tech and drug-related IP to make their patents available for free seems to have resulted in a high volume of low-quality patent applications for the USPTO to sort through and deal with. This put even greater strain on the limited resources available to the USPTO, and arguably made it harder for some valuable solutions to be vetted and OK’d.
While the patent process is expensive and time-consuming, we need to be extremely careful about the ways that we change it so that increased strain isn’t put on other agencies of the government that are already working at capacity.
Yes, the patent process can absolutely be streamlined and improved. But we need to do so by increasing the quality of the patents being examined by the USPTO and making it easier to challenge patents. Understanding the subtleties of the patent system is essential when looking for ways to improve it, but hopefully, with time and communication, we’ll be able to move forward.
