Lead Author: Lila Feisee
Organization: The Biotechnology Innovation Organization
The Biotechnology Innovation Organization (BIO) believes that the implication that Intellectual Property protections impede access to medicines is erroneous. BIO believes that there is evidence that countries with little or no IP protections, or countries with a focus on generic medicines still face significant challenges in providing much needed medicines to their populations. There are many factors unrelated to IP that stand in the way of access to medicines including inefficient and inconsistent regulatory systems, tariffs, poor health infrastructure and delivery mechanisms, and lack of capacity and education in the healthcare space to name a few. And BIO believes it is weak and unpredictable IP laws in countries that create a difficult if not impossible environment for the development of new medicines, and for providing the incentives necessary to introduce new and innovative medicines for populations that need them. BIO believes that IP is a tool for enabling the development of biotech products, which rely heavily on patent protections to generate investment into the development of these products, and BIO urges the Commission to look at ways to strengthen IP laws to enable investors, companies and researchers to take the risks necessary to develop innovative medicines to reach those who need them most.
Comments of the Biotechnology Innovation Organization (BIO)
The Biotechnology Innovation Organization (BIO) represents more than 1,100 biotechnology companies, academic institutions, state biotechnology centers and related organizations in the United States and 30 other nations, including both developed and developing economies. BIO’s members are involved in the research and development (R&D) of health care, agricultural, industrial and environmental biotechnology products and services. More than 90% of BIO’s members are innovative small businesses.
BIO is a strong proponent of successful partnerships towards making medicines available for all who need them. In 2010, our members adopted the BIO Options for Increasing Access to Medicines in the Developing World , which provides a series of options companies should consider as they conduct business. In addition, global health related programming is a regular feature at our International Convention , which attracts more than 16,000 biotechnology professionals, thought leaders, government officials from around the globe. These programs focus on identifying challenges associated with the development of medicines for neglected diseases, and also bring together companies and other interested parties including funders, universities and others interested in this space.
BIO members, and the global innovative biotechnology in general, are leading the world’s search for new medical treatments and cures, as noted in detail below. The financing and advancement of these treatments rely critically on the protection of intellectual property. Therefore, as an organization representing innovative companies active in developing new healthcare products, BIO has a keen interest in the work of the UN High Level Panel on Access to Medicines and is pleased to provide comments in response to the call for contributions.
The UN High Level Commission’s call for contributions asks for submissions to focus on addressing policy incoherence in relation to the rights of inventors, international human rights law, trade rules and public health objectives including increased access to medicines, vaccines, diagnostics and medical devices in accordance with Sustainable Development Goal 3. It is important to note that BIO’s members have long been actively engaged in addressing these goals as well as SDG 1 and 9.
At the outset we note that the scope of the call for contributions appears to be narrower than the apparent mandate of the Commission. In fact, the call presupposes that the concept, and advances that notion that IP protections are inconsistent with public health. We disagree with this assessment and we believe that the facts prove this assertion to the contrary. For example we note that while 95% of essential medicines, as defined by the WHO, are off patent, still one third of the world’s population does not have reliable access to them and, in parts of Africa and Asia, that is true for half the population. And despite all the current mechanisms in place to facilitate no-or-low costs access to non-patented HIV medicines, only 15.8 million of the estimated 36.9 million people living with HIV globally (about 43%) were accessing treatment in 2014.
Moreover, despite the wide availability of no-or-very low cost non-patented HIV medicines, in at least 14 African countries, 80% or more of people who were estimated to be eligible for treatment under the WHO guidelines were not receiving antiretroviral therapy as of 2013. First-line treatments for killer diseases like malaria and TB are available as generic products at very low cost, and yet many people are denied access to them. And finally, according to the WHO, and estimated 649 million people, or about 50% of the population in India do not have regular access to the hundreds of non-patented drugs on India’s EML. Despite its large domestic generic drug industry, India’s investment in health as a percentage of its GDP has averaged around 4% for the last decade. India’s current level of 4.5% is one of the lowest figures in the world ranking it below such countries as Haiti and Ethiopia.
For these reasons, we urge the commission to consider other known factors that affect the ability of populations both in developing countries and developed countries, to access medicines, not the least significant of which are trade barriers such as tariffs, regulatory inefficiencies; poor health infrastructure (including health education), availability of care, the availability of health insurance, and mechanisms to pay for healthcare among others. BIO believes that in order for countries to be able to address issues of access, they must look at the full range of barriers to access that exist. Looking at the rights of inventors in relation to access to medicines alone will not help address the access issue that plagues many in the developing world. For as we have indicated above, the availability of a medicine in a country even at the lowest possible prices, does not guarantee that the patient population in need of the medicine will actually be able to access it.
However, to the extent that laws in countries prevent the appropriate protection for innovative products making it difficult to make medicines available, BIO will address these points. To do this, it is first necessary to understand about the biotechnology industry, and the role that IP plays in the development of biotech products, since in order for a product to be accessible, it must first exist.
The Biotechnology Industry:
The biotechnology industry is one of the most research-intensive industries in the world. The global biopharma industry spends more than 140 billion dollars in R&D annually . These investments are paying off. BIO’s industry research shows that since the sequencing of the human genome, there are more than 455 new drug products and vaccines on the market, and there are more than 5000 currently in development. In the U.S. 70% of all of the clinical programs are being sponsored by small companies which put more than 19% of revenues generated back into R&D spending. Most of these companies have yet to realize any revenue from that work, much less a profit.
These products are now improving, and will continue to improve, the lives of hundreds of millions of people worldwide, and offer hope for cures for a wide range of illnesses. Medicines represent some of the most effective and efficient use of health care expenditures. Their value is reflected by dramatic health improvements, improved quality of life, hospitalizations/emergency room cost avoidance, return to work and community. It is well known that medicines account for only about 10% of overall healthcare costs, a figure that has remained stable for decades. Through the use of innovative therapies there are savings in other areas of the healthcare system as well. The U.S. Congressional Budget Office credits each dollar of additional spending on medicines with a twenty-cent reduction in other healthcare expenses.
Advances in agricultural biotechnology have already had a profound impact on the world’s capacity to feed itself, dramatically improving yields of crops while decreasing dependence on chemical pesticides. Industrial biotechnology is affecting numerous sectors of the economy, and is presenting a realistic alternative through biofuel production.
The key to the success of the biotechnology industry – across of all its sectors – is a business model that is based on taking significant risks to develop products based on innovation. Specifically, the biotechnology business model is based on making significant investments (often hundreds of millions of dollars) in early stage research and development with the hope that some of these investments and efforts will yield a commercial product. This model has worked despite the fact that it is lengthy (often taking more than a decade) and that most biotechnology R&D investments and efforts do not result in a commercial product reaching the market (only 5 in 5,000 compounds that enter preclinical testing make it to human testing and only 1 of those 5 are approved by the FDA) . It is only by pushing boundaries of science and taking these risks that breakthrough inventions are discovered and converted into commercially viable products and services.
Thus, the biotechnology business model requires an environment that, as much as possible, eliminates unpredictability in the commercial sector making it more conducive for companies to take risks. One important factor in this environment is the guarantee of patent exclusivity. Specifically, by ensuring that the products or services that may eventually be marketed can be protected from unauthorized copying and use – for a limited period of time -- companies can justify taking risks and making significant R&D investments. Introducing unpredictability by changing the availability of patent rights, or the conditions in which patent rights can be asserted, will adversely affect the business environment, and the delicate balance that has been reached over past decades, that is so crucial to supporting innovation in the biotechnology sector.
Patents and the Biotechnology Industry
To illustrate the role of patents in the typical biotechnology venture, consider the following example. A researcher, typically in a university laboratory, discovers a gene that is expressed only by a particular type of cancer cell. This discovery can result in a variety of distinct research and development initiatives – ranging from diagnostic tools for detecting the presence of the gene or its expression product in test samples taken from patients, to therapeutic agents that selectively kill cells that express the gene or inhibit the expression of the gene. As soon as practical after the discovery of the gene and its practical value, patent applications must be filed. BIO’s industry research shows that in the biopharma sector, the patent that covers the composition of matter--the key patent which companies use to generate investment funding--is almost always developed by the company.
These patents will be used to justify the investment of millions of dollars into development of these diagnostic and therapeutic agents. Translating this initial discovery into a tangible product can take more than a decade and hundreds of millions, and even, billions of dollars. The exclusivity that patents on these compositions provide is what investors will rely upon to provide funding for development of products, and will be a key factor affecting the decision of a larger company to work with the startup company or university that owns the patent to do clinical development of products based on the discovery. Of course, the road to development from this point is long and arduous, has a significant likelihood of failure, and is fraught with other commercial setbacks. However, the faith that the discovery will help improve the lives of patients, and the confidence that patent rights will protect products that are developed, propel the transfer of technology and research and development work that follows.
Virtually all new treatments and cures reaching global patients are developed using the model outlined above. In fact, 91% of drugs are developed by the private sector with no direct government role. It is true that government agencies such as the NIH in the United States do much important work on the causes and underlying biology of diseases. But they do not develop new medicines nor are they able to manufacture, supply or commercialize these or any other products.
Patent law policies that impede the development of biotech products:
It is the early stages of drug development that the development of a product is most vulnerable to perturbations in the capital markets. If, for example, the strength of a key patent on a life-saving product is cast into doubt, or if there is a gap in patent protection to cover the entire product, investors will not invest in that particular project. Likewise, if for example, in a particular key market a product is not patented, or there is uncertainty about the strength of its patent in that market, investors may also look elsewhere. Recent studies now provide greater evidence that strong intellectual property protection facilitates access. In particular, these studies show that strong IP protection is not only important to incentivize the development of new medicines, as acknowledged in the global consensus of the Doha Declaration, but also results in faster launch and faster access to new medicines in developing countries. Moreover, health outcomes improve when strong IP systems exist that act as an incentive for innovators to develop a local market. Thus, weakening IP rules demonstrate a policy incoherence that weakens justifiable rights of inventors in contradiction to international human rights law and the pursuit of public health policies to result in positive public health outcomes.
Policies that weaken IP rights serve only to exacerbate the policy incoherence that impede access to medicines in both developed and developing markets. BIO has found that in certain countries it can take up to 10 years or more to issue a patent on a key product. This is often times due to backlogs in patent offices, but it is also the case, that certain countries have laws, which prevent timely issuance of patents. For example, in Brazil, even after an application has been deemed to be patentable by the competent authority (the patent office) it must wait for the approval of the regulatory agency (ANVISA) before the patent is actually issued. Investors looking to invest in the R&D of that product will be discouraged by such a delay. Lack of investment will then lead to possible delay in the development of the product, or even worse, the abandonment of the project. Hence, a potential life-saving medicine may not be available to the public.
In addition, once a patent has been issued, investors looking for a project to fund will look to see whether the patent is enforceable and predictable. If enforceability of a patent is unpredictable, for example, in countries where compulsory licensing is liberally employed, investors will withdraw from that project in that particular country. This is because investors will not invest millions, perhaps hundreds of millions on the development of a product simply to risk the copying of the product by a competitor. The result of such a policy may be the loss of a manufacturing facility or an R&D facility in that country. Or worse, the result may be the lack of availability of that particular product for the patients in that country. Systematic use of compulsory licenses to address industrial policy needs is an incoherency in the patent laws of some countries, which prevents the development and the introduction of new drug products in those countries and thereby impedes access to medicines.
Along the same line, certain countries have incoherencies in their country’s patent laws that may result in the revocation of a deserving patent in one country, while other countries still have that patent in force. In some instances these incoherencies can be used as a means to delay the review of, and or granting a patent. Companies who have relied on a patent to obtain funding will now, no longer be able to attract the investors or the relevant partners necessary to carry on the R&D or to invest in the very costly clinical trials which will be necessary in order to carry out an endeavor. These restrictions on patentability undermine the incentives mentioned to develop new products and enhance their dissemination in developing countries.
Access to Medicines:
BIO recognizes the questions have been raised about the connection between strong intellectual property protections and access to medicines. We believe that access to medicines is indeed a complex and multifaceted problem, as noted above. However, as established in a recent study published in one of the world’s leading peer reviewed economic journals, the American Economic Review , stronger IP regimes actually promote the dissemination of new medicines, controlling for a host of other factors. Furthermore, since the adoption of TRIPs standards by most countries (i.e., non-least developed WTO members) over 20 years ago, the market for both generic and innovative chemical medicines has grown at an explosive pace, and by virtually any measure, access to both new and older chemical medicines around the world is much greater. On the other hand, there is no evidence that the lack of IP protection afforded the world’s least-developed countries under TRIPS has conversely had an impact on their access to medicines.
BIO members are working with developing country governments every day to arrive at deals that permit new medicines to be introduced to their populations in a sustainable manner. BIO and its member companies are committed to finding ways to improve access to new medicines, including through increasing the technical capacity of regulatory agencies to efficiently assess and approve new medicines and through creative contracting and distribution mechanisms.
It is our industry’s hope to find partners in developing and other countries that can help us find solutions to unmet medical needs. But for this to happen, universities and researchers in these countries will need the economic incentives to engage and partner in such research. They will need a level of intellectual property protection akin to the one that has created the world’s leading biotechnology industry here in the United States.
As indicated at the outset of these comments, BIO believes that there are many factors involved that affect the accessibility of a product, many of which have nothing to do with the rights of inventors. Below we outline some of possible approaches countries may want to consider in order to improve access to medicines.
How to Promote Access to Medicines (and Remedy Policy Incoherence) In a Meaningful Way:
In light of the factors mentioned above, BIO urges the High-Level Panel to take a holistic approach and consider pragmatic solutions to improve access to medicines. There are several approaches that have shown promising results in a pragmatic manner. It is imperative that the Panel build on these successes rather than focusing unduly on the role of intellectual property rights or that may be misinformed. Thus, we propose that High-Level Panel consider ways to build on the following mechanisms:
Product Development Partnerships (PDPs) – these partnerships provide a mechanism to succeed by leverage public sector funding with expertise from industry to develop medicines and vaccines where other mechanisms have failed. BIO Members are engaged in these programs. Major PDP’s such as the Medicines for Malaria Venture, the TB Alliance, and the Drugs for Neglected Diseases Initiative represent only a small sample of the work ongoing in this area.
Innovative Voluntary Licensing Initiatives – As noted, compulsory licensing is counterproductive to achieving access to medicines and is part of the problems concerning policy incoherence regarding IP, trade and public health policies. To the contrary, measures that find new ways to manage IP rights, e.g., through voluntary licensing, can help address unmet medical needs by fostering innovation or dissemination of healthcare products through leverage multiple resources. For example, recent activity of the Medicines Patent Pool (MPP), which has more recently shown creativity and flexibility in engaging both innovators and follow-on product manufacturers has shown promise in increasing access.
Strengthening, rather than weakening, regional trade and other international agreements. As noted previously, there is new evidence confirming that a robust IP system is not a barrier to access but instead facilitates access to medicines. Thus, it is imperative that the Panel not weaken IP incentives, but rather should encourage greater adherence to “best practices” enshrined in regional trade agreements. Many regional trade agreements recognize the need for flexibilities in extraordinary circumstances, while promoting systems that support the ability to obtain IP on deserving inventions and that provide certainty over procurement and enforcement of such rights. These agreements help spur development and diffusion of new technologies to address unmet medical needs and should continue to be pursued. Moreover, regional agreements regarding regulatory and other measures relevant to overcoming access barriers are paramount to achieving pragmatic results. For example, regional agreements regarding mutual recognition procedures for regulatory approvals can help facilitate access to high-quality essential medicines in developing countries. Recent efforts, including the African Medicines Regulatory Harmonization Program (AMRH) are good examples that could be replicated around the world to achieve results.
We appreciate this opportunity to comment.
Bibliography and References
3) World Health Organization and Health Action International (Global), Measuring Medicine Prices, Availability, Affordability, and Price Components (Geneva: 2008).
4) USAID, AIDS By the Numbers,
5)Médecins Sans Frontières (MSF) estimates the average price of ARVs per patient, per year is $67. Access to Medicines is a Global Struggle, The Pharmaceutical Journal, October 2, 2014.
6) Laing, R., “The patent status of medicines on the WHO model list of essential medicines,” https://www.wto.org/english/tratop_e/trips_e/techsymp_feb11_e/laing_18.2.11_e.pdf
7)India’s population in 2016 is 1.31 billion. http://www.indiaonlinepages.com/population/india-current-population.html
8) World Bank and OECD, 2006-2016.
9) World Bank and OECD, 2016.
10)See for example: Mercurio, Bryan “Resolving the Public Health Crisis in the Developing World: Problems and Barriers of Access to Essential Medicines” Northwestern Journal of International Human Rights, Vol. 5 Issue 1(Fall 2007); “Pharmaceutical Access in Least Developed Countries: On-the-Ground Barriers and Industry Successes.” The Cameron Institute, Essential Medicines and Health Products Information Portal: A World Health Organization resources (2010). Accessed at http://apps.who.int/medicinedocs/en/d/Js17815en/
11) Evaluate Pharma World Preview 2015 Outlook to 2020, Eighth edition June 2015
12) PhRMA 2013 Profile: Biopharmaceutical Research Industry at http://www.phrma.org/sites/default/files/pdf/PhRMA%20Profile%202013.pdf
13) Sampat B, Lichtenberg F. What are the respective roles of the public and private sectors in pharmaceutical innovation? Health Affairs. 2011;30(2):332‐339.
14) See, e.g., Cockburn, Iain M., Jean O. Lanjouw, and Mark Schankerman. 2016. "Patents and the Global Diffusion of New Drugs." American Econ. Review, 106(1): 136-64; 15) Margaret Kyle and Yi Qian, “Intellectual Property Rights and Access to Innovation: Evidence from TRIPS,” National Bureau of Economic Research, Dec. 2014, http://www.nber.org/papers/w20799
16) Charles River Associates, “The role of the innovative industry in ‘developing’ the market for new medicines in Emerging Markets: A case study approach,” April 2013.
17) Patents and the Global Diffusion of New Drugs, Iain M. Cockburn, Jean O. Lanjouw, and Mark Schankerman, American Economic Review 2016, 106(1): 136–164