AIDS TREATMENT NEWS #216, February 12, 1995

On February 3 AIDS TREATMENT NEWS interviewed Bruce Lehman, Assistant Secretary of Commerce and Commissioner of Patents and Trademarks, in his office near Washington D.C. We had requested the interview to discuss proposals for giving priority to inventions for serious or life-threatening illnesses -- a recommendation most recently made by the National Task Force on AIDS Prevention, at its January 19 meeting. We did not know until the interview that the PTO had already gone ahead and implemented the rule, though only for AIDS and cancer.

The patent system, while exceedingly important for medical research, has long been neglected by the AIDS community. But the PTO on its own has made important changes. It made AIDS patents available free through the Internet (see AIDS TREATMENT NEWS #210). On December 21, 1994, it issued new guidelines to prevent some patent examiners from requiring clinical trials before a new drug could be patented, after complaints from biotechnology companies (which usually need the patent in order to raise money to run the trials). And now it has made AIDS and cancer patent applications eligible for priority review.

The following interview with Commissioner Lehman is important for companies, for AIDS and cancer researchers, and for treatment and policy activists alike.

ATN: The National Task Force on AIDS Drug Development recently recommended that "drugs involved in the diagnosis and treatment of serious or life-threatening disease should undergo an expedited review process by the Patent and Trademark Office." Do you have any plans for priority review of these applications? Lehman: We have already established a policy inside the Patent and Trademark Office to allow applicants to apply for expedited handling of inventions related to therapies for AIDS-related illnesses, and for cancer.

We have also made all of the AIDS-related patents available on the Internet. Eventually all of the patents will be available in the same manner, probably in about six or seven years.

ATN: On the rapid review, the FDA has special procedures for "serious or life-threatening illnesses" -- including heart disease, diabetes, Alzheimer's disease, and others. Could the patent office allow special priority for all these illnesses, instead of limiting it to AIDS and cancer? Lehman: Keep in mind that there are many priorities in the patent system, which is an engine of economic growth for the country. So it is not easy to establish these priorities; it is a serious matter. Frankly it is not something we hear a huge clamor for, from the biotechnology and pharmaceutical industries. There is a reason for that; speeding patent applications is vastly different from speeding up regulatory review. By and large biotech companies are quite happy with a LONG pendency of the patent -- precisely because of its linkage to regulatory review. We can get the patent out as soon as six months after the application comes in, but then the companies may have to undergo years of clinical testing before they can sell the drug. Often companies do NOT want us to issue the patent -- because under the old law, you had 17 years from the issuance of patent for a patent term. So your term is running while you are going through regulatory review, and companies would rather delay the patent [and avoid losing time to sell their drug under patent protection].

We have just gone to a new system -- 20 years from filing, as opposed to 17 years from issuance. To some degree, that advantage of delay has been eliminated. And we still have patent term extension legislation, which permits you to extend the patent to compensate for regulatory delay at the FDA. The average patent is issued 19 months after it is filed; and the average biotech patent is less than 21 months. So without any expediting at all, the average patent is issued less than two years after it has come into the office, and it is the rare biotech or pharmaceutical invention which would be anywhere near through the regulatory process in that period of time. In that sense, the potential market, for purchasers of the therapy, is not really prejudiced at all [by delays in the patent office].

But often the patent applicant needs to have the patent in hand in order to obtain financing for the extended clinical testing that is necessary. Then they want to get the patent out quickly. It is this category of patent applicants who I think will use the expedited procedures that we now have, and be most benefited by them.

Recently we made another change which also relates to treatment development. Last September we had a hearing in San Diego, a major center of the biotech industry, where we invited comment on problems of the industry. Overwhelmingly the number one criticism we heard was that patent examiners were demanding results from clinical testing, as a precondition to demonstrating that the patent had "utility," which is one of the requirements of the patent law. That clearly was a problem that was causing a great deal of dissatisfaction in industry; people thought we were being unreasonable, that it was getting out of hand. So in December I issued new rules where we vastly streamlined that procedure, and made it clear that one did not have to have the actual results of human testing in order to demonstrate utility; instead, evidence such as affidavits of scientists knowledgeable in the area, indicating that the treatment was likely to be useful in human beings, would be enough. That change has been favorably received in the biotech industry, and hopefully it will have a positive impact on research and development in this area, because it will enable people to obtain capital to support the development process.

ATN: There is another problem in getting better AIDS treatments developed. Often the patent applicant keeps research findings secret while the application is pending. Apparently they fear that if the application has to be re- filed, somebody else could get in and have an earlier filing date.

Lehman: We have addressed that problem. I'm very glad you raised it, because right now our solution is under attack, and people who see the value of our addressing the problem need to let their views be known.

One of the differences between the U.S. patent system and all others in the world is that we keep all patents secret until they are issued, while others publish patent applications 18 months after they are filed. This, combined with the old 17- year term from issuance, enabled some applicants to game the system. They could file continuances, etc., to keep the patent bottled up in the patent office for quite a period of time before it issued -- and keep the whole thing secret. In fact, in some cases, they did not market anything; they waited until somebody else got into the marketplace with a product, then they sued them; they let their patent be granted, and then could show that they were in the patent office first -- and we have a first-to-invent system. That is totally counterproductive, because then the patent system has provided no incentive to get to the marketplace with the product, and it has provided a disincentive to the person who did, because they have to pay royalties to the "submarine patent" owner. [Note: The term "submarine patent" refers to a patent application deliberately delayed and kept secret, sometimes for many years, waiting to surface strategically at some later time, with the weapon of its early filing date. This abuse of the U.S. patent system has become a serious problem.] This is the fundamental reason for our shift to the international standard of a 20-year term from filing and an 18-month publication. Also, conforming to the standard will give us advantages in dealing with other countries. The 20- year term is already passed, as part of the GATT legislation. The 18-month publication was introduced but not passed in the last Congress; we hope it will be passed in this one.

These changes can have a number of salutary effects. One of them is to speed things up, not slow things down. You want people to get into and out of the patent office with a good, solid patent as quickly as possible, then use that to get to the marketplace to finance the research and development, and get out there with a product. That is the whole function of the patent system. The function is not served when somebody deliberately delays; it is not served when they keep their patent secret indefinitely. The whole reason for the patent system is that in return for getting exclusivity, the right solely to make, use, and sell your invention, you have to fully disclose everything about it, including how to make it, to other people, so that they can go to work on something else and get their own patent that will compete with it. By that you get a leapfrogging effect, presumably accelerating the pace of innovation. It not only stimulates economic activity, in this case it stimulates the creation of new therapies. I think that the patent system, in combination with the best and biggest basic research enterprise in the world, NIH and related government-funded enterprises, are the reasons we have the world's most dynamic and far-reaching medical research industry. But clearly the patent system has had some flaws in it, and this in one that would be addressed.

Now Congressman Dana Rohrabacher (Republican, Orange County) is out there doing everything humanly possible to turn this back. He is opposed to 18-month publication, he is opposed to the 20-year term. He has legislation pending in Congress which has 90 cosponsors to reverse our progress, and is trying to work against us in many ways. Members of Congress might be interested to know that there are people who would like their patent to be published in 18 months, who would like people to be incented (given incentive) to get in and out of this patent office, and there are people perhaps whose life may depend on it.

ATN: We have found that the procedure to "make special" certain applications is not well known, even among people who are knowledgeable about patents. No one I talked to has known that AIDS and cancer were included.

Lehman: We just did it recently, a couple of months ago. One of the things we are trying to do is to beef up our whole public-affairs operation, because I think the whole patent office has been a bit of a secret for quite a few years, and I think we need to change that around. Probably that is not widely known in the industry.

There is a whole suite of things we are working on, to make the system work better. There are two sides to this. There are people, like Congressman Rohrabacher, who want to permit people to game the system to make money, as opposed to incenting innovation. And other people are interested in having the most dynamic patent system, where the sole objective is to enable people to get in and out of this office as quickly as possible with a dynamite patent that they can take to the bank, and not to the courthouse, and turn into a product or process that is going to help the consuming public. And then, by disclosure of the invention, encourage somebody else, a competitor, to get out there and have full access to the technology so they can develop their own patent, or at least, the moment that patent term expires, be in there with a competing generic product.

ATN: What is Congressman Rohrabacher's argument for keeping the current system? Lehman: His argument is that a long patent term is good, and we should not do anything to shorten patent term, and that there is a possibility that someone will not get the patent out of the patent office in three years, and therefore people will lose patent term.

The question of how much patent term is appropriate to incent research and development is a serious question. I think that by and large the 17-year term from issuance in the United States has generally been considered to equate to the international norm of 20 years from filing, as it gives you three years to get into and out of the patent office. Over the years patent pendency in this office has depended on its efficiency and resources available to it. We have just about always been able to get most of the patents out within three years. That is also true of many patent offices in the world.

I do not think any case has been made that we need to lengthen patent term beyond what we have right now. Rohrabacher favors the ability to get the longest patent term possible. There are serious consumer and public-interest considerations in that. I am a total, 100 percent believer in the patent system and in intellectual property; I am one of the strongest advocates for the owners of intellectual property rights in the world. But the genius of the constitutional system that we have is that those rights are limited. There comes a point at which the knowledge goes into the public domain to be used by all, and that is the essence of the generic industry, for example, and other industries.

Once you have provided the incentive -- and our system provides that -- for getting a fair reward on your investment, then we ought to open it up. Then you have two things going at once: you encourage the development of the generic industry with cheap, older therapies, but you are constantly incenting the production of new innovative therapies, which may cost more for the period that they are under exclusivity, because you have to amortize the investment -- that's the tradeoff. In many cases these new therapies may cost more than a generic older therapy on a per-pill basis, but many times they are much more cost effective, because they are cheaper than hospitalization, the use of medical devices, whatever -- not to mention cases where there are no other therapies, and the alternative is catastrophic for the patient.

I think we have a good basic fundamental approach, and I think Congressman Rohrabacher is playing with it, and people do not understand that. Rohrabacher is no more generous to the AIDS community on other matters. He is now going around on Capitol Hill collaring many members of Congress who do not know anything about this issue. In the new environment, there is some mob mentality that if it's a Clinton Administration idea it must be bad. He is taking advantage of that.

ATN: On another issue, we are concerned about intellectual property denying access to AIDS care in many parts of the world. When a really effective treatment is found, what about Africa, India, Thailand, Brazil, and other countries, where few can pay U.S. drug prices? What can be done about this -- or is there nothing that can be done? Lehman: Until the signing of the GATT treaty, there has been no patent law in Brazil for example, and in much of the developing world. Any drug invented here can be replicated there for the cost of manufacture. The GATT treaty brought that situation to an end. I think there is a very good rationale for doing so -- lack of patent protection ultimately helps nobody. First of all, it creates higher pharmaceutical costs in the few markets where you do have protection; it means that the cost of development of drugs is borne entirely by the citizens of the advanced industrial countries, particularly the United States. Their drugs cost more so others pay less.

Also, lack of patent protection virtually rules out the creation of indigenous, research-oriented pharmaceutical industries in those countries. Some countries are not ready for a research-intensive industry, but certainly Brazil is -- yet they have no research-intensive pharmaceutical industry. They have many diseases that are unique to those kinds of climates, which there is no particular incentive for companies to research. I think it is short-sighted to assume that no patent protection in these countries is even to their benefit. And it disproportionately penalizes consumers in countries like the United States, and reduces the resources available to pharmaceutical innovators to spend money on developing new treatments. The GATT treaty has changed all of that; over a ten-year phase-in, all signatory countries to the GATT treaty will have to start providing full protection to pharmaceuticals the same way we do here in the United States. Incidentally, the U.S. biotech industry thinks the 10-year phase-in is overgenerous; I think it will allow the countries to adjust.

Ultimately there are always going to be poor countries in the world that cannot afford anything. Many countries in Africa cannot even afford generic drugs, much less research- intensive ones. That is why we have the World Health Organization, and various aid programs, because ultimately the answer to universal access to any product or service is not necessarily to make it free, so that you have no market, and therefore no incentive. Instead, address the specific problem; identify the group of people who need and should have access, as a matter of public policy. Then provide the funding, usually from a public funding source, to subsidize them and see that they have access.

ATN: Often people do not think of the patent system when they think of medical research.

Lehman: Some people's eyes glaze over when you start talking about patents and intellectual property; they want to just forget about it. Yet patent protection is fundamentally important to the growth of technology and innovation. It is absolutely at the core of commercialized medical research. Pharmaceutical companies do not make pharmaceuticals, they make patents. That is what they own (except for generic-drug companies). Obviously there is a value to generic drugs, because they are cheap. But if we just had a generic drug system, we would not have a single new therapy; there would not be anything other than what we have out there right now, unless we had some socialized system.

We obviously have much government input in basic research, but government does not get the pill into the customer's medicine cabinet without the patent system, which is the critical link. So if the patent system is not working right, we have a problem every bit as fundamental as problems at the FDA or anywhere else.