NY Times Editorial Board Gets It: Drug Patents Are Bankrupting Americans & It Needs To Be Fixed

Patents

from the fix-the-system dept

There has been a push over the last few months by some pro-patent academics and (of course) the pharmaceutical industry to insist that high drug prices and high healthcare costs have nothing whatsoever to do with our broken patent system that grants drug and device makers a full on monopoly. That claim doesn’t just defy logic, it defies all evidence and reality. As we noted last year, an investigation by the House Oversight Committee found some incredibly damning examples of how drug companies exploited the patent system to jack up prices — with the most damning being the story of how AbbVie hired McKinsey to come up with a sneaky plan to effectively extend the patent monopoly of Humira, an important drug for many, many Americans.

They deliberately did some shady stuff to extend the life of the patent monopoly while jacking up prices to insane levels.

Anyway, it appears that the Editorial Board at the NY Times has been paying attention to all of this as well, and has published a fantastic piece calling for significant fixes to the patent system to stop this nonsense and to lower drug and healthcare costs. The article is called “Save America’s Patent System,” but it might just as easily have been called “Save America’s Healthcare.” Because it can do both.

Drugmakers for decades have argued that patents are essential to American innovation. For all that lip service to medical advancement, though, a recent investigation by the House Oversight Committee concluded that market share is more likely the point. Twelve of the drugs that Medicare spends the most on are protected by more than 600 patents in total, according to the committee. Many of those patents contain little that’s truly new. But the thickets they create have the potential to extend product monopolies for decades. In so doing, they promise to add billions to the nation’s soaring health care costs — and to pharmaceutical coffers.

And for all the hand-wringing over how to lower prescription drug costs in recent years, little has been said about the patent system or its many failings. Put simply: The United States Patent and Trademark Office is in dire need of reform.

The editorial comes up with some pretty straightforward suggestions for fixing the patent system. First, stop granting patents for minor changes. The law requires that a patent be new and nonobvious to those skilled in the art. Yet it regularly approves new patents on very minor updates to long-existing ideas.

The pharmaceutical industry is a good example. Nearly 80 percent of the drugs associated with new patents between 2005 and 2015 were not new. But the issue is not confined to drugmakers. The Theranos debacle, to take just one other example, was touched off by officials who granted scores of patents for a device that had never been built and that turned out not to work. The company was able to secure those patents without disclosing almost any technical information about its product.

It also suggests a move that I’ve been arguing for for many years: there needs to be a point at which patent rejections are final. While there is something called a “final rejection,” it’s not actually final. Patent applicants can adjust and keep appealing. And this bogs down the system, and actually encourages patent examiners to eventually approve a patent just to get it off of their pile. We’ve been calling out this problem for nearly two decades, and it hasn’t yet been fixed.

Importantly, the NY Times also highlights that the process to challenge bad patents needs to be improved:

Bad patents have steep costs. They gum up the wheels of innovation by making it harder for would-be inventors to proceed with their work. They strain budgets by preventing cheaper products from entering the market. And they leave honest inventors vulnerable to patent trolls — people who buy up weak patents not to create anything new or useful but to hold legitimate inventions ransom. But the process of weeding these patents out once they’ve been granted remains fraught: It can take years and many thousands of dollars to challenge a bad patent in court, and even when the case seems obvious, success is never guaranteed.

This is big and important for a number of reasons. In the US’s last big patent reform, they enabled some better methods of invalidating bad patents, via the Patent Trial and Appeal Board (PTAB) and the “inter partes review” process, allowing for at least some path to revisiting granted patents to see if they should have never been granted in the first place.

Yet, many in Congress are actually looking to go in the other direction, and to make it much, much harder to challenge bad patents. So it’s great to see the NY Times pushing Congress to actually move the needle in the other direction and to strengthen the PTAB process.

The next suggestion is really great, and surprising. It notes that too many Patent Office directors come directly from industries that rely heavily on patent monopolies, and that they’re biased towards ever more patents, regardless of the quality. And that should stop.

Too many patent office directors have come from or gone to industry jobs within months of holding the federal post. This revolving door poses a real risk to the integrity of the patent office. The most recent example of that comes from the Trump administration appointee Andrei Iancu. During his tenure, the patent office used its discretionary powers to deny a challenge to a patent held by a company that his former law firm represented. He then returned to that firm as soon as his time in government was up.

And then my favorite suggestion of them all — recognizing that under the Constitution, the patent system is supposed to be for the benefit of the public, not the corporations holding the patents. And thus, the public should be a part of the process:

For too much of its history, the patent office has treated inventors and companies as its main customers while all but ignoring the people whose lives are affected by patenting decisions. That needs to change. Officials can start by appointing more public representatives to the patent office’s public advisory committee. Right now, six of the committee’s nine members are attorneys who represent commercial clients or private interests; only one works in public interest.

Officials should also establish a public advocate service similar to the one that exists at the Internal Revenue Service and should make a concerted effort to ramp up their public outreach. “The patent system has gotten so complicated that it’s impossible for anyone who’s not an inventor or a lawyer to penetrate it,” said Mr. Duan.

There’s much more in the piece, but it’s one of the rare NY Times editorials that I think is 100% on point, and hopefully the Patent Office and Congress move towards doing what’s in there to not only help save the patent system, but to fix America’s continuing healthcare debacle.

Filed Under: drug patents, ipr, patent system, patent thicket, patents, ptab, uspto