The Continuing Value of Biotech Patenting

    By Kevin Noonan --

In several recent posts, I have taken the position that patents, particularly patents on genes and recombinant or transgenic non-human organisms, have been vital to America's preeminence in the biotechnology and pharmaceutical industries.  A recent Washington Post story by Joseph Fuller and Brock Reeve supports this view.

The statistics are overwhelming.  According to Fuller and Reeve, American pharmaceutical companies account for 60 percent of global sales.  The percentage is even greater for biotechnology companies (75 percent of biotech sales).  It was not always thus, however:  less than 30 years ago, half of the top ten pharmaceutical companies in sales were European, and in the early 1980's European companies invented half of the world's new drugs.  Today, U.S. companies have two and a half times as many biotech drugs in development as do their European counreparts -- a staggering 4500, according to this report.

Fuller and Reeve set forth the following reasons for this sea change:

• Bayh-Dole permitted universities to patent inventions made with government funds; and
• Diamond v. Chakrabarty permitted genes and living organisms (the heart of the nascent biotech industry) to be patented.

In contrast, Europe did not clarify the patentable status of living organisms until 1998, and the EU did not encourage state-funded universities to pursue patenting and commercialization.

The U.S. backed up this permissive atmosphere for protecting biotech inventions with investment.  The Federal government spent more than $50 billion in funding life science research between 1985-1995, and the private sector invested about $6 billion in biotech start-up companies between 1987-1997.  Both public and private investment in biotech in the U.S. dwarfed European efforts in this sector.

It would be foolish to think that the investment activities were not related to and dependent upon the fact that inventions were protected by patents.  Unmentioned in the article is the role of the Federal Circuit, which provided some measure of certainty to the investment community, giving patent protection both the uniformity and enforcement "teeth" that made patents meaningful.

There continue to be purportedly ethical and certainly political opposition to "patenting life;" the factual and legal limitations of those arguments have been discussed elsewhere (see "In Support of Gene Patents" and "Anti-Patent ("Sullivan?") Malice by the New York Times").  Fuller and Reeve remind us that this false debate can have serious economic  consequences that we in America have so far avoided.  It would be a pity to snatch defeat from the jaws of victory at this late date.

Comments

[Amit Goyal]

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