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Dan Eramian
Vice President, Communications
Biotechnology Industry Organization
www.bio.org
Global Public Policy Institute and Ecole de Science Politique
Paris, June 24, 2004
Thanks very much. From the biotechnology industry's viewpoint, there is a fundamental message about patents I would like you to remember: patents... save... lives.
That may be a credibility-stretcher for some of you, but we in biotech see its truth every day.
Here's why:
More than 90 percent of the 1,000+ biotechnology companies in business today are small businesses, a majority with less than 100 employees.
These small companies are pursuing big science. It takes on average 10 years and hundreds of millions of dollars of investment to bring a new drug to market - and more drugs fail in clinical trials than succeed.
To paraphrase playwright Tennessee Williams, these companies "depend upon the kindness of strangers." They must convince unseen, often unknown investors that their company's research and development pipeline has a better than terrible chance at paying off, and that is one very tough job.
Last year, investors poured almost $17 billion into biotech companies, despite the fact that most have no products on the market and will probably lose money years before turning profitable. And many will never become profitable. So why do investors keep writing the checks?
Because patents are in place that protect intellectual property.
Patents attract investors, because they assure a return if a risky research project is successful. But this investor support is fragile, and it can be shaken by public-relations blunders, especially in the realm of patents.
To give just one example of what can happen, back in March of 2000, the U.S. genomics bubble popped when the press misread a statement from President Clinton and British Prime Minister Tony Blair as a change in their governments' policies that would threaten gene patents. Biotech stocks plunged 13 percent in a single day, a loss of more than $40 billion in value. And that was because of a misinterpretation of single statement.
Because patents are so essential to the biotech business model, our members support strong patent protections.
Of course, there are diverse opinions in our organization. We represent 1,000 organizations ranging from universities to startup companies to the world's largest biotech firms such as Amgen and Genentech. They vary enormously in their approach to intellectual property - some in-license technology and products, some outlicense; some make a business out of marketing research tools or drug-delivery technology; others are more squarely focused on drug development.
So one of our biggest daily challenges is building a consensus among our own members in what is a legal, economic and public affairs battleground.
That's the internal challenge.
From the outside, we've had to respond to broadside attacks on biotechnology patents, some of which grow out of deeply held ethical and religious convictions. Back in 1995, for example, 200 religious leaders, although most of them knew very little about biotech, signed a statement calling for a moratorium on patents for human genes and genetically modified animals. Said one signatory: "Once we allow all of life to be defined as mere products of human invention ... we denigrate our reverence to God."
The controversy died down quickly, but we initiated a dialogue with some of those same religious leaders, who proved eager to learn more about what biotechnology really is all about and how it can help people.
That dialogue has led to a full-time partnership with the National Council of Churches, the largest ecumenical organization in the United States, and to the creation of BIO Ventures for Global Health, which I'll discuss in a few moments.
So the here's what we learned: opposition to biotech patents is often a product of ignorance, or to put it kindly, a lack of full understanding of the science or the issues.
One of the key public affairs missions for BIO and biotechnology companies is to educate the public about what it is we're patenting or not patenting. We are not creating or patenting human beings, or creepy critters, but life-saving technologies like vaccines, drugs and crops that can deliver better yields. Patents help our member companies fund the research and development for these technologies.
Of course, many patent issues are decided in court, because after all, a patent really is simply a right to sue someone else if they make, sell, import or use an invention. But that creates public relations challenges.
A patent holder has a monopoly, and people don't like monopolies. Those of you who work for companies enforcing patents can find yourself cast as Goliath against David when battles in the courtroom spill out into the courtroom of public opinion. To give you an example: Monsanto sued a Canadian farmer named Percy Schmeiser for saving Roundup Ready seeds and replanting them without permission.
Mr. Schmeiser is a 73-year-old who has taken on Mount Everest three times and is the former mayor of a small town - the perfect test case from the point of view of the activist groups that oppose biotechnology, he's the little guy in a conflict with a Mount Everest-sized company. Monsanto took a major public relations risk by challenging him, through appeals that went all the way to Canada's Supreme Court.
As many of you know, Monsanto prevailed, but the case made a lot of headlines, and here's how many times Monsanto was praised in news stories for defending its patent rights - ZERO!
Even when your legal position is solid, you can get bad press when defending a patent, creating policy headaches for the rest of the industry. In October 2001, during the anthrax scare that followed the 9/11 attacks in the U.S., high demand for Cipro, the only antibiotic approved to treat the disease, led to tense negotiations between patent-holder Bayer and the U.S. government, which considered ordering compulsory licensing before agreeing to a discounted price. For Bayer, there was a risk to its corporate image if it were portrayed in the media that supplies were inadequate and prices too high during a national emergency. In the end, Bayer agreed to the discounted price. Corporate goodwill is often as valuable an asset as a patent.
At BIO, we try to stay focused on policy. Here are just a few of the intellectual property issues we face:
- Should life forms, genes and gene mutations be patented, and if so, what should the standards be?
- Should agricultural biotech companies be allowed to enforce patents on their seeds - that is, use the power of the courts to stop farmers from saving and replanting seeds?
- If a company is letting an important patent sit idle while blocking others from research in the area, should the government step in?
- How will the regulatory system handle the expiration of patents on recombinant proteins, which, because of their complexity, can't be simply copied like the generic drugs with which we're all familiar?
We've even had to field questions from anti-biotech commentators about whether human embryos or human hybrid organisms can be patented.
I'm fortunate at BIO to represent an industry that cares about its reputation and has a proud history of doing the right thing more often than not. The universities that patented the foundational technology of this industry - recombinant DNA - licensed the technology widely and nonexclusively, even though one of the key scientists - Herb Boyer - was a founder of Genentech and might have benefited from an exclusive license.
Many biotech companies have since followed the nonexclusive model with technological tools. Agricultural companies that could protect their seeds with a "terminator" gene have opted not to, and they've made broadly available proprietary genomic information on staple crops like rice.
Biotech companies that market expensive drug therapies have created patient assistance programs to help poor patients without insurance. And most biotech companies don't enforce patents against academic scientists who use their technology for purely research purposes.
So, even though biotech firms are avid patenters, they believe that a patent locked up in a filing cabinet does nobody much good, except perhaps the attorney billing levels in somebody's law firm.
Part of the public affairs problem is that the average member of the public doesn't really know what a patent is, and even a fair number of health and economic policy experts don't comprehend their central role in biomedical innovation. Moreover, the very word patent leaves an impression of "greed" or "selfishness" with many members of the public, the media and even decision makers in our governments.
If we want to push the opinion pendulum back in the other direction, we have to make the case for intellectual property vigorously and through long-term education - a press release now and then isn't enough.
And, in biotech especially, we must bear in mind the unique nature of our industry and the potential for eroding our goodwill with the public, an asset that is just as valuable as a patent, and in the long-term, is where the real return on investment comes in.
That goodwill hinges on access to our products, by far the most compelling of all the patent-related public affairs issues we encounter at BIO.
I'd like to describe to you a famous scenario Harvard psychologists used in the 1970s to analyze moral reasoning in children. It goes like this: "Hans has a wife who is dying but can be saved by an expensive drug invented by a local druggist. Hans cannot afford the drug or get credit to purchase it. Do you think Hans should steal the drug to save his dying wife?"
That psychologists invented this scenario to gauge moral reasoning suggests how deeply resonant the issues surrounding drug patents and access are. You have only to substitute the governments of Africa or Brazil for Hans and makers of HIV drugs for the druggist to see how this dilemma applies to the biotechnology and pharmaceutical industries.
If responsible companies want to avoid the legislative equivalent of Hans stealing the drug -- through compulsory licensing, for example -- we've got to find ways to solve these dilemmas while keeping the patent system intact. It is system that creates the incentives for developing new drugs in the first place.
And those drugs, more than 200 approved so far - save lives.
In 2002, BIO launched a global health initiative to find new ways of developing products for third world diseases - without attacking the existing patent system. The truth is, patents aren't the problem anyway. The problem is the lack of markets and poor health infrastructure in many developing countries, where people often lack access even to generic drugs and inexpensive vaccines. But patents are an easier target than health-care funding and infrastructure.
As a result of our global health initiative, we hosted a partnering meeting for companies, investors, government agencies and NGOs in late 2002, and this month we've joined with the Bill and Melinda Gates Foundation to create BIO Ventures for Global Health.
The program was established to help counter a well-known and perfectly miserable international crisis: market barriers, funding barriers and information barriers have long restricted biotechnology investment in diseases that primarily affect populations outside of North America and Europe. As a result, less than 10 percent of health research funding is targeted to diseases that account for 90 percent of the global disease burden.
That will begin to change with this project. BVGH will work with companies and foundations to identify market opportunities, build new partnerships and secure funding for the most promising new technologies to fight some of the world's most devastating and neglected diseases - diseases that are not getting that research and development today.
Of course, there's a public affairs component to the project - a newsletter, press releases, web site, speaking engagements - but ultimately the best public affairs component grows out of sound policy and action, one that addresses the fundamental barriers to drug development for third world needs.
I began with that simple fact: patents save lives. It's not so outrageous a statement to consider - when you look at the impact such global programs can do - and that the funding for those programs is generated by profits - from products protected with patents.
Thank you.
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