Let’s put this bad idea out of its misery

By Sander A. Flaum, MBA, Principal, Flaum Navigators, Advisory Board Member and Executive-in-Residence, Fisher College of Business, The Ohio State University 

One of the more cynical attacks on our industry goes something like this: “Taxpayers fund medical research through research grants, so they should get the benefits of any discoveries, not the greedy pharma companies.” I’m sure you’ve heard it. Politicians and pundits of all stripes love to reinforce the idea that pharma is gorging at the public trough – that all we do is gobble up federal grants as seed money for our outrageously priced nostrums. 

Of course, like much of what we hear today, it’s just not true. The NIH and other government agencies don’t fund drug development. They underwrite basic research, usually without regard to any potential use. In fact, many years ago, Senator William Proxmire took great delight in mocking research that had no obvious applications. 

In a way he was right. Basic research advances science, but little more. The hard part – turning a discovery into a device or a drug – is likely to cost hundreds of millions and even billions of dollars. And you will not see a politician of any party endorsing a financial risk without a guaranteed return. They’re happy to leave the translational process to entrepreneurs who are willing to risk their labor and cash in return for the prospects of reward.

Speculative risk is fundamental to this country. Forget the Bill of Rights – patent protection is baked into our Constitution. Article 1, Section 8 gives Congress the power to “promote the progress of science and useful arts by securing for limited times to authors and inventors the exclusive rights to the exclusive rights to their respective rights and discoveries.” 

Patent protection was among the first bills Congress passed in 1790. Nearly 200 years later, in 1980, the Bayh-Dole Act specifically allowed contractors to patent discoveries even if a federal agency had funded them. This legislation ensured that innovators who take discoveries from lab bench to hospital bedside could be rewarded. Today, research universities and scientists benefit from patent royalties and use the proceeds to continue their work. Yet others have gained far more. 

Think of patients who have seen their cancers cured. Families who’ve watched children with rare diseases outlive their gloomy prognoses. A national pandemic brought under control in months, not years. 

I wouldn’t be writing about the attack on drug patents if it weren’t gaining traction in another way. And that’s the crazy notion that in order to help the rest of the world manage the pandemic, we should strip companies like Pfizer and Moderna of their patents and put them in the public domain. Amazingly, this idiocy has actually been suggested by people who hold responsible government positions.

Which do you think would be more helpful? Stripping intellectual property from the innovators and giving it away to laboratories and manufacturers around the world, most of whom are incapable of using it? Or simply buying vaccines and giving them to the countries most in need? 

Not surprisingly, global leaders are underwhelmed by the idea of patent divestiture. For them, patents are not an impediment. The problem is that too many countries lack our level of pharmaceutical R&D and manufacturing infrastructure. When politicians castigate our industry because breakthrough drugs happen cost more here than in other countries, they ignore the fact that most of these drugs would never have been developed in the first place had we hobbled our industry with price constraints and investment disincentives. 

“Promote the progress of science.” Once again, the Founders got it right.