Tags: Health Care | Lobbyists | Patent | Provision

Health Care Lobbyists Seek Special Patent Provision

Health Care Lobbyists Seek Special Patent Provision

By    |   Sunday, 30 August 2015 02:15 PM

In this increasingly technological and engineered world in which we live, more and more, obtaining and protecting intellectual property rights is becoming a strategic necessity for businesses.

Lobbyists for the pharmaceutical industry are trying to use a current congressional debate over patent reform as a way to insert a special carve out in patent law for politically favored companies.

Between this past August 4th and 27th, Apple (AAPL) was granted more than 225 US patents as the company looks to shore up its competitive position and protect new products and services it aims to bring to the marketplace.

Taking a much wider step back, data from the U.S Patent and Trademark Office shows a substantial rise in patent applications over the last 10 years compared to the ten year prior.

There is little debate that patent law is a complicated subject, yet the idea of protecting intellectual and private property is a centerpiece of American free market capitalism. At the same time, the Founding Fathers, who included protection of intellectual property rights in the Constitution itself, never contemplated providing a perpetual monopoly to patent holders. Under current patent law, the patent term spans 20 years “from the filing date of the earliest U.S. application to which priority is claimed (excluding provisional applications).”

Congress is once again contemplating changes to patent law to help consumers by cracking down on costly and abusive patent lawsuits. H.R. 9, the Innovation Act, sponsored by House Judiciary Chairman Bob Goodlatte (R-Virginia) is Congress’ effort to end abusive patent lawsuits that drain millions and millions if not billions from the economy.

These abusive lawsuits also call legitimate patents into question and shift resources from productive investments for research and development to legal fees and frivolous lawsuits. Calculations by the Cornell Law Review, based on a survey of defendants and a database of litigation, estimated accrued direct costs to defendants arising from “non practicing entities (NPE) patent assertions (better known as “patent trolls”) to be roughly $29 billion in 2011.

Over the years, some companies have learned to game the system by filing patent after patent to use existing patent law to extend the time period a company holds a unique license that would drive profits and earnings.

As Wolf Greenfield pointed out in December 2013, “Owners of patents covering methods of manufacturing drugs or biologics may be able to squeeze extra value out of their intellectual property by taking advantage of the obscure provision that makes patent term extension (PTE) rights more robust for “method of manufacturing” patents. This exception is particularly significant for biopharmaceutical companies if they are aware of it well before preparing their PTE applications.”

According to a Politico report, “The drug industry is circulating a sign-on letter to build support for exempting drugs from a streamlined patent challenge process, a key issue stalling the House’s Innovation Act.” Given the growing target market that is domestic aging population and the critical nature of drug patent life, it is hardly surprising to learn the pharmaceutical industry has deployed lobbyists to add a last minute provision that would scale back the Inter Partes Review (IPR), a process that allows an efficient way to challenge illegitimate patents.

Government is so entwined in the health care sector of the economy, any idea that hikes costs for drugs will hike government expenditures. Considering that Medicare, Medicaid, and health programs for the military and veterans pick up a high percentage of drug costs, increased costs will be passed on to the taxpayer.

Estimates vary about the cost of this push to the taxpayer of between $31 billion and $93 billion over the next two decades. In other words, this proposal will likely increase the federal deficit, which according to USDebtClock.org already stands at $18.4 trillion or almost $155,000 per taxpayer.

Patent law may be complicated and filled with loopholes, but lawyers for the pharmaceutical industry are using influence to attempt a last minute special interest carve out to benefit the industry to the detriment of the free market and consumers. Hopefully, Congress will decide not to step in and allow a functioning IPR program to continue to weed out illegitimate patent requests.

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In this increasingly technological and engineered world in which we live, more and more, obtaining and protecting intellectual property rights is becoming a strategic necessity for businesses.
Health Care, Lobbyists, Patent, Provision
Sunday, 30 August 2015 02:15 PM
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