California Companies Urge Congress to Approach Patent Reform Cautiously

On Friday, CHI organized a letter with more than 100 California-based companies and organizations to Senator Dianne Feinstein, expressing important concerns about recently reintroduced patent reform legislation. CHI represents more than 250 life sciences companies and academic research organizations whose inventions are the basis of California’s global leadership in the life sciences industry, representing more than 270,000 jobs across our state and improving the lives of millions around the world.

California’s innovative high-tech industries lead the world in biotechnology, electronics, green technology, medical technology, information technology and telecommunications, and more. The biomedical industry’s advanced research and development is extremely risky and expensive in nature, with the average biotech drug, for example, taking almost 15 years and a billion dollars to reach the market. Strong patent protections enable companies to attract the risk capital they need in order to continue to innovate new technologies that save lives. The hundreds of smaller, venture capital-backed firms in the state, many spun out of California’s world-class research universities and private research institutes, could not attract funding without strong intellectual property protection.

CHI supports balanced and reasonable efforts to improve the U.S. patent system, particularly measures that would improve patent quality by adequately funding and modernizing operations at the U.S. Patent and Trademark Office. Unfortunately, the recently introduced Patent Reform Act of 2009 includes provisions that would undermine patent certainty, encourage infringement, and weaken the enforceability of patent rights and intellectual property protections upon which our industry depends. Reducing the value of patents will shrink investment, ultimately diminishing the flow of new medicines and treatments available to patients.

The letter submitted to Feinstein describes how these same provisions raised concerns and objections in the last Congress. In the current economic crisis, CHI believes the enactment of this legislation would cause even greater harm today—delaying promising research and development, reducing investment, diminishing innovation and slowing job growth.

CHI believes the proposed legislation fails to account for recent court decisions that have transformed the patent law landscape and corrected certain alleged failings of the current system in terms of excessive damages awards. While the full effects remain to be seen, decisions such as Ebay v. MercExchange (limiting the availability of injunctive relief), Seagate (limiting treble damages), KSR v. Teleflex (reinforcing the non-obviousness standard), and Microsoft v. AT&T (limiting offshore infringement liability) have clearly limited the legal options of patent holders. As for damage awards, the premier example of excessive damages raised in the past—the Alcatel-Lucent v. Microsoft decision—was overturned on the basis that the damages awarded were indeed excessive under the existing law. This suggests that the present system works and is not in need of fundamental overhaul in the form of mandatory apportionment.

California is at the epicenter of this debate, so we are hopeful that Senator Feinstein's thoughtful views will be reflected in the legislation. We appreciated her efforts during last year’s debates on patent reform and we stand ready to work with her to ensure that reform of the patent system maintains and strengthens protections for innovations across all sectors of the economy.

CHI-Advancing California biomedical research and innovation.

Legislation for Follow-on Biologics Must Not Hinder Innovation

California Healthcare Institute supports the creation of a science-based pathway for the U.S. Food and Drug Administration (FDA) to review and approve follow-on biologic drugs. But we are concerned that the legislation introduced today by Chairman Waxman, Representatives Pallone, Deal and Emerson may actually hinder the development of new biotechnology therapies.

To serve the public interest, follow-on biologics legislation should incorporate three essential principles: employing the best science to make sure that products are safe for patients, encouraging price competition among manufacturers, and providing ample incentives to encourage continued private-sector investment in the next generation of breakthroughs.

While the FDA has an excellent track record ensuring the safety of generic drugs, scientists at the agency are far more cautious about follow-on biologics. Generic drugs are chemical compounds whose molecular structure can be copied precisely. The Waxman legislation would give the FDA wide discretion to determine what studies are necessary to determine the safety and efficacy of a follow-on biologic, and whether a follow-on product could be considered interchangeable with an innovator’s drug. In fact, the bill would empower the Secretary of Health and Human Services to make determinations of interchangeability before the FDA has completed its scientific and technical analyses. Yet biologics are genetically engineered living cells, which are vastly more complex than traditional pharmaceuticals. Indeed, FDA officials have suggested that biologics’ complexity is so great that even using the most advanced science, there is no way to know whether or not a follow-on biologic is an exact copy. Clearly there is a need for clinical studies, well beyond the requirements of the Waxman bill, to ascertain the safety of follow-on biologics.

The new legislation poses economic risks as well. It mirrors the Hatch-Waxman bill of 1984, which opened the door to generic drugs. Hatch-Waxman allowed innovators a protection known as the “data exclusivity period.” The innovator’s drug was permitted a minimum of five years post-approval on market before a generic competitor could use the original manufacturers’ clinical trial data to establish the generic’s safety and efficacy. The new legislation would extend this same approach to biologics. Yet today’s biotech industry, and the time and expense of developing a novel biotech drug—now more than 15 years and almost $1 billion—bear little resemblance to 1984’s pharmaceutical industry. Other legislative approaches, including one endorsed by Sen. Kennedy, have included substantially longer periods of data exclusivity. And we believe an extended period is necessary to encourage investors to continue to put up the risk capital on which the entire American biotechnology industry was founded.

Biologic drugs represent the cutting edge of medical research and biotechnology has developed advanced therapies and treatments for patients based on this technology. Continued research and development will lead to better, more personalized treatments, and perhaps cures, for these and other rare diseases.

Our industry supports more than 270,000 jobs in California—a number that balloons to more than one million when one considers indirect employment statistics—many of which are high-wage, high-value jobs. We are one of the few sectors of the economy creating jobs; a vital engine driving California’s future. As an industry dependent on large and risky investments to support research and development timelines that take more than 15 years, though, our firms are struggling like many others in the current economy. Promising research that could lead to cures and treatments for cancer, HIV/AIDS, Parkinson’s and other diseases are jeopardized by policies that do not reward innovation.

We urge Congress to move carefully on this issue and ensure that any pathway for approving follow-on biologics respects sound science, safeguards patient safety and provides incentives to continue research and development of breakthrough therapies and cures.

CHI-Advancing California biomedical research and innovation

CHI Applauds President Obama's Expansion of Federal Funding to Stem Cell Research

Saving and improving lives through medical innovation is the ultimate goal of the life sciences industry, and its greatest benefit to humankind. CHI enthusiastically supports President Obama’s decision to allow the National Institutes of Health (NIH) to fund stem cell research. CHI believes that stem cell research holds great promise for breakthrough, novel therapies and, one day, cures for millions of patients in the U.S. and around the world who suffer from dread diseases and conditions such as spinal cord injuries, blindness, diabetes, Parkinson’s and Alzheimer’s, and others.

California has been on the leading edge in stem cell research since the passage of Proposition 71 in 2004 and the development of the California Institute for Regenerative Medicine (CIRM). With the recent infusions in research dollars to the National Institutes of Health in President Obama’s stimulus package, and now the lifting of the research ban, California is uniquely positioned to capitalize on this opportunity to advance important, life-saving research.

Today’s action to expand NIH funding of stem cell research is a welcome and critical step—one that shows this administration’s willingness to base its decisions on sound science. But stem cell research has a long way to go before it can deliver on the promise of cures for critical unmet medical needs. To realize the promise of stem cell research and the intent of the millions of California voters who overwhelming passed Proposition 71, new medicines must be commercialized and used to treat patients. Policies need to reward medical innovation and minimize barriers to technology transfer to encourage the speedy delivery of new treatments derived from stem cell research. CHI will continue to work diligently with legislators to develop public policies that advance biomedical science, biotechnology, pharmaceutical and medical device innovation in California.

CHI-Advancing California biomedical research and innovation