This week, a Senate committee is scheduled to take up legislation dubbed the Medication Affordability and Patent Integrity Act.
It's a serious misnomer. Far from making new medications affordable, it will delay them, and far from protecting patent integrity, it will hurt the foundation of intellectual property protection on which American prosperity depends.
The U.S. patent system beckons to our innovators as they pour time, financial resources, and effort into bringing bright ideas to fruition. Very simply, during the 20-year period a patent is in force, its owner is protected from theft by competitors. Patents provide the "market exclusivity" that makes hard work pay off.
The benefits accrue not just to the patent owners, but to all Americans. The first advantage is the steady stream of technological improvement that brings us better cameras in our phones, more medical treatments, and faster wireless technology every year. The second is the overall boost to our economy and global competitiveness. In fact, IP-intensive industries are responsible for 41% of America's domestic output and close to half of all jobs.
The Senate legislation takes aim at biotech patents in particular. That's bad enough. But given the cavalier attitude toward the value of the intellectual property protection reflected in this legislation, investors will watch carefully for the possibility of contagion.
For drugmakers, the integrity of their enterprise depends on robust but separate processes involving the U.S. Patent and Trademark Office and the Food and Drug Administration.
The PTO ensures that new chemical compounds and new medical processes such as delivery systems meet the criteria for a patent. Meanwhile, the FDA focuses on the safety and efficacy of drugs by overseeing companies' extensive clinical trial data and drug information -- the crux of how the technology works.
Information submitted to the FDA often includes highly sensitive trade secrets, which can be worth tens of millions of dollars, if not more. Most proprietary information resides safely within this regulatory channel -- that is, confined inside the FDA.
This clear delineation between each agency's responsibilities keeps their respective expertise focused and minimizes unnecessary data-sharing that could jeopardize the confidentiality and security of trade secrets.
This Senate bill would upend this system. It mandates the disclosure and certification of identical data between both agencies. This unprecedented cross-disclosure requirement would create a nightmare scenario for innovators seeking to patent new medicines and for the PTO in handling the vast volume of additional data.
The reporting requirement also introduces significant financial and legal risks. A company that invested billions in developing a new drug could find its patent invalidated due to a minor administrative error in the disclosure process.
There is no justification for these provisions. Right now, the "duty of candor and good faith" allows PTO to invalidate patents if companies engage in deceptive disclosures or misconduct.
Besides saddling innovators with severe and unfounded legal risks, the bill would also impose significant burdens on the PTO. The office is already swamped in what Yale's Journal of Law and Technology has called "information overload." Forcing drug patent examiners to do an additional deep dive into clinical trial data, which is outside their area of expertise, would increase their workload significantly -- introducing unnecessary delay in patent grants and in drug development.
The proposed legislation also invites the theft of critical trade secrets by global rivals. Its drafters don’t seem to take China and other bad actors seriously. America's drug innovators rely on advanced formulations, manufacturing processes, and clinical trial data to maintain a competitive edge. Foreign adversaries would jump at the opportunity to get hold of information that could pare their own R&D costs.
One of the defining characteristics of the PTO is openness. The agency's public dissemination and regulatory disclosures process should not be compromised by the need to create new silos for trade secrets.
This proposed legislation works against American innovators and for the interests of foreign powers -- all for no noticeable benefit. Fortunately, lawmakers have the opportunity to promote genuine patent integrity by redesigning or scrapping the bill during the Health, Education, Labor and Pensions Committee markup.
James Edwards is executive director of Conservatives for Property Rights (@4PropertyRights) and patent policy advisor to Eagle Forum Education & Legal Defense Fund. The views expressed are his own.