Tournament: Meadows | Round: 1 | Opponent: Immaculate Heart BC | Judge: Jacob Smith
Innovation DA
Strong current IP guarantees causes massive Pharma innovation.
Stevens and Ezell 20 Philip Stevens and Stephen Ezell 2-3-2020 "Delinkage Debunked: Why Replacing Patents With Prizes for Drug Development Won’t Work" https://itif.org/publications/2020/02/03/delinkage-debunked-why-replacing-patents-prizes-drug-development-wont-work (Philip founded Geneva Network in 2015. His main research interests are the intersection of intellectual property, trade, and health policy. Formerly he was an official at the World Intellectual Property Organization (WIPO) in Geneva, where he worked in its Global Challenges Division on a range of IP and health issues. Prior to his time with WIPO, Philip worked as director of policy for International Policy Network, a UK-based think tank, as well as holding research positions with the Adam Smith Institute and Reform, both in London. He has also worked as a political risk consultant and a management consultant. He is a regular columnist in a wide range of international newspapers and has published a number of academic studies. He holds degrees from the London School of Economics and Durham University (UK).)Elmer
The Current System Has Produced a Tremendous Amount of Life-Sciences Innovation The frontier for biomedical innovation is seemingly limitless, and the challenges remain numerous—whether it comes to diseases that afflict millions, such as cancer or malaria, or the estimated 7,000 rare diseases that afflict fewer than 200,000 patients.24 And while certainly citizens in developed and developing nations confront differing health challenges, those challenges are increasingly converging. For instance, as of this year, analysts expect that noncommunicable diseases such as cardiovascular disease and diabetes will account for 70 percent of natural fatalities in developing countries.25 Citizens of low- and middle-income countries bear 80 percent of the world’s death burden from cardiovascular disease.26 Forty-six percent of Africans over 25 suffer from hypertension, more than anywhere else in the world. Similarly, 85 percent of the disease burden of cervical cancer is borne by individuals living in low- and middle-income countries.27 To develop treatments or cures for these conditions, novel biomedical innovation will be needed from everywhere. Yet tremendous progress has been made in recent decades. To tackle these challenges, the global pharmaceutical industry invested over $1.36 trillion in RandD in the decade from 2007 to 2016—and it’s expected that annual RandD investment by the global pharmaceutical industry will reach $181 billion by 2022.28 In no small part due to that investment, 943 new active substances have been introduced globally over the prior 25 years.29 The U.S. Food and Drug Administration (FDA) has approved more than 500 new medicines since 2000 alone. And these medicines are getting to more individuals: Global medicine use in 2020 will reach 4.5 trillion doses, up 24 percent from 2015.30 Moreover, there are an estimated 7,000 new medicines under development globally (about half of them in the United States), with 74 percent being potentially first in class, meaning they use a new and unique mechanism of action for treating a medical condition.31 In the United States, over 85 percent of all drugs sold are generics (only 10 percent of U.S. prescriptions are filled by brand-name drugs).32 And while some assert that biotechnology companies focus too often on “me-too” drugs that compete with other treatments already on the market, the reality is many drugs currently under development are meant to tackle some of the world’s most intractable diseases, including cancer and Alzheimer’s.33 Moreover, such arguments miss that many of the drugs developed in recent years have in fact been first of their kind. For instance, in 2014, the FDA approved 41 new medicines (at that point, the most since 1996) many of which were first-in-class medicines.34 In that year, 28 of the 41 drugs approved were considered biologic or specialty agents, and 41 percent of medicines approved were intended to treat rare diseases.35 Yet even when a new drug isn’t first of its kind, it can still produce benefits for patients, both through enhanced clinical efficacy (for instance, taking the treatment as a pill rather than an injection, with a superior dosing regimen, or better treatment for some individuals who don’t respond well to the original drug) and by generating competition that exerts downward price pressures. For example, a patient needing a cholesterol drug has a host of statins from which to choose, which is important because some statins produce harmful side effects for some patients. Similarly, patients with osteoporosis can choose from Actonel, Boniva, or Fosomax. Or take for example Hepatitis C, which until recently was an incurable disease eventually requiring a liver transplant for many patients. In 2013, a revolutionary new treatment called Solvadi was released that boosted cure rates to 90 percent. This was followed in 2014 by an improved treatment called Harvoni, which cures the Hepatitis C variant left untouched by Solvadi. Since then, an astonishing six new treatments for the disease have received FDA approval, opening up a wide range of treatment options that take into account patients’ liver and kidney status, co-infections, potential drug interactions, previous treatment failures, and the genotype of HCV virus.36 “If you have to have Hepatitis C, now is the time to have it,” as Douglas Dieterich, a liver specialist at the Icahn School of Medicine at Mount Sinai Hospital in New York, told the Financial Times. “We have these marvellous drugs we can treat you with right now, without side effects,” he added. “And this time next year, we’ll have another round of drugs available.”37 Moreover, the financial potential of this new product category has led to multiple competing products entering the market in quick succession, in turn placing downward pressure on prices.38 As Geoffrey Dusheiko and Charles Gore write in The Lancet, “The market has done its work for HCV treatments: after competing antiviral regimens entered the market, competition and innovative price negotiations have driven costs down from the initially high list prices in developed countries.”39 As noted previously, opponents of the current market- and IP-based system contend patents enable their holders to exploit a (temporary) market monopoly by inflating prices many multiples beyond the marginal cost of production. But rather than a conventional neoclassical analysis, an analysis based on “innovation economics” finds it is exactly this “distortion” that is required for innovation to progress. As William Baumol has pointed out, “Prices above marginal costs and price discrimination become the norm rather than the exception because … without such deviations from behaviour in the perfectly competitive model, innovation outlays and other unavoidable and repeated sunk outlays cannot be recouped.”40 Or, as the U.S. Congressional Office of Technology Assessment found, “Pharmaceutical RandD is a risky investment; therefore, high financial returns are necessary to induce companies to invest in researching new chemical entities.”41 This is also why, in 2018, the U.S. Congressional Budget Office estimated that because of high failure rates, biopharmaceutical companies would need to earn a 61.8 percent rate of return on their successful new drug RandD projects in order to match a 4.8 percent after-tax rate of return on their investments.42 Indeed, it’s the ability to recoup fixed costs, not just marginal costs, through mechanisms such as patent protection that lies at the heart of all innovation-based industries and indeed all innovation and related economic progress. If companies could not find a way to pay for their RandD costs, and could only charge for the costs of producing the compound, there would be no new drugs developed, just as there would be no new products developed in any industry. Innovating in the life sciences remains expensive, risky, difficult, and uncertain. Just 1 in 5,000 drug candidates make it all the way from discovery to market.43 A 2018 study by the Deloitte Center for Health Solutions, “Unlocking RandD productivity: Measuring the return from pharmaceutical innovation 2018,” found that “the average cost to develop an asset an innovative life-sciences drug including the cost of failure, has increased in six out of eight years,” and that the average cost to create a new drug has risen to $2.8 billion.44 Related research has found the development of new drugs requires years of painstaking, risky, and expensive research that, for a new pharmaceutical compound, takes an average of 11.5 to 15 years of research, development, and clinical trials, at a cost of $1.7 billion to $3.2 billion.45 IP rights—including patents, copyrights, and data exclusivity protections—give innovators, whether in the life sciences or other sectors, the confidence to undertake the risky and expensive process of innovation, secure in the knowledge they’ll be able to capture a share of the gains from their efforts. And these gains are often only a small fraction of the true value created. For instance, Yale University economist William Nordhaus estimated inventors capture just 4 percent of the total social gains from their innovations; the rest spill over to other companies and society as a whole.46 Without adequate IP protection, private investors would never find it viable to fund advanced research because lower-cost copiers would be in a position to undercut the legitimate prices (and profits) of innovators, even while still generating substantial profits on their own.47 As the report “Wealth, Health and International Trade in the 21st Century” concludes, “Conferring robust intellectual property rights is, in the pharmaceutical and other technological-development contexts, in the global public’s long-term interests. Without adequate mechanisms for directly and indirectly securing the private and public funding of medicines and vaccines, research and development communities across the world will lose future benefits that would far outweigh the development costs involved.”48 Put simply, the current market- and IP-based life-sciences innovation system is producing life-changing biomedical innovation. As Jack Scannell, a senior fellow at Oxford University’s Center for the Advancement of Sustainable Medical Innovation has explained, “I would guess that one can buy today, at rock bottom generic prices, a set of small-molecule drugs that has greater medical utility than the entire set available to anyone, anywhere, at any price in 1995.” He continued, “Nearly all the generic medicine chest was created by firms who invested in RandD to win future profits that they tried pretty hard to maximize; short-term financial gain building a long-term common good.”49 For example, on September 14, 2017, the FDA approved Mvasi, the first biosimilar for Roche’s Avastin, a breakthrough anticancer drug when it came out in the mid-1990s for lung, cervical, and colorectal cancer.50 In other words, a medicine to treat forms of cancer that barely existed 20 years ago is now available as a generic drug today. It’s this dynamic that enables us to imagine a situation wherein drugs to treat diseases that aren’t available anywhere at any price today (for instance, treatments for Alzheimer’s or Parkinson’s) might be available as generics in 20 years. But that will only be the case if we preserve (and improve where possible) a life-sciences innovation system that is generally working. The current system does not require wholesale replacement by a prize-based system that—notwithstanding a meaningful success here or there—has produced nowhere near a similar level of novel biomedical innovation.
Reducing IP protections chills future investment – even the perception of wavering commitment scares off companies.
Grabowski et al. ’15 (Harry; Professor Emeritus of Economics at Duke, and a specialist in the intersection of the pharmaceutical industry and government regulation of business; February 2015; “The Roles Of Patents And Research And Development Incentives In Biopharmaceutical Innovation”; Health Affairs; https://www.healthaffairs.org/doi/10.1377/hlthaff.2014.1047; Accessed: 8-31-2021; AU)
Patents and other forms of intellectual property protection play essential roles in encouraging innovation in biopharmaceuticals. As part of the “21st Century Cures” initiative, Congress is reviewing the policy mechanisms designed to accelerate the discovery, development, and delivery of new treatments. Debate continues about how best to balance patent and intellectual property incentives to encourage innovation, on the one hand, and generic utilization and price competition, on the other hand. We review the current framework for accomplishing these dual objectives and the important role of patents and regulatory exclusivity (together, the patent-based system), given the lengthy, costly, and risky biopharmaceutical research and development process. We summarize existing targeted incentives, such as for orphan drugs and neglected diseases, and we consider the pros and cons of proposed voluntary or mandatory alternatives to the patent-based system, such as prizes and government research and development contracting. We conclude that patents and regulatory exclusivity provisions are likely to remain the core approach to providing incentives for biopharmaceutical research and development. However, prizes and other voluntary supplements could play a useful role in addressing unmet needs and gaps in specific circumstances. Technological innovation is widely recognized as a key determinant of economic and public health progress. 1,2 Patents and other forms of intellectual property protection are generally thought to play essential roles in encouraging innovation in biopharmaceuticals. This is because the process of developing a new drug and bringing it to market is long, costly, and risky, and the costs of imitation are low. After a new drug has been approved and is being marketed, its patents protect it from competition from chemically identical entrants (or entrants infringing on other patents) for a period of time. For firms to have an incentive to continue to invest in innovative development efforts, they must have an expectation that they can charge enough during this period to recoup costs and make a profit. After a drug’s patent or patents expire, generic rivals can enter the market at greatly reduced development cost and prices, providing added consumer benefit but eroding the innovator drug company’s revenues. The Drug Price Competition and Patent Term Restoration Act of 1984 (commonly known as the Hatch-Waxman Act) was designed to balance innovation incentives and generic price competition for new drugs (generally small-molecule chemical drugs, with some large-molecule biologic exceptions) by extending the period of a drug’s marketing exclusivity while providing a regulatory framework for generic drug approval. This framework was later changed to encompass so-called biosimilars for large-molecule (biologic) drugs through the separate Biologics Price Competition and Innovation Act of 2009. Other measures have been enacted to provide research and development (RandD) incentives for antibiotics and drugs to treat orphan diseases and neglected tropical diseases. Discussion continues about whether current innovation incentives are optimal or even adequate, given evolving public health needs and scientific knowledge. For instance, the House Energy and Commerce Committee recently embarked on the “21st Century Cures” initiative, 3 following earlier recommendations by the President’s Council of Advisors on Science and Technology on responding to challenges in “propelling innovation in drug discovery, development, and evaluation.” 4 In this context, we discuss the importance of patents and other forms of intellectual property protection to biopharmaceutical innovation, given the unique economic characteristics of drug research and development. We also review the RandD incentives that complement patents in certain circumstances. Finally, we consider the pros and cons of selected voluntary (“opt-in”) or mandatory alternatives to the current patent- and regulatory exclusivity–based system (such as prizes or government-contracted drug development) and whether they could better achieve the dual goals of innovation incentives and price competition. The essential rationale for patent protection for biopharmaceuticals is that long-term benefits in the form of continued future innovation by pioneer or brand-name drug manufacturers outweigh the relatively short-term restrictions on imitative cost competition associated with market exclusivity. Regardless, the entry of other branded agents remains an important source of therapeutic competition during the patent term. Several economic characteristics make patents and intellectual property protection particularly important to innovation incentives for the biopharmaceutical industry. 5 The RandD process often takes more than a decade to complete, and according to a recent analysis by Joseph DiMasi and colleagues, per new drug approval (including failed attempts), it involves more than a billion dollars in out-of-pocket costs. 6 Only approximately one in eight drug candidates survive clinical testing. 6 As a result of the high risks of failure and the high costs, research and development must be funded by the few successful, on-market products (the top quintile of marketed products provide the dominant share of RandD returns). 7,8 Once a new drug’s patent term and any regulatory exclusivity provisions have expired, competing manufacturers are allowed to sell generic equivalents that require the investment of only several million dollars and that have a high likelihood of commercial success. Absent intellectual property protections that allow marketing exclusivity, innovative firms would be unlikely to make the costly and risky investments needed to bring a new drug to market. Patents confer the right to exclude competitors for a limited time within a given scope, as defined by patent claims. However, they do not guarantee demand, nor do they prevent competition from nonidentical drugs that treat the same diseases and fall outside the protection of the patents. New products may enter the same therapeutic class with common mechanisms of action but different molecular structures (for example, different statins) or with differing mechanisms of action (such as calcium channel blockers and angiotensin receptor blockers). 9 Joseph DiMasi and Laura Faden have found that the time between a first-in-class new drug and subsequent new drugs in the same therapeutic class has been dramatically reduced, from a median of 10.2 years in the 1970s to 2.5 years in the early 2000s. 10 Drugs in the same class compete through quality and price for preferred placement on drug formularies and physicians’ choices for patient treatment. Patents play an essential role in the economic “ecosystem” of discovery and investment that has developed since the 1980s. Hundreds of start-up firms, often backed by venture capital, have been launched, and a robust innovation market has emerged. 11 The value of these development-stage firms is largely determined by their proprietary technologies and the candidate drugs they have in development. As a result, the strength of intellectual property protection plays a key role in funding and partnership opportunities for such firms. Universities also play a key role in the RandD ecosystem because they conduct basic biomedical research supported by sponsored research grants from the National Institutes of Health (NIH) and the National Science Foundation (NSF). The Patent and Trademark Law Amendments Act of 1980 (commonly known as the Bayh-Dole Act) gave universities the right to retain title to patents and discoveries made through federally funded research. This change was designed to encourage technology transfer through industry licensing and the creation of start-up companies. Universities received only 390 patents for their discoveries in 1980, 12 compared to 4,296 in 2011, with biotechnology and pharmaceuticals being the top two technology areas (accounting for 36 percent of all university patent awards in 2012). 13
RandD’s key to innovation – otherwise, future pandemics.
Marjanovic et al. ’20 (Sonja; Ph.D. at the University of Cambridge; May 2020; “How to Best Enable Pharma Innovation Beyond the COVID-19 Crisis”; RAND; https://www.rand.org/pubs/perspectives/PEA407-1.html; Accessed: 8-31-2021; AU)
As key actors in the healthcare innovation landscape, pharmaceutical and life sciences companies have been called on to develop medicines, vaccines and diagnostics for pressing public health challenges. The COVID-19 crisis is one such challenge, but there are many others. For example, MERS, SARS, Ebola, Zika and avian and swine flu are also infectious diseases that represent public health threats. Infectious agents such as anthrax, smallpox and tularemia could present threats in a bioterrorism context.1 The general threat to public health that is posed by antimicrobial resistance is also well-recognised as an area in need of pharmaceutical innovation. Innovating in response to these challenges does not always align well with pharmaceutical industry commercial models, shareholder expectations and competition within the industry. However, the expertise, networks and infrastructure that industry has within its reach, as well as public expectations and the moral imperative, make pharmaceutical companies and the wider life sciences sector an indispensable partner in the search for solutions that save lives. This perspective argues for the need to establish more sustainable and scalable ways of incentivising pharmaceutical innovation in response to infectious disease threats to public health. It considers both past and current examples of efforts to mobilise pharmaceutical innovation in high commercial risk areas, including in the context of current efforts to respond to the COVID-19 pandemic. In global pandemic crises like COVID-19, the urgency and scale of the crisis – as well as the spotlight placed on pharmaceutical companies – mean that contributing to the search for effective medicines, vaccines or diagnostics is essential for socially responsible companies in the sector. 2 It is therefore unsurprising that we are seeing industry-wide efforts unfold at unprecedented scale and pace. Whereas there is always scope for more activity, industry is currently contributing in a variety of ways. Examples include pharmaceutical companies donating existing compounds to assess their utility in the fight against COVID19; screening existing compound libraries in-house or with partners to see if they can be repurposed; accelerating trials for potentially effective medicine or vaccine candidates; and in some cases rapidly accelerating in-house research and development to discover new treatments or vaccine agents and develop diagnostics tests.3,4 Pharmaceutical companies are collaborating with each other in some of these efforts and participating in global RandD partnerships (such as the Innovative Medicines Initiative effort to accelerate the development of potential therapies for COVID-19) and supporting national efforts to expand diagnosis and testing capacity and ensure affordable and ready access to potential solutions.3,5,6 The primary purpose of such innovation is to benefit patients and wider population health. Although there are also reputational benefits from involvement that can be realised across the industry, there are likely to be relatively few companies that are ‘commercial’ winners. Those who might gain substantial revenues will be under pressure not to be seen as profiting from the pandemic. In the United Kingdom for example, GSK has stated that it does not expect to profit from its COVID-19 related activities and that any gains will be invested in supporting research and long-term pandemic preparedness, as well as in developing products that would be affordable in the world’s poorest countries.7 Similarly, in the United States AbbVie has waived intellectual property rights for an existing combination product that is being tested for therapeutic potential against COVID-19, which would support affordability and allow for a supply of generics.8,9 Johnson and Johnson has stated that its potential vaccine – which is expected to begin trials – will be available on a not-for-profit basis during the pandemic.10 Pharma is mobilising substantial efforts to rise to the COVID-19 challenge at hand. However, we need to consider how pharmaceutical innovation for responding to emerging infectious diseases can best be enabled beyond the current crisis. Many public health threats (including those associated with other infectious diseases, bioterrorism agents and antimicrobial resistance) are urgently in need of pharmaceutical innovation, even if their impacts are not as visible to society as COVID-19 is in the immediate term. The pharmaceutical industry has responded to previous public health emergencies associated with infectious disease in recent times – for example those associated with Ebola and Zika outbreaks.11 However, it has done so to a lesser scale than for COVID-19 and with contributions from fewer companies. Similarly, levels of activity in response to the threat of antimicrobial resistance are still low.12 There are important policy questions as to whether – and how – industry could engage with such public health threats to an even greater extent under improved innovation conditions.
Evolving superbugs trigger extinction.
Srivatsa ’17 (Kadiyali; specialist in pediatric intensive and critical care medicine in the UK. Invented the bacterial identification tool ‘MAYA’; 1-12-2017; "Superbug Pandemics and How to Prevent Them", American Interest; https://www.the-american-interest.com/2017/01/12/superbug-pandemics-and-how-to-prevent-them/, Accessed: 8-31-2021; AU)
It is by now no secret that the human species is locked in a race of its own making with “superbugs.” Indeed, if popular science fiction is a measure of awareness, the theme has pervaded English-language literature from Michael Crichton’s 1969 Andromeda Strain all the way to Emily St. John Mandel’s 2014 Station Eleven and beyond. By a combination of massive inadvertence and what can only be called stupidity, we must now invent new and effective antibiotics faster than deadly bacteria evolve—and regrettably, they are rapidly doing so with our help. I do not exclude the possibility that bad actors might deliberately engineer deadly superbugs.1 But even if that does not happen, humanity faces an existential threat largely of its own making in the absence of malign intentions. As threats go, this one is entirely predictable. The concept of a “black swan,” Nassim Nicholas Taleb’s term for low-probability but high-impact events, has become widely known in recent years. Taleb did not invent the concept; he only gave it a catchy name to help mainly business executives who know little of statistics or probability. Many have embraced the “black swan” label the way children embrace holiday gifts, which are often bobbles of little value, except to them. But the threat of inadvertent pandemics is not a “black swan” because its probability is not low. If one likes catchy labels, it better fits the term “gray rhino,” which, explains Michele Wucker, is a high-probability, high-impact event that people manage to ignore anyway for a raft of social-psychological reasons.2 A pandemic is a quintessential gray rhino, for it is no longer a matter of if but of when it will challenge us—and of how prepared we are to deal with it when it happens. We have certainly been warned. The curse we have created was understood as a possibility from the very outset, when seventy years ago Sir Alexander Fleming, the discoverer of penicillin, predicted antibiotic resistance. When interviewed for a 2015 article, “The Most Predictable Disaster in the History of the Human Race,” Bill Gates pointed out that one of the costliest disasters of the 20th century, worse even than World War I, was the Spanish Flu pandemic of 1918-19. As the author of the article, Ezra Klein, put it: “No one can say we weren’t warned. And warned. And warned. A pandemic disease is the most predictable catastrophe in the history of the human race, if only because it has happened to the human race so many, many times before.”3 Even with effective new medicines, if we can devise them, we must contain outbreaks of bacterial disease fast, lest they get out of control. In other words, we have a social-organizational challenge before us as well as a strictly medical one. That means getting sufficient amounts of medicine into the right hands and in the right places, but it also means educating people and enabling them to communicate with each other to prevent any outbreak from spreading widely. Responsible governments and cooperative organizations have options in that regard, but even individuals can contribute something. To that end, as a medical doctor I have created a computer app that promises to be useful in that regard—of which more in a moment. But first let us review the situation, for while it has become well known to many people, there is a general resistance to acknowledging the severity and imminence of the danger. What Are the Problems? Bacteria are among the oldest living things on the planet. They are masters of survival and can be found everywhere. Billions of them live on and in every one of us, many of them helping our bodies to run smoothly and stay healthy. Most bacteria that are not helpful to us are at least harmless, but some are not. They invade our cells, spread quickly, and cause havoc that we refer to generically as disease. Millions of people used to die every year as a result of bacterial infections, until we developed antibiotics. These wonder drugs revolutionized medicine, but one can have too much of a good thing. Doctors have used antibiotics recklessly, prescribing them for just about everything, and in the process helped to create strains of bacteria that are resistant to the medicines we have. We even give antibiotics to cattle that are not sick and use them to fatten chickens. Companies large and small still mindlessly market antimicrobial products for hands and home, claiming that they kill bacteria and viruses. They do more harm than good because the low concentrations of antimicrobials that these products contain tend to kill friendly bacteria (not viruses at all), and so clear the way for the mass multiplication of surviving unfriendly bacteria. Perhaps even worse, hospitals have deployed antimicrobial products on an industrial scale for a long time now, the result being a sharp rise in iatrogenic bacterial illnesses. Overuse of antibiotics and commercial products containing them has helped superbugs to evolve. We now increasingly face microorganisms that cannot be killed by antibiotics, antifungals, antivirals, or any other chemical weapon we throw at them. Pandemics are the major risk we run as a result, but it is not the only one. Overuse of antibiotics by doctors, homemakers, and hospital managers could mean that, in the not-too-distant future, something as simple as a minor cut could again become life-threatening if it becomes infected. Few non-medical professionals are aware that antibiotics are the foundation on which nearly all of modern medicine rests. Cancer therapy, organ transplants, surgeries minor and major, and even childbirth all rely on antibiotics to prevent infections. If infections become untreatable we stand to lose most of the medical advances we have made over the past fifty years.