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Dispelling Misconceptions in Biopharmaceutical IP Regulation · Making Medicine

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You're listening to Making Medicine Stories from the early stage life Sciences Ecosystem, a
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podcast that explores the people and deals that have led to the medicines, devices,
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and technologies that keep us healthy. Let's get into the show. Hello,
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this is your host, John Stanford, and welcome to another episode of
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the Making Medicine Podcast. Today we have Kirsen Axelson from the Incubate Policy Lab
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with us on World Ipday. To celebrate World IP Day, including the release
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of our latest white paper that she drove forward. We're going to give an
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inside scoop to our listeners about what they can expect from the Incubate Policy Lab
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moving forward. So most importantly, Kirsten, Happy World Ipday, Happy World
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Ipday. Thank you for having me on the podcast. Well, it's great
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to have you back on the podcast. I know that episodes with you as
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sort of a guru of the life sciences field, folks love to hear your
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insights and bring forward sort of your ideas where you think things are going,
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what trends are you are seeing. But for those who haven't heard in episode,
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can you just give us a brief background to where your career has been
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and the many different facets in which you've touched the industry. Thank you.
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I have worked in and around the pharmaceutical industry for twenty four years now,
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currently as a policy advisor to a number of biopharmaceutical companies with an affiliation to
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DLA PIPER, as well as as a visiting scholar with the American Enterprise Institute.
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In my time in industry, I worked in policy and business development,
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analytics, and in strategy. So I've seen a number of different ways that
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policy effects business decisions, what types of R and D programs get advanced,
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and how that affects the medicines that are ultimately available for you and me and
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the people we care about to take well. And we appreciate that one of
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your newest titles, because, as you say, you've got fingers and lots
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of pies and ways that you advised this whole community based on that experience.
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But I was so thrilled that you took on a new role as really leading
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our incubate policy lab, which for those of you who don't know, was
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really reinvigorated this year and we'll be putting out regular white papers and research papers
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about various aspects of the industry. What got you excited about having this forum
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to bring forward some of the things and what do you hope collectively we can
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spotlight for policy makers and analysts and those watching the industry through the Incubate Policy
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Lab and your work with it. Thank you. So, I'm delighted to
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be able to reinvigorate and produce a lot of the content for the Incubate Policy
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Lab, and we'll be producing a different piece each month, really explaining things
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in terms that are easily understood, from issues ranging from intellectual property to investor
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sentiment to the merits of different types of technologies like small versus large molecule.
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What excited me about working with Incubate is the incredibly important role that venture investment
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has in advancing promising science. Scientists conduct a process that costs money, and
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I don't think that is a subject that people are often comfortable coming to terms
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with. Scientists advance potential candidates to becoming medicines costs a lot of money,
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and most of the time that effort fails. It is an incredibly noble profession
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to be a scientist, and without funding from the private community and the public
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sector, we would not have the medicines we have today. The intellect alone
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would not be sufficient. So I am excited to be able to put some
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more evidence around some of the policies that can affect how the flow of funds
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goes into science at various different stages, from early discovery all the way through
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to commercialization and launch of a new medicine. You make such a good point
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there that intellect alone doesn't get it done. And I do think, especially
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in healthcare, because it's so personal to us. We're all patients, we
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all have a loved one who's a patient. We think there's this utopia where
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drug discovery, or new medical devices, or better surgeries at the hospital,
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it should all just happen. And I do think there's a tension that we
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don't think about with technology, of what it takes for a new laptop or
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a new computer or a new cell phone to come to the consumer. We
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don't think about healthcare the same way of well, gosh, someone on the
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other end's got to be making a bet that this is going to work,
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and if they lose that bet, they lose money. And you know,
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we've seen study after studies say that the United States free market development of entrepreneurs
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really outpaces government driven product development. So we'll save that for another episode because
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today is World Ipday, and I want to talk about the newspaper that dropped
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today in celebration of World IPDA from Incubates Policy Lab, and I want to
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make sure I get the title right IP Protections for Medicines, supporting innovation and
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promoting competition. And I want to start there with the title because I think
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you know a lot of this. You said, putting evidence based research towards
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some of these policies IP is a tough one, and so the first question
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I want to throw at you in that title, we think of IP as
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a protection granted to someone in exchange for them developing it. And I think
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a lot of people who misunderstand IP throw out words like monopoly and the very
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opposite of competition. So how is IP a driver of competition? And how
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would you frame that for those who are a little suspicious of that argument?
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Yes, so, I mean, just the very basics, Intellectual property is
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granted to an inventor for a finite period of time that gives them the exclusive
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right to market their invention and for most competition in a number of ways.
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In the biopharmaceutical industry, one is by allowing that period of time where the
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patent holder is able to make money from their invention, others will also go
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into that category. Multiple companies will pursue a particularly promising area of science because
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there is often money to be made. And that is I think the sort
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of obvious thing that everyone understands with IP. That's why all businesses. It's
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a foundation of all businesses, right, there's intellectual property and cars and airplanes
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and certain types of food. Then the way it also promotes lower prices and
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competition at the end of the patent life cycle is very similar money. And
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when the patent expires, there is money to be made as the branded drug
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transitions to that utilization, transitions to the generic drug. And there is typically
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a limited number of generic entrants at the end of the patent life cycle one
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or two, and they have slightly higher prices than they would have several years
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out, and they compete for that new business as it switches from the brand
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to the generic, and that's when they make their money. Generics are a
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very low margin business. The federal government, with their own analysis, has
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shown that larger branded markets attract more generic entrants. More generic entrance push prices
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down. So when you have a patented period of time that is finite and
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ending, the way the legal system is set up is to do exactly that,
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encourage generics to enter at that time, get a reward, and then
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the market opens up to multiple generic entrants that all have pretty low margins,
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and with the exception of the case of shortages, which is another issue,
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can supply reliably forever with very significantly lower cost to the health system and to
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people who need the medicines well. And I know shortages is also something that
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you are an expert on and we've talked about in other episodes. If I
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say, it's sort of back to you, and one of our vcs loves
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this analogy of sort of mortgaging versus rents, and that the IP protection period
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is your mortgage and you're paying it off, and then the generics are sort
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of the post paid off mortgage, and now society really owns it because generics
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are made at such low cost. Though again, if that cost gets too
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low, we do run into shortages issues. So I love that you framed
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IP as generating that competition, because again, IP it's become a little bit
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of a political buzzword and you're for it or against it. I mean it
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is there and trined in the Constitution, and we've seen two examples recently that
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diverged. We had a proposal for marching rights, which you know would effectively
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wave IP, proposed by the Biden administration. I want you to sort of
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talk about thoughts on that in a second. But we also had bipartisan support
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to defend IP in the global wto waiver conversation. It was very productive to
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see the Biden administration. So in two instances at the global level we said,
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look, protecting IP is important, and then at the domestic level,
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we're a little fuzzy on that. And there's definitely some divisiveness even within the
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Democratic Party about the role of IP. What do you think about those two
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instances and why is this such a hot button right now? Do you think
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I think people incorrectly see IP as giving a property owner, in this case
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a large multinational and often a large multinational bio pharma company, too much power,
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right, they have too much power over me. I there's a price
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that I can't afford, and that must be an awful feeling to see a
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price on a medicine you can't afford and that most often occurs with a person
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who is uninsured or their insurance company is excluding certain medicines from their treatment and
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they aren't able to find through an assistance program a way to afford their medicine.
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Think IP has become conflated with the serious under insurance we have problem we
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have. In reality, removing IP would not solve the under insured problem.
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Whenever I hear people can't afford their medicines, we should get rid of the
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IP. Well, if they're und ensured, they don't have a doctor either,
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and so that's a larger systematic problem that we need to address. Then,
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as far as intellectual property in the international context, there are a number
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of countries that don't where there is not intellectual property protection and they still don't
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have access to medicine when there are compulsory licenses. When a country says I'm
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going to waive the intellectual property rights, often generic companies don't step up and
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or no company will step up and manufacture the drug. So it isn't just
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the intellectual property. You also have to have the willingness to manufacture the drug,
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the systems to distribute the drug, and a number of pharma companies in
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many low income countries are willing to provide the drug at a low cost,
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providing certain conditions can be met, such as the product can't be diverted,
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it needs to be used in a safe setting, Adverse events have to be
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able to be collected. Because you can't just drop boxes of drugs into countries
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and ethically address health systematic issues. It wouldn't be right for patients anywhere.
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Those are some of the points on IP in the international context. Thanks Kirsten.
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I think that lays out the international components well. Domestically, we've heard
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and talked about a little bit this concept of margin. How do you see
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that an IP in a similar view, So quite simply, Marchin rights were
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established when the system patent system in the law that created the patent system we
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have today for medicines, and they allow the federal government to basically break the
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intellectual property of a patent holder if that patent holder is not taking sufficient steps
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to make that approved medicine available for the public health, and that the intent
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of this was to, you know, make sure medicines were accessible in public
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health emergencies or other instances where a patent holder may have gotten a drug approved
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and decided for whatever reason not to invest in manufacturing and making the drug sufficiently
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available. So there's been discussion lately about using marching rights to reduce the intellectual
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property protection of the patent holder and allow others to manufacture the drug, presumably
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at a lower cost. That has been asked of the NIH a number of
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times who makes these decisions, and repeatedly a leadership has responded that is not
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warranted. In this case. There are hundreds and thousands of people taking that
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drug. There's no evidence of widespread access issue. So that's one reason why
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marchin rights may not be as successful policy is they may not be actually solving
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a problem. But the other critical reason why marchin rights could be particularly bad
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is not the pharma industry. It's academic centers. The vast majority of government
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funded patent holders are in institutions colleges. Those colleges make money off of the
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royalties when they license the right to use that patent to a biopharma company.
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That money they make doesn't just fund ongoing science, it funds the entire university,
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the humanities, all the other parts of the departments that may not have
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the same kind of revenue streams. If you make that kind of partnership with
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an academic center toxic to the private industry, they will not do it.
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The vast majority of R and D expenditure is done by the private market.
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A good amount of the early stage science is done by universities, sometimes with
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grants from the federal government, so the federal government will have a portion of
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the patents that are on the final drug, but there are other ways that
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private companies could get that early science. Other countries, and notably China,
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are moving in the other direction from the US government. They're strengthening their patent
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systems. They're looking at our patent system and making theirs more like that.
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They're putting money into their universities. They're allowing the patent holders to get financial
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rewards from this investment. So if we make partnership with universities in the US
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toxic to private industry, private industry will find another way to innovate, and
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it will be very damaging to the universities. Moreover, only about two percent
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of drugs exclusively have patents where the government has funded the research. Around ten
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to fifteen percent of all drugs have some form of government research. In it,
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So this wouldn't even really solve an affordability problem. There's just not that
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many drugs that would be affected by march in, and the consequences to universities
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would be trendous. Well, I appreciate those views, and I think they
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align well with one of our previous guests from the Bidoal Coalition, So I
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think reinforcing that concept that again, IP, a lot of the conversation around
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it is somewhat ill informed, and I think the paper does a good job
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landing that out. One of the things your paper does that I liked all
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of it, and for those of us who are IP watcher, sort of
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a must read. But you also I think reached out a little further to
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the community that may not be thinking about biologics and small molecules day in and
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day out, and for that end, I really liked how the paper had
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a set of misconceptions, in your view that should be addressed. Would love
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it if you'd speak to some of those that you've seen in your experience of
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Hey, the way people are talking about intellectual property, which is usually related
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to patents in this case, how they're talking about it, and then sort
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of the reality were there a couple of those misconceptions that you might want to
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speak to now and really highlight absolutely so the first one, and the term
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patent thickets has become a political buzzword because it's got popular support to say it's
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the patent thicket that is keeping you from getting access to your medicine. I
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think largely the people mean when they say patent thickets is there's so many patents
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on a particular invention, there's no way that they could all possibly expire and
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have generic competition. There is no evidence that there are patent thickets. In
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biopharmaceuticals, there are often multiple patents, and I'll get in a moment to
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why that happens and also why it doesn't necessarily block generic entry. Where there
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may be evidence of patent thickets is like on a smartphone, where there can
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be a huge number of patents covering different aspects of the technology. In the
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pharma industry, you often do see multiple patents. It might be that some
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are on the drugs, some are on the way that you manufacture it,
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some are on the delivery device. There can be multiple places where there are
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patents, and a patent is twenty years although remember that a drug takes around
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seven to ten years to develop, so the average time a small molecule is
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on the market without a generic competitor is around fourteen years. The reason I
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say there's no patent thickets is because there are very few cases where there are
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drugs that are on the market with no generic competition, particularly when there it
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is a large enough drug that the revenue will sustain a generic competitor. There's
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all kinds of reasons why there might not be a generic competitor, but they
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don't necessarily tie to the patent. It might be that there it's a very
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small market and there's just not any interest in generic company in manufacturing and producing
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the drug. It might be that a drug has been able to create the
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types of contracts with health plans that mean they will always favor the brand and
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not use the generic that typically happens with a large molecule like a biologic,
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where there isn't automatic substitution. Those types of contracts can be entered into.
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So there's lots of different reasons why there might not be generic entry, but
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there's no evidence that there is widespread use of patent thickets, or even that
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patent thickets exist in a pharmaceutical market before you move on to the next one.
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I love how you laid that out, because this one has been a
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hot button issue and the term has been thrown around so much, and I
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really appreciate some of the clarity that I hope some folks can take away from
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this of we just don't see the evidence of that. And we can certainly
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have debates about the cost of healthcare and payer reform and is insurance operator is
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insurance? And we can even talk about is the cost of production? How
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we can address that in a meaningful way in the pharmaceutical space to potentially drive
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down the underlying cost, which would hopefully drive down prices. But for all
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the Senate hearings and house hearings where the word patent thickets were thrown out,
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I just love how clearly you sort of said, look, the system is
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working, and it's represented by generics coming to the market. And as the
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paper points out, you know, ninety percent of the scripts in the country
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are being filled for generics. So we sort of have this functioning system.
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And it's so rare that you hear people say, actually, this is working,
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and this concept that on my last day of exclusivity with this product,
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I'm filing a patent at the last minute to get five more years of profit,
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We're not seeing it, and that there are other actors at play that
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may explain why a generic has not come to market, including maybe the cost
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of the branded drug has been driven down through payer discussions to a point that
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it's suitable, or we're asking generics to step in and frankly lose money on
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production, and it's our expectations of society that are out of whack. So
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sorry to go down the rabbit hole entirely there, but I just I thought
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that was one misconception. What's one other that you might want to call out?
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And another one is that multiple patents block generic entry. Drug companies will
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add additional patents. Again, this might be a run manufacturing process. A
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generic competitor can still challenge a drug while it is under patent protection, and
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they often do, and oftentimes they are successful. More than half of patent
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medicines receive a challenge from a generic manufacturer before their patent term expires, and
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many of them are successful. So, for example, you might have an
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extended release formulation or again, a certain type of manufacturing. They say you
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know what, I'm going to manufacture it a different way and I don't need
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to violate that patent, but I am going to challenge the patent on the
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underlying molecule, and so it does not block a generic competition to have multiple
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patents on our drug. So it seems like, again we don't talk about
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it, but there is a sort of a robust market if half of these
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things are being challenged by people who want to get to the market, and
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there are rewards, certainly in the generic space for being that first one to
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get to the market. I don't think we talk about, or frankly,
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many people know beyond sort of people who have your level of expertise, just
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how that process plays out, how competitive is, and how driven people are
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to find a solution that brings their own product to market first. And so
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you know, we think about it's good that we're calling these things out on
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IP day, because the way IP has been cast is, oh, nothing
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can happen when this ip's out there, and that it's written into stone.
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And yet you know, here you are pointing towards a constant effort to push
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back on that with market forces behind them. The last you've been so generous
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with your time. The last thing I just want to say is I will
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in this current environment, almost all roads lead back to the IRA. IP
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what is and was sort of the law of the land and guided so much
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of this industry. I've talked to with a few other people on the podcast
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about to some extent, the IRA brings us into a post IP universe where
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frankly, your IP may not matter if you're selected for sort of this government
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setting mechanism. Since I had you, I wanted to run that by you.
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Are the elements of the IRA put drugs up for price setting after nine
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or thirteen years? Is that kind of an end run around IP in your
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view? A bit and set up in such a way that is really I
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think driven by some of the myths around drugs and IP. Right Like,
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there was this idea that after thirteen years the government should step in and reduce
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the price. And I have to say, if both small and large molecules
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were having the price set after thirteen years, given that most drugs don't have
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more than thirteen or fourteen years of time without a generic competitor, that would
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have been far less disruptive to the system. So yeah, by setting the
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price, it does essentially take away some of the value from the property holder
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and also will discourage generic entry. That is to me one of the more
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tragic elements of the way this policy was done. By pushing the price down
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at the end of a life cycle, there's not going to be as much
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money to be made from a generic entrant, and generic competition is what has
23:00
brought down the prices of drugs in this country and also kept the quality up.
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I mean to think that we now live in a world where a huge
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amount of heart attack prevention statins anti hypertensives is generic medicines that people can often
23:15
get for a few dollars a month. We'll live in a world where that
23:18
will be the case for hepatitis C. We will live in the world WLLL
23:22
that's going to be the case for weight loss medicines. And that is quite
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incredible unless we really undermine the generics industry, and the biosimilars industry has already
23:33
been slow to start, and now if we have the federal government stepping in
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and pushing down the price of the brand towards the end of the life cycle,
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the economics for a biosimilar to enter the market are just not going to
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work. Setting this law up in a way that was largely politically motivated based
23:48
on myths about intellectual property. There could actually be real harm done to the
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generics industry, which is the industry that really should be the darling of our
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country that has successful cut down price and kept up quality for a number of
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therapeutic areas well. I think who would have thought here were on on World
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Ipday and we're finishing the conversation with how we've got to strengthen the generics industry
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and that is an ecosystem, folks, That is what we're often here talking
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about. You can hear and learn more about all of this from Incubate's Policy
24:21
Lab. I'm so grateful to Kirsen Axelson for all the work you do,
24:26
but also for joining me today to talk about the latest release. We'll have
24:30
her back regularly talking about the incredible work that's coming out of Incubate Policy Lab.
24:36
For more, you can learn about Incubate at www dot Incubatecoalition dot org,
24:41
including finding the latest policy Lab release, and while you're there, give
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us a follow on LinkedIn, x, YouTube, and anywhere you get your
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information. A special thanks, as always to Grace Moster and making Today's podcast
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