BIO testimony on international intellectual property protection before the United States Trade Representative

Good morning. My name is Lila Feisee, Vice President of International Affairs at the Biotechnology Industry Organization (BIO).  Today, I am testifying on behalf of BIO and its 1100 members who innovate in the healthcare, agriculture, industrial, and environmental sectors.  The vast majority of our members are small and medium sized companies with no product on the market.  With no source of product revenue and long development times before market launch, biotech companies must leverage the strength of their global patent portfolio to raise the large amounts of capital required to get their innovations to the market.  In this global economy where investment decisions often include the growth potential in emerging markets, IP setbacks in places like China, India, and Brazil can have a significant impact on the delivery of scientific progress, the availability of the next generation of biotech innovation, and on the ability of the biotech sector to create jobs here in the United States.  These IP setbacks are outlined in our written submission in more detail, but my testimony today will focus on the areas of most concern.

In contrast to twenty years ago, the global intellectual property environment is deteriorating in many countries around the world to standards that harm innovation everywhere.  Some deterioration has been more subtle such as requiring unnecessary information in patent applications for certain technologies in places like China and Canada.  Some deterioration has been more dramatic as countries like India institute a pattern of seeming unconcern for broad areas of intellectual property, no matter what the impact on local or global innovators.

While BIO’s members express concerns about many countries in our Special 301 submission, we thought it best to spend our limited time on our recommendation to name India as a priority foreign country. 

In the healthcare space, only a few dozen innovative and patent protected medicines are on the market in India.  Yet, in the last two years more than a dozen patents have been revoked, compulsory licensed or threatened to be compulsory licensed, or otherwise rendered unenforceable. In addition, several biotechnology inventions in the health and agricultural fields have been denied patent protection; these same products have been granted patents in many other jurisdictions around the world. There are perhaps other anti-IP actions that we do not yet know about. The fact that these same patents are valid around the world in both major and emerging markets reveals a clear lack of concern for protecting innovators in India, presumably for the benefit of India’s industry. The Indian government claims that it is taking these steps to keep the prices of medicines down and improve access to medicines. However, we contend that these actions are in reality a form of industrial policy designed to improve local commercial interests at the expense of U.S. biotechnology companies. These steps by the Indian government benefit in a very tangible manner its domestic pharmaceutical industry. The medicines being targeted, such as Bayer’s Nexavar, Pfizer’s Sutent, BMS’ Sprycel, Roche’s Tarceva, and Novartis’ Glivec, are highly specialized anti-cancer medicines that benefit a small fraction of India’s patient population, and only those who can already afford the highly specialized medical talent and facilities to properly diagnose and treat the relevant forms of cancer.   Yet, to our knowledge, only one of these medicines (Glivec) appears on India’s National List of Essential Medicines.

No amount of patent revocations, compulsory licenses, enhanced efficacy requirements, or other methods to render patent rights unenforceable will address any of the systemic healthcare problems plaguing India.  The real tragedy underlying the anti-IP rhetoric is not simply that it diverts attention away from the real problems of access to health care that many millions of Indians face, but that it undermines India’s goal of becoming a healthcare and science innovator.  There are companies around the world interested in collaborating in research, science and the development of medicines in India.  These measures make it difficult, and often impossible, for such deals to happen.  In our view, this is a problem for innovators in India as the deals will simply go to other countries with more respect for IP rights.  Nonetheless, a number of our member companies continue to strive to be successful and to help the Indian poor through patient assistance programs which provide the medicine for free or even below generic price to the poor, creative licensing strategies to allow Indian generic companies to manufacture medicines to reduce cost, technology improvements to enhance storage life of medicines to survive the lack of infrastructure in India, and many more initiatives that contribute to addressing the healthcare burden in India. Yet, American companies cannot fix this problem alone. And the current set of IP policies impedes them from doing more. The government of India spends around 1% of the country’s GDP on healthcare.  That is lower than all other emerging economies and even lower than several heavily indebted nations.  India’s vast economic growth over the last decade has clearly not been matched by an equivalent increase in public spending by the government. 

While it may not be our place to set priorities for the Indian government, we wish to point out both the significant costs of its current approach in undermining its potential as a global biotech innovator, and observe that the benefits to healthcare in India, to the extent they exist at all, would not appear to offset these costs.

Perhaps of greater concern to us is that if India is left unchecked, and is successful in its efforts to weaken its IP laws to benefit its local industry, it will not be an outlier in its policies, but other countries-- emerging and middle income countries-- will follow suit creating a significant burden on the US economy. This is not sustainable, especially in view of the current economic environment in the US.

Upholding the system of intellectual property rights is essential to guaranteeing future innovation and future jobs not just for U.S. biotechnology companies but also for other countries and other industries around the world.

Thank you for this opportunity to testify.

 

BIO submitted a full report to the U.S. Government highlighting intellectual property challenges in various markets around the world. Download full report (PDF).