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#BIOCEO16 Fireside Chat with Senator Chuck Schumer

February 8, 2016
New York Senator Chuck Schumer joined attendees at the 2016 BIO CEO & Investor Conference this afternoon for a fireside chat, moderated by BIO Chairman Ron Cohen, to discuss current political and public policy issues facing the country and the biopharmaceutical industry. The Senator expressed optimism that progress can be made on a bipartisan basis in a number of areas that will be conducive to investment in medical innovation and the well-paying jobs that such investment creates. Several of the areas mentioned by Sen. Schumer were:

  • Allowing startup companies  to take a greater percentage of deductions and pay fewer taxes while attempting to become profitable;

  • More funding for the National Institutes of Health;

  • More funding for the FDA to speed up the drug review process, resulting in new treatments reaching patients more quickly, without sacrificing the safety that our drug industry is known for;

  • Reforming our tax code to be more competitive internationally, eliminating the incentive for American companies to undergo “inversions” while also encouraging foreign companies to invest in R&D here;

“Every one of these things that I’ve mentioned is actually doable, I’m not just talking pie-in-the-sky here. We’re getting a little better, the gridlock is declining, and on ideas like tax reform, Paul Ryan and I are sitting down and doing it. That’s a good combination to start out with.”

The conversation then turned to one of the thorniest intellectual property issues facing the biotech sector: the Inter-Parties Review (IPR) process, which setup a separate parallel system to challenge the validity of patents than the Hatch-Waxman system that had been in place since the 1980’s. The Hatch-Waxman Act is largely credited with the fact that about 90% of prescriptions dispensed in the U.S. today are for generics, while allowing for continued investment in new medicines. The IPR review process, enacted as part of a broader set of patent reforms three years ago, was unintended to be a tool to protect companies from “patent trolls” who file frivolous lawsuits alleging patent infringement. The IPR process has had the unintended consequence of making it much easier to overturn the validity of patents for biopharmaceutical products – resulting in a great deal of uncertainty for companies who frequently spend 10-15 years and billions of dollars to get a new drug approved. If the patent protecting that investment can’t be relied upon, it’s a much harder sell for prospective investors in the already high-risk drug development business. As Ron Cohen put it, investors are saying “Oh my goodness, this is undermining Hatch-Waxman, we don’t know if we can invest in this industry anymore.”

Senator Schumer agreed that IPR process has had unintended consequences for the biopharma sector. He mentioned two possibilities for remedying it – either exempting biopharmaceutical patents entirely (which would require Congress to find $1.2 billion as an offset) or modifying the IPR process itself to pose less of a problem for biopharmas. “I will plead with you – don’t let the perfect be the enemy of the good. You can’t get everything you want. Make the standard, “Is this what we’re proposing better for you than present law?” And we’re working towards that, because it’s a really important thing to do for some of the other types of tech. But we’re working closely with your industry to either exempt you or… find a way to make the IPR process solve your problems but not be so defanged that it does no good for the tech companies.”

Asked for his views about what to expect this year, Sen. Schumer expressed optimism that we would continue to see members of Congress on both sides of the aisle work together to advance NIH funding, tax reform, possibly patent reform and FDA reform, all outcomes that “you wouldn’t have been able to predict a year or two ago."