Demystifying Intellectual Property with David Kappos

Show Notes

When we think about equitable access to care, intellectual property is usually not the first thing that comes to mind. It’s easy to assume that patent protections are a secondary concern when lives are at stake. But in reality, these protections are what fuel the innovation that saves lives.

Joining us today to discuss the unique role of IP is David Kappos, co-founder of the Council for Innovation Promotion. David is widely recognized as one of the world’s foremost experts in intellectual property and has spent decades advancing healthcare innovation through thoughtful policy leadership.

Episode Transcript

Sue Peschin:

Hi, everyone. Welcome to This is Growing Old, the podcast all about the common human experience of aging. My name is Sue and I’ll be your host today. 

When we think about equitable access to care, intellectual property is usually not the first thing that comes to our minds. It’s easy to assume that patent protections are a secondary concern when lives are at stake. But in reality, these protections are what fuel the innovation that saves lives. Last month, the Alliance For Aging Research brought together policy experts and leading voices in health to explore the critical role strong intellectual property protections, also known as IP, play in bringing groundbreaking treatments from the lab to the pharmacy. 

Our new white paper, A Fair Trade: How Intellectual Property Policies Unlock Better Access to Care, sheds light on the purpose of IP laws, while debunking myths and misconceptions. If those are left unchallenged, they could threaten future medical breakthroughs. Joining us today to discuss the unique role of IP is David Kappos, co-founder of the Council For Innovation Promotion. David is widely recognized as one of the world’s foremost experts in intellectual property and has spent decades advancing healthcare innovation through thoughtful policy leadership. 

David, thanks for joining us today. 

David Kappos:

Yeah. Great to see you, Sue. Thank you for inviting me. And thank you for what you’re doing with the Council, advancing issues about innovation. Which as you say, are a bit refined and could be challenging for folks, but they’re so important. 

Sue Peschin:

Absolutely. Okay. Well, let’s dive in. David, we appreciate you serving as an expert speaker at the convening that we did at the very end of March on intellectual property policies and how they unlock better access to care. The paper that came out of it, our summary white paper from the meeting, describes IP as “a cornerstone of American health innovation,” which makes it sound very important. But for a lot of patient advocacy groups and others who are focused on affordability issues and access issues, IP and patent protection issues might seem abstract or even trivial to them. Can you unpack the role of IP and patents, and why they’re really critical to both innovation and equitable access to care? 

David Kappos:

Yeah, Sue, and it’s a great question. IP and patents are upstream of the pricing mechanisms that we’re all so concerned about. I would start by saying everybody wants medicines to be available on an affordable basis. We’re all super concerned about that. 

David Kappos:

The role of intellectual property is to provide an incentive for creating new medicines in the first place. If you think about it, the medicine that doesn’t exist might as well be infinite in price because you can’t get it no matter how much money you have. 

David Kappos:

All those diseases that your folks in your group are concerned about that aren’t cured yet, the price for a cure for those is currently infinite because the cure doesn’t exist. 

What intellectual property is about is putting an incentive system in place so that universities, and research institutions, and companies can afford to bring capital, in other words can afford to invest in the extremely expensive and failure-prone process of curing those uncured diseases. IP is all about finding cures in the first place. Pricing mechanisms downstream from there are the tools that we need to use in order to ensure that everybody gets access to those medicines once they’re created. 

Sue Peschin:

I like it. Good explanation. Can you just tell people what is a patent? 

David Kappos:

Yeah. A patent is a grant from the US government. It is granted to inventors, people who have really brilliant ideas, solve big problems. If you happen to be one of those people, you come into an agency call the United States Patent and Trademark Office. I used to run that agency during the Obama Administration. You go through a process that results … It involves an extensive examination by a professional, degreed patent examiner. If you meet all the requirements, you’ve got an invention, it’s new, nothing similar to it has been done before, you’ve given a thorough description of it, you could get a patent. 

What a patent then gives you is a right of exclusivity for a period of time. That period of time is 20 years from when the application is initially filed. In the life sciences field, the actual exclusivity winds up generally being somewhere around 13, 14 years by the time you get through the whole application process. 

The magic of the system is that, for the small investment that our country makes in grating a limited period of exclusivity, after the patent expires, the invention which has been fully described goes into the public domain forever. The patent system has turned out to be large, perhaps mankind’s greatest invention to incent inventions. It works in a magical way, inducing giant amounts of capital and people to spend enormous amounts of time working on solving very, very hard problems because of the incentive of getting a period of exclusivity in exchange for all of that work.

The last thing I’ll say on this, Sue, for folks to understand is the requirement to describe an invention in order to get a patent is really, really important because that’s what makes the patent system into a vehicle for the dissemination of knowledge. It enables one inventor after another to build on the work of previous inventors. We say that each inventor gets to stand on the shoulders of all the inventors that came before them to build the next great thing on top of the last great thing. That’s very different from all other approaches to dealing with innovation outputs. The other approaches involved holding those outputs secret, keeping them as trade secrets. 

Trade secrets, the concept existed way back in the guild ages, at the end of the so-called Dark Ages or the Middle Ages, before the Renaissance started. You’re talking 1500 years ago, something like that. The guild period was well known frankly for slow progress of innovation. Why? Because every time someone had an invention, they kept it secret, they didn’t share it. There was no patent system, there was only the prospect of keeping an invention secret to avoid having anyone else learn about it. As a result, there was no ability to stand on the shoulders of those who came before you. Everything was kept secret in these guilds as long as possible. The world’s innovation system basically just crawled along until the patent system got created.  I’m sorry, that’s a long answer to a short question. 

Sue Peschin:

That’s okay. 

David Kappos:

I just wanted to share some things there. 

Sue Peschin:

I think it’s interesting for listeners, and I know I learned a lot when we were talking about it, because you don’t think about the time limitation of it and that’s really where a lot of the value is. Well, it’s in both. It’s in declaring it and having exclusivity, but then also the time limited value. You want to maximize that time. 

If you think about it, it’s like a lot of other things in healthcare aren’t patented. The connection to the pricing issue, they don’t necessarily change in price over time. But when things are patented, like a lot of the medications, they do. They eventually go generic. That’s what you’re talking about. I thought that was very interesting to learn. 

David Kappos:

Right. Sue, to put a few data points against that for folks to understand. Around 90% of all prescriptions in the US are filled with generic. Generics absolutely dominate the market. Our system works extremely well in that way. That the patent system and since the innovation in the first place, the inventor gets a limited period of exclusivity. The generics are waiting in the wings to immediately make low cost drugs when the patents expire. The inventors take the returns that they’ve earned from the inventions in the first place and invest them back in making more inventions. It’s a classic virtuous cycle, it works extraordinarily well. 

The other thing I’ll mention is that there was a study done, it might have been by the World Health Organization a number of years ago, on the top 300 drugs in the world. If I recall right, all but 13 of them, almost all of them were generic. You get a sense from that that, on the arc of time, the system of having generics last forever and patents last for a modest period of time balances the interests of everyone and results in a system like we have the US, where we frankly invent most of the world’s new medicines here because we’ve got the strong protection. Then we get the benefit of access at low cost because we’ve got a very strong generic presence. 

Sue Peschin:

Right, right. Yeah, when the patent expires. Drug pricing and tariffs on medical products remain really hot topics right now on Capitol Hill. Those issues often get conflated with IP and then they distort the policy conversation. What are some of the biggest myths about IP? And how do those misconceptions create challenges in trying to educate the public about the role of IP protections? 

David Kappos:

Yeah, yeah. There’s a couple of them that I’ll mention and they’ve got memes that go with them, or visual metaphoric descriptions. One of them is the concept of so-called patent thickets. The theory is that drug makers are getting not just one patent to cover their drug, or two or three, but many of them. So creating a thicket, think dozens of them. That’s been studied. In fact, that was studied by the US Patent and Trademark Office. At the request of Congress, the government agency that deals with this stuff and has no dog in the hunt so to speak studied that issue. They found that it’s just not the case. That the innovators get a modest number of patents, many times just one, two, three, numbers like that. Not dozens or hundreds of them. The patent positions do not impede generics from entering the market after the expiration of the original patent. Which, as I mentioned, tends to be in the 13-ish year range. 

It’s a myth. In reality, it doesn’t exist. There may have been one case at one time, I call that the N equals one problem. It’s always very dangerous to create policy because of a single data point. You can find a single data point that stands for just about anything because there’s always an aberration here or there. But if you refer to the report that the PTO came out with, this is just actually not a real issue. 

Sue, the other meme if you will, or myth that’s out there, is the myth of product hopping. The theory there, or the meme is that branded drug makers, when a patent is expiring, when their original patent on a drug is expiring, they’ll get a new patent on some trivial variation of the drug. The example that’s given that’s completely unreasonable is changing the color or the shape of the pill. Let me just assure everyone as the guy who used to run the US Patent and Trademark Office, the patent office does not stand for that. It’s composed of a number of thousands of people who are dedicated to helping do the right thing. That means never granting patents for trivial variations. Our laws do not permit that and the patent office vigorously polices that. 

In reality, what does happen is that after an original drug is created, and billions of dollars are spent on the creation, the perfection, and the clinical trials that get that drug to market, and recouping the losses for the nine out of 10 drugs that have tremendous investments made in them and then fail in the end and can’t go to market.  

David Kappos:

The reality is that once the initial drug is made and it’s on the market, the drug makers don’t just walk away and go on vacation or something. They’re investing immediately in improving the drug.

What do I mean by improvements? Well, frequently you’ll find medicines, treatments that initially require intravenous administration. That means that patients have to go to a hospital or a lab, perhaps several times a week. It’s extremely disruptive to people’s schedules. It’s extremely expensive because you’re dealing with healthcare professionals multiple times a week. It’s prone to issues, infections, things like that. That method of administration is certainly way better than nothing. If you’re a patient that’s suffering from disease, you’ll do it any day. 

David Kappos:

But the drug makers then invest hundreds of millions of dollars more in doing the research and development, and going through separate clinical trials to perfect better methods of administration. This is why you see drugs who go from intravenous to ultimately then to a simple tablet that gets taken once a day or a few times a week, or whatever. There’ll be other stops, if you will, in between. Patient administered injections and things like that, that don’t require IV treatment. 

The reality is that innovators are incented by the patent system, the prospect of getting a follow-on patent for the innovation that’s required to create a better method of administration. They invest a lot. They create these better methods of administration. Patients are benefited dramatically by them. The incentive system ensures that companies, and boards, and research institutions, and universities can afford to, can justify those add-on investments. That’s not product hopping, that’s just good old-fashioned ingenuity and further investing in an initial product. 

Sue, the other thing I’ll say about that is that, remember from the previous part of our discussion a few minutes ago, the original patent doesn’t last forever. It lasts for whatever its term was. Again, typically an operative term of somewhere around 13-ish years. Generics are welcome and permitted to come on the market with whatever the product is that’s covered by that original patent when that original patent expires. There’s absolutely no prohibition from the generics entering the marketplace. Many times, they do because the original method of administration works okay, at least for some population of the patients. 

But what you don’t want is a world in which there’s absolutely no incentive for innovators to invest in creating improved methods of administration, or any of the other improvements that can be made. Improved efficacy, reduced side effects, longer lasting formulations. All of those improvements you absolutely want investment in those. The mechanism we have, the one tool we have in the world to incent that investment is the patent system. 

Sue Peschin:

Yeah. One thing we hear from the advocacy space, sometimes from the payer community, and I think it’s very paternalistic towards the patient community is they, “Oh, we have to pay all this extra money for convenience.” Our response back is what you’re calling convenience is really about adherence. That’s health enhancing. That’s not just convenience. Because there are very real issues, especially for older adults, in getting back and forth from a hospital or a doctor’s office. Making sure you have a family caregiver who can take you. A lot of cancer drugs, I know when my grandmother had ovarian cancer years and years ago, it was infusion. It was horrible. Now, there are a lot of oral chemotherapy drugs. Which there’s enough with cancer that you have to deal with, and having to sit and wait for an infusion over an hour, two hours, if you don’t have to, how much more time do you have to spend with people around you? 

David Kappos:

Yeah. 

Sue Peschin:

That, it makes a big difference and it’s not just about convenience. 

David Kappos:

Yeah, those are great points, Sue. Yeah. 

Sue Peschin:

Yeah. My next question is how do you think … Without going too much into it, how can patient voices and stories help illustrate the impact of strong IP protections? 

David Kappos:

Yeah. Well, the stories really are absolutely essential. Getting patients and patient groups out there, talking about the treatments that are being created, are being researched, are close to making it through clinical trials, are entering clinical trials, have promise to cure sick Americans. Telling the stories about the need for investment, the criticality of incenting investment in order to get those treatments out of the lab, through clinical trials, and onto the marketplace. Sue, it’s so important. If your folks can just tell those stories to members of Congress, it’ll go a long way in persuading those policymakers of the need to continue to support a strong and effective patent system so that those treatments can get to the marketplace as soon as possible. 

Sue Peschin:

Okay. Now, when you talk about stories, I think there’s a broader story here too, about American ingenuity. We keep hearing about is the US going to maintain its role as the leader in biomedical research? Why is protecting American ingenuity so important in the fight for patent rights? 

David Kappos:

Yeah. I’ll start by saying, Sue, it’s by no means a foregone conclusion that the US is going to continue leading. Our economic rivals overseas are nipping at our heels. They’d very much love to take over the leadership banner. 

Why is it important? Well, I’ll give you several reasons. Number one, the country that invents first tends to save lives first in its own country. When American companies are inventing new treatments and putting them through clinical trials, through the FDA here in the US, they’re going on the market here in the US first. Sick, and in some cases unfortunately otherwise dying patients get access to the medicines here. Again, it’s well taken in the data that Americans get access to a much broader variety of medicines than people in other countries. That’s because such a disproportionate share of new treatments are invented in this country. We get the benefit of being first out.

Second benefit is, when we invent these drugs, we also get to export them to the rest of the world. That means patients in other countries are remunerating American companies, who then have more money to invest in more treatments, and more research, and more development to put more new drugs on the market. Again, the virtuous cycle becomes a global virtuous cycle that feeds into a US-based research and development engine. It’s great for the world, but it’s really, really great for our country. 

That’s not to mention, Sue, that third thing when you talk about knowledge diffusion. It goes to the country that’s in the lead.

David Kappos:

When it goes to the US, it feeds into the engine of innovation to create even more treatments. 

Then, there’s secondary effects. All the jobs that go with it. National leadership. Being able to have influence on a global basis. National security in some cases. When you talk about things like pandemics, we saw how that played out in recent memory. The US was much benefited by having done early R&D and understanding the genetic makeup of the COVID virus. And being able to be so quick to then sequence the virus, within months start devising effective treatments for it. That could have gone much, much differently. If folks think that some other countries would have been as generous as we were about providing medicines to the whole world, I’m not so sure that others would have been as generous with us as we were with them. 

In any event, I much prefer the situation where the US is in the lead. We’re investing and we’re in position to be quick off the starting blocks when the next pandemic, when the next global emergency comes around. 

Sue Peschin:

Yeah. I think these are all really important points, and especially the earlier access to the latest and greatest. It’s lifesaving, truly. Can you tell people listening about the PERA Act? What it is, what are some practical ways that people listening can get involved in PERA, and also in other advocacy efforts? 

David Kappos:

Yeah. Thanks, Sue. I am happy to talk about the Patent Eligibility Restoration Act, that’s what PERA’s called. That’s a piece of legislation that, for the bio-pharma sector, corrects some case law, some decisions that were made by the Supreme Court that have resulted in diagnostics being ineligible for patent protection in the US, and certain genomics-related inventions being ineligible for patent protection in the US. 

We’ve got an unfortunate situation now, where inventions in those two areas, which by the way are eligible for patenting everywhere else. Europe, China, Japan, all those countries. Diagnostics and genetics-based improvements that otherwise meet all the requirements for patentability, they’re new, and they’re not obvious, and they’re described well and all that, are eligible everywhere else, but not in the US. We’ve got ourselves worked into this corner where universities, research institutions, and companies in the US simply don’t invest in diagnostics. As important as diagnostics are, we’re not investing in this country. 

Why? Because if you make an investment, let’s say you spend a billion dollars creating some great new diagnostic, you’re just giving that investment away to all your competitors if you’re a company. Folks who are watching this should ask themselves the question, “Would you invest your 401K in a company that’s going to then use your 401K to do research and development that will only benefit its competitors and it will not benefit itself?” No public company would do that. You can’t. You can’t afford to. You’ll be out of business if you do that. The only rational decision for US companies to make is to not invest in diagnostics R&D. Whatever’s happening in China, in other places, they’re the ones who are investing in diagnostics R&D right now. You have to presume it’s primarily to benefit people in their countries and not really to initially benefit Americans.

We’re trying to reverse that mistake and situation. PERA, it’s very narrow legislation. It’s not a jumbo bill, it’s just a few pages long.  

David Kappos:

It basically says we’re going to unwind those Supreme Court cases and we’re going to return the law to how it worked before those cases. It had been about the same, the law on eligibility, going all the way back to the original Patent Act of 1793. 1793. The law had been the same and it was only changed around 15 years ago by the Supreme Court. PERA will fix that. 

Sue, the other part of your question was what can your viewers and listeners do? 

David Kappos:

Well, this is a piece of legislation that’s pending in Congress right now. This is a thing, it’s real. It already had a hearing last term of Congress. It needs to go to the Judiciary Committee in the Senate now, there’s a companion bill in the House also, and get considered by the Judiciary Committee. 

The thing for folks to do is call the office. It’s very easy to do. You go online to your Congressional House and/or Senate office and look up the phone number. Call up that office. It’ll take you three minutes to tell them, “Look, I’m calling about the Patent Eligibility Restoration Act. I’d like to see this legislation passed because I’d like to see diagnostics and genetic-related inventions, I’d like to see investment in those kinds of innovations here in the US.” Three minute call, hugely important.

Now of course, Sue, the groups that you guys marshal, which are great groups that are trying to advocate for cures to important diseases, they should organize a little bit more and get a couple of folks to go into Congressional offices, particularly members of the Senate Judiciary Committee. Easy to find online, in the US government website. Go in, schedule meetings. Members of Congress are happy to meet with constituents. You could do it in the district, when they’re in their home office, or in Washington, DC if people can get there. But it’s super important. You don’t need to have 100 meetings, you just need to have one, two, or three. Go in there for half-a-day, meet with three offices. Tell them PERA is important, you want to see diagnostics and genetics-related innovation rewarded so that they’ll be cures for Americans. Have a huge impact. 

Sue Peschin:

That’s awesome. Well, the Alliance For Aging Research supports the bill. They know, the cosponsors of the bill know that. We’ve weighed in and we put out a statement in favor of it. We’re happy to help anybody who’s listening who’s interested in calling in. You can get in contact with us at [email protected] if you want to learn more about how to do that. We can also put it on our Phone to Action to let folks know. 

One question I had was there was some really good news about a week or so ago, the very first blood test for Alzheimer’s that was approved by the FDA. Are you saying that they’ll be able to apply for a patent now? Or PERA has to pass in order for them to be able to get a patent on that? 

David Kappos:

Yeah. Great question. I don’t know about that particular one.

David Kappos:

If there’s something else going on with it. That, despite it being a test, that it turned out to be eligible for patent protection. When you start getting into some complexities of the system then. 

David Kappos:

When the application was filed, those kinds of things. But what I can say is that more tests for Alzheimer’s and other important diseases and illness will absolutely be coming to market if PERA passes. 

Sue Peschin:

That’s great. Well, right now in order to get diagnosed, you have to have a pretty painful spinal tap for a definitive diagnosis. Or a PET scan. Both of those are more expensive and more invasive than a simple blood test. I know the community is super excited about that. It seems like it’s a no-brainer that these types of medical products should also be able to get patents. 

We have two questions that we ask all our guests, so here goes. First, when you were younger, what did you imagine growing older would be like? 

David Kappos:

Let’s see. I suppose my parents would be a good example. I have six brothers and sisters. We all have, through our lives, remained fairly close to our parents. They only passed away within the last few years, my mom at 100 and my father at 98. I suppose having lived most of my life being really lucky to have my parents in my life, I imagined that it would be more or less the experience they had. You get to retire, and travel, and dance, and spend time with kids and grandkids, and even great-grandkids for a 30-plus year retirement. I now know they were lucky. 

I suppose, Sue, that’s what this meeting is about in a way, is trying to pave a path so that more people can get that lucky to have a long retirement. To be a vision for their kids as to what retirement or what old age looks like. I’ll tell you what, for my parents, they were active. Alert in the lives of their kids and we were in their lives. And living at home all the way. Never had to leave their home. More people should have a retirement like that and that’s really what this discussion is about. 

Sue Peschin:

Hi, everyone. Welcome to This is Growing Old, the podcast all about the common human experience of aging. My name is Sue and I’ll be your host today. 

When we think about equitable access to care, intellectual property is usually not the first thing that comes to our minds. It’s easy to assume that patent protections are a secondary concern when lives are at stake. But in reality, these protections are what fuel the innovation that saves lives. Last month, the Alliance For Aging Research brought together policy experts and leading voices in health to explore the critical role strong intellectual property protections, also known as IP, play in bringing groundbreaking treatments from the lab to the pharmacy. 

Our new white paper, A Fair Trade: How Intellectual Property Policies Unlock Better Access to Care, sheds light on the purpose of IP laws, while debunking myths and misconceptions. If those are left unchallenged, they could threaten future medical breakthroughs. Joining us today to discuss the unique role of IP is David Kappos, co-founder of the Council For Innovation Promotion. David is widely recognized as one of the world’s foremost experts in intellectual property and has spent decades advancing healthcare innovation through thoughtful policy leadership. 

David, thanks for joining us today. 

David Kappos:

Yeah. Great to see you, Sue. Thank you for inviting me. And thank you for what you’re doing with the Council, advancing issues about innovation. Which as you say, are a bit refined and could be challenging for folks, but they’re so important. 

Sue Peschin:

Absolutely. Okay. Well, let’s dive in. David, we appreciate you serving as an expert speaker at the convening that we did at the very end of March on intellectual property policies and how they unlock better access to care. The paper that came out of it, our summary white paper from the meeting, describes IP as “a cornerstone of American health innovation,” which makes it sound very important. But for a lot of patient advocacy groups and others who are focused on affordability issues and access issues, IP and patent protection issues might seem abstract or even trivial to them. Can you unpack the role of IP and patents, and why they’re really critical to both innovation and equitable access to care? 

David Kappos:

Yeah, Sue, and it’s a great question. IP and patents are upstream of the pricing mechanisms that we’re all so concerned about. I would start by saying everybody wants medicines to be available on an affordable basis. We’re all super concerned about that. 

David Kappos:

The role of intellectual property is to provide an incentive for creating new medicines in the first place. If you think about it, the medicine that doesn’t exist might as well be infinite in price because you can’t get it no matter how much money you have.  

David Kappos:

All those diseases that your folks in your group are concerned about that aren’t cured yet, the price for a cure for those is currently infinite because the cure doesn’t exist. 

What intellectual property is about is putting an incentive system in place so that universities, and research institutions, and companies can afford to bring capital, in other words can afford to invest in the extremely expensive and failure-prone process of curing those uncured diseases. IP is all about finding cures in the first place. Pricing mechanisms downstream from there are the tools that we need to use in order to ensure that everybody gets access to those medicines once they’re created. 

Sue Peschin:

I like it. Good explanation. Can you just tell people what is a patent? 

David Kappos:

Yeah. A patent is a grant from the US government. It is granted to inventors, people who have really brilliant ideas, solve big problems. If you happen to be one of those people, you come into an agency call the United States Patent and Trademark Office. I used to run that agency during the Obama Administration. You go through a process that results … It involves an extensive examination by a professional, degreed patent examiner. If you meet all the requirements, you’ve got an invention, it’s new, nothing similar to it has been done before, you’ve given a thorough description of it, you could get a patent. 

What a patent then gives you is a right of exclusivity for a period of time. That period of time is 20 years from when the application is initially filed. In the life sciences field, the actual exclusivity winds up generally being somewhere around 13, 14 years by the time you get through the whole application process. 

The magic of the system is that, for the small investment that our country makes in grating a limited period of exclusivity, after the patent expires, the invention which has been fully described goes into the public domain forever. The patent system has turned out to be large, perhaps mankind’s greatest invention to incent inventions. It works in a magical way, inducing giant amounts of capital and people to spend enormous amounts of time working on solving very, very hard problems because of the incentive of getting a period of exclusivity in exchange for all of that work.

The last thing I’ll say on this, Sue, for folks to understand is the requirement to describe an invention in order to get a patent is really, really important because that’s what makes the patent system into a vehicle for the dissemination of knowledge. It enables one inventor after another to build on the work of previous inventors. We say that each inventor gets to stand on the shoulders of all the inventors that came before them to build the next great thing on top of the last great thing. That’s very different from all other approaches to dealing with innovation outputs. The other approaches involved holding those outputs secret, keeping them as trade secrets. 

Trade secrets, the concept existed way back in the guild ages, at the end of the so-called Dark Ages or the Middle Ages, before the Renaissance started. You’re talking 1500 years ago, something like that. The guild period was well known frankly for slow progress of innovation. Why? Because every time someone had an invention, they kept it secret, they didn’t share it. There was no patent system, there was only the prospect of keeping an invention secret to avoid having anyone else learn about it. As a result, there was no ability to stand on the shoulders of those who came before you. Everything was kept secret in these guilds as long as possible. The world’s innovation system basically just crawled along until the patent system got created.  I’m sorry, that’s a long answer to a short question. 

Sue Peschin:

That’s okay. 

David Kappos:

I just wanted to share some things there. 

Sue Peschin:

I think it’s interesting for listeners, and I know I learned a lot when we were talking about it, because you don’t think about the time limitation of it and that’s really where a lot of the value is. Well, it’s in both. It’s in declaring it and having exclusivity, but then also the time limited value. You want to maximize that time. 

If you think about it, it’s like a lot of other things in healthcare aren’t patented. The connection to the pricing issue, they don’t necessarily change in price over time. But when things are patented, like a lot of the medications, they do. They eventually go generic. That’s what you’re talking about. I thought that was very interesting to learn. 

David Kappos:

Right. Sue, to put a few data points against that for folks to understand. Around 90% of all prescriptions in the US are filled with generic. Generics absolutely dominate the market. Our system works extremely well in that way. That the patent system and since the innovation in the first place, the inventor gets a limited period of exclusivity. The generics are waiting in the wings to immediately make low cost drugs when the patents expire. The inventors take the returns that they’ve earned from the inventions in the first place and invest them back in making more inventions. It’s a classic virtuous cycle, it works extraordinarily well. 

The other thing I’ll mention is that there was a study done, it might have been by the World Health Organization a number of years ago, on the top 300 drugs in the world. If I recall right, all but 13 of them, almost all of them were generic. You get a sense from that that, on the arc of time, the system of having generics last forever and patents last for a modest period of time balances the interests of everyone and results in a system like we have the US, where we frankly invent most of the world’s new medicines here because we’ve got the strong protection. Then we get the benefit of access at low cost because we’ve got a very strong generic presence. 

Sue Peschin:

Right, right. Yeah, when the patent expires. Drug pricing and tariffs on medical products remain really hot topics right now on Capitol Hill. Those issues often get conflated with IP and then they distort the policy conversation. What are some of the biggest myths about IP? And how do those misconceptions create challenges in trying to educate the public about the role of IP protections? 

David Kappos:

Yeah, yeah. There’s a couple of them that I’ll mention and they’ve got memes that go with them, or visual metaphoric descriptions. One of them is the concept of so-called patent thickets. The theory is that drug makers are getting not just one patent to cover their drug, or two or three, but many of them. So creating a thicket, think dozens of them. That’s been studied. In fact, that was studied by the US Patent and Trademark Office. At the request of Congress, the government agency that deals with this stuff and has no dog in the hunt so to speak studied that issue. They found that it’s just not the case. That the innovators get a modest number of patents, many times just one, two, three, numbers like that. Not dozens or hundreds of them. The patent positions do not impede generics from entering the market after the expiration of the original patent. Which, as I mentioned, tends to be in the 13-ish year range. 

It’s a myth. In reality, it doesn’t exist. There may have been one case at one time, I call that the N equals one problem. It’s always very dangerous to create policy because of a single data point. You can find a single data point that stands for just about anything because there’s always an aberration here or there. But if you refer to the report that the PTO came out with, this is just actually not a real issue. 

Sue, the other meme if you will, or myth that’s out there, is the myth of product hopping. The theory there, or the meme is that branded drug makers, when a patent is expiring, when their original patent on a drug is expiring, they’ll get a new patent on some trivial variation of the drug. The example that’s given that’s completely unreasonable is changing the color or the shape of the pill. Let me just assure everyone as the guy who used to run the US Patent and Trademark Office, the patent office does not stand for that. It’s composed of a number of thousands of people who are dedicated to helping do the right thing. That means never granting patents for trivial variations. Our laws do not permit that and the patent office vigorously polices that. 

In reality, what does happen is that after an original drug is created, and billions of dollars are spent on the creation, the perfection, and the clinical trials that get that drug to market, and recouping the losses for the nine out of 10 drugs that have tremendous investments made in them and then fail in the end and can’t go to market. 

David Kappos:

The reality is that once the initial drug is made and it’s on the market, the drug makers don’t just walk away and go on vacation or something. They’re investing immediately in improving the drug.

What do I mean by improvements? Well, frequently you’ll find medicines, treatments that initially require intravenous administration. That means that patients have to go to a hospital or a lab, perhaps several times a week. It’s extremely disruptive to people’s schedules. It’s extremely expensive because you’re dealing with healthcare professionals multiple times a week. It’s prone to issues, infections, things like that. That method of administration is certainly way better than nothing. If you’re a patient that’s suffering from disease, you’ll do it any day. 

David Kappos:

But the drug makers then invest hundreds of millions of dollars more in doing the research and development, and going through separate clinical trials to perfect better methods of administration. This is why you see drugs who go from intravenous to ultimately then to a simple tablet that gets taken once a day or a few times a week, or whatever. There’ll be other stops, if you will, in between. Patient administered injections and things like that, that don’t require IV treatment. 

The reality is that innovators are incented by the patent system, the prospect of getting a follow-on patent for the innovation that’s required to create a better method of administration. They invest a lot. They create these better methods of administration. Patients are benefited dramatically by them. The incentive system ensures that companies, and boards, and research institutions, and universities can afford to, can justify those add-on investments. That’s not product hopping, that’s just good old-fashioned ingenuity and further investing in an initial product. 

Sue, the other thing I’ll say about that is that, remember from the previous part of our discussion a few minutes ago, the original patent doesn’t last forever. It lasts for whatever its term was. Again, typically an operative term of somewhere around 13-ish years. Generics are welcome and permitted to come on the market with whatever the product is that’s covered by that original patent when that original patent expires. There’s absolutely no prohibition from the generics entering the marketplace. Many times, they do because the original method of administration works okay, at least for some population of the patients. 

But what you don’t want is a world in which there’s absolutely no incentive for innovators to invest in creating improved methods of administration, or any of the other improvements that can be made. Improved efficacy, reduced side effects, longer lasting formulations. All of those improvements you absolutely want investment in those. The mechanism we have, the one tool we have in the world to incent that investment is the patent system. 

Sue Peschin:

Yeah. One thing we hear from the advocacy space, sometimes from the payer community, and I think it’s very paternalistic towards the patient community is they, “Oh, we have to pay all this extra money for convenience.” Our response back is what you’re calling convenience is really about adherence. That’s health enhancing. That’s not just convenience. Because there are very real issues, especially for older adults, in getting back and forth from a hospital or a doctor’s office. Making sure you have a family caregiver who can take you. A lot of cancer drugs, I know when my grandmother had ovarian cancer years and years ago, it was infusion. It was horrible. Now, there are a lot of oral chemotherapy drugs. Which there’s enough with cancer that you have to deal with, and having to sit and wait for an infusion over an hour, two hours, if you don’t have to, how much more time do you have to spend with people around you? 

David Kappos:

Yeah. 

Sue Peschin:

That, it makes a big difference and it’s not just about convenience. 

David Kappos:

Yeah, those are great points, Sue. Yeah. 

Sue Peschin:

Yeah. My next question is how do you think … Without going too much into it, how can patient voices and stories help illustrate the impact of strong IP protections? 

David Kappos:

Yeah. Well, the stories really are absolutely essential. Getting patients and patient groups out there, talking about the treatments that are being created, are being researched, are close to making it through clinical trials, are entering clinical trials, have promise to cure sick Americans. Telling the stories about the need for investment, the criticality of incenting investment in order to get those treatments out of the lab, through clinical trials, and onto the marketplace. Sue, it’s so important. If your folks can just tell those stories to members of Congress, it’ll go a long way in persuading those policymakers of the need to continue to support a strong and effective patent system so that those treatments can get to the marketplace as soon as possible. 

Sue Peschin:

Okay. Now, when you talk about stories, I think there’s a broader story here too, about American ingenuity. We keep hearing about is the US going to maintain its role as the leader in biomedical research? Why is protecting American ingenuity so important in the fight for patent rights? 

David Kappos:

Yeah. I’ll start by saying, Sue, it’s by no means a foregone conclusion that the US is going to continue leading. Our economic rivals overseas are nipping at our heels. They’d very much love to take over the leadership banner. 

Why is it important? Well, I’ll give you several reasons. Number one, the country that invents first tends to save lives first in its own country. When American companies are inventing new treatments and putting them through clinical trials, through the FDA here in the US, they’re going on the market here in the US first. Sick, and in some cases unfortunately otherwise dying patients get access to the medicines here. Again, it’s well taken in the data that Americans get access to a much broader variety of medicines than people in other countries. That’s because such a disproportionate share of new treatments are invented in this country. We get the benefit of being first out.

Second benefit is, when we invent these drugs, we also get to export them to the rest of the world. That means patients in other countries are remunerating American companies, who then have more money to invest in more treatments, and more research, and more development to put more new drugs on the market. Again, the virtuous cycle becomes a global virtuous cycle that feeds into a US-based research and development engine. It’s great for the world, but it’s really, really great for our country. 

That’s not to mention, Sue, that third thing when you talk about knowledge diffusion. It goes to the country that’s in the lead. 

David Kappos:

When it goes to the US, it feeds into the engine of innovation to create even more treatments. 

Then, there’s secondary effects. All the jobs that go with it. National leadership. Being able to have influence on a global basis. National security in some cases. When you talk about things like pandemics, we saw how that played out in recent memory. The US was much benefited by having done early R&D and understanding the genetic makeup of the COVID virus. And being able to be so quick to then sequence the virus, within months start devising effective treatments for it. That could have gone much, much differently. If folks think that some other countries would have been as generous as we were about providing medicines to the whole world, I’m not so sure that others would have been as generous with us as we were with them. 

In any event, I much prefer the situation where the US is in the lead. We’re investing and we’re in position to be quick off the starting blocks when the next pandemic, when the next global emergency comes around. 

Sue Peschin:

Yeah. I think these are all really important points, and especially the earlier access to the latest and greatest. It’s lifesaving, truly. Can you tell people listening about the PERA Act? What it is, what are some practical ways that people listening can get involved in PERA, and also in other advocacy efforts? 

David Kappos:

Yeah. Thanks, Sue. I am happy to talk about the Patent Eligibility Restoration Act, that’s what PERA’s called. That’s a piece of legislation that, for the bio-pharma sector, corrects some case law, some decisions that were made by the Supreme Court that have resulted in diagnostics being ineligible for patent protection in the US, and certain genomics-related inventions being ineligible for patent protection in the US. 

We’ve got an unfortunate situation now, where inventions in those two areas, which by the way are eligible for patenting everywhere else. Europe, China, Japan, all those countries. Diagnostics and genetics-based improvements that otherwise meet all the requirements for patentability, they’re new, and they’re not obvious, and they’re described well and all that, are eligible everywhere else, but not in the US. We’ve got ourselves worked into this corner where universities, research institutions, and companies in the US simply don’t invest in diagnostics. As important as diagnostics are, we’re not investing in this country. 

Why? Because if you make an investment, let’s say you spend a billion dollars creating some great new diagnostic, you’re just giving that investment away to all your competitors if you’re a company. Folks who are watching this should ask themselves the question, “Would you invest your 401K in a company that’s going to then use your 401K to do research and development that will only benefit its competitors and it will not benefit itself?” No public company would do that. You can’t. You can’t afford to. You’ll be out of business if you do that. The only rational decision for US companies to make is to not invest in diagnostics R&D. Whatever’s happening in China, in other places, they’re the ones who are investing in diagnostics R&D right now. You have to presume it’s primarily to benefit people in their countries and not really to initially benefit Americans.

We’re trying to reverse that mistake and situation. PERA, it’s very narrow legislation. It’s not a jumbo bill, it’s just a few pages long. 

David Kappos:

It basically says we’re going to unwind those Supreme Court cases and we’re going to return the law to how it worked before those cases. It had been about the same, the law on eligibility, going all the way back to the original Patent Act of 1793. 1793. The law had been the same and it was only changed around 15 years ago by the Supreme Court. PERA will fix that. 

Sue, the other part of your question was what can your viewers and listeners do? 

David Kappos:

Well, this is a piece of legislation that’s pending in Congress right now. This is a thing, it’s real. It already had a hearing last term of Congress. It needs to go to the Judiciary Committee in the Senate now, there’s a companion bill in the House also, and get considered by the Judiciary Committee. 

The thing for folks to do is call the office. It’s very easy to do. You go online to your Congressional House and/or Senate office and look up the phone number. Call up that office. It’ll take you three minutes to tell them, “Look, I’m calling about the Patent Eligibility Restoration Act. I’d like to see this legislation passed because I’d like to see diagnostics and genetic-related inventions, I’d like to see investment in those kinds of innovations here in the US.” Three minute call, hugely important.

Now of course, Sue, the groups that you guys marshal, which are great groups that are trying to advocate for cures to important diseases, they should organize a little bit more and get a couple of folks to go into Congressional offices, particularly members of the Senate Judiciary Committee. Easy to find online, in the US government website. Go in, schedule meetings. Members of Congress are happy to meet with constituents. You could do it in the district, when they’re in their home office, or in Washington, DC if people can get there. But it’s super important. You don’t need to have 100 meetings, you just need to have one, two, or three. Go in there for half-a-day, meet with three offices. Tell them PERA is important, you want to see diagnostics and genetics-related innovation rewarded so that they’ll be cures for Americans. Have a huge impact. 

Sue Peschin:

That’s awesome. Well, the Alliance For Aging Research supports the bill. They know, the cosponsors of the bill know that. We’ve weighed in and we put out a statement in favor of it. We’re happy to help anybody who’s listening who’s interested in calling in. You can get in contact with us at [email protected] if you want to learn more about how to do that. We can also put it on our Phone to Action to let folks know. 

One question I had was there was some really good news about a week or so ago, the very first blood test for Alzheimer’s that was approved by the FDA. Are you saying that they’ll be able to apply for a patent now? Or PERA has to pass in order for them to be able to get a patent on that? 

David Kappos:

Yeah. Great question. I don’t know about that particular one.

David Kappos:

If there’s something else going on with it. That, despite it being a test, that it turned out to be eligible for patent protection. When you start getting into some complexities of the system then. 

Sue Peschin:

Okay.

David Kappos:

When the application was filed, those kinds of things. But what I can say is that more tests for Alzheimer’s and other important diseases and illness will absolutely be coming to market if PERA passes. 

Sue Peschin:

That’s great. Well, right now in order to get diagnosed, you have to have a pretty painful spinal tap for a definitive diagnosis. Or a PET scan. Both of those are more expensive and more invasive than a simple blood test. I know the community is super excited about that. It seems like it’s a no-brainer that these types of medical products should also be able to get patents. 

We have two questions that we ask all our guests, so here goes. First, when you were younger, what did you imagine growing older would be like? 

David Kappos:

Let’s see. I suppose my parents would be a good example. I have six brothers and sisters. We all have, through our lives, remained fairly close to our parents. They only passed away within the last few years, my mom at 100 and my father at 98. I suppose having lived most of my life being really lucky to have my parents in my life, I imagined that it would be more or less the experience they had. You get to retire, and travel, and dance, and spend time with kids and grandkids, and even great-grandkids for a 30-plus year retirement. I now know they were lucky. 

I suppose, Sue, that’s what this meeting is about in a way, is trying to pave a path so that more people can get that lucky to have a long retirement. To be a vision for their kids as to what retirement or what old age looks like. I’ll tell you what, for my parents, they were active. Alert in the lives of their kids and we were in their lives. And living at home all the way. Never had to leave their home. More people should have a retirement like that and that’s really what this discussion is about. 

Sue Peschin:

Yeah, that’s good stuff. That’s good. You are lucky and I appreciate you sharing that. Finally, as an adult, what do you enjoy most about growing older yourself? 

David Kappos:

Well, I’m not retired. My wife has other things in mind for me. What do I enjoy about getting older? Well, there is something and that is the wisdom that you have. Just having seen things. I used to think when I was younger and I’d interact as a lawyer with senior lawyers, I always wondered if they had eyes in the back of their head or they were somehow clairvoyant or something, when they could just pick up issues. They could look at a 300-page document and immediately flip to the key issue that it took me a week to figure out. 

David Kappos:

I’ve learned in the fullness of time they probably weren’t clairvoyant, they had just seen a lot. 

David Kappos:

A lot more than I had seen. That’s really the word that goes on that is wisdom.

Sue Peschin:

Yeah. 

David Kappos:

You gain that with age and with experience. 

Sue Peschin:

Right. As we get older too, one of the things that does strengthen in our processing is really ability to connect those dots. That’s what that sounds like as well. 

Well, David, thank you for this great info. This was really a pleasure. Thanks to our listeners for tuning in. As always, please be sure to check out the Alliance’s website at agingresearch.org to stay updated on our team’s work in this important area. I hope-

Yeah, that’s good stuff. That’s good. You are lucky and I appreciate you sharing that. Finally, as an adult, what do you enjoy most about growing older yourself? 

David Kappos:

Well, I’m not retired. My wife has other things in mind for me. What do I enjoy about getting older? Well, there is something and that is the wisdom that you have. Just having seen things. I used to think when I was younger and I’d interact as a lawyer with senior lawyers, I always wondered if they had eyes in the back of their head or they were somehow clairvoyant or something, when they could just pick up issues. They could look at a 300-page document and immediately flip to the key issue that it took me a week to figure out. 

David Kappos:

I’ve learned in the fullness of time they probably weren’t clairvoyant, they had just seen a lot. 

Sue Peschin:

Right. 

David Kappos:

A lot more than I had seen. That’s really the word that goes on that is wisdom.

David Kappos:

You gain that with age and with experience. 

Sue Peschin:

Right. As we get older too, one of the things that does strengthen in our processing is really ability to connect those dots. That’s what that sounds like as well. 

Well, David, thank you for this great info. This was really a pleasure. Thanks to our listeners for tuning in. As always, please be sure to check out the Alliance’s website at agingresearch.org to stay updated on our team’s work in this important area. I hope-