Facilitating Innovation to Fight Coronavirus Act

Pharmaceutical and medical research is vital for development of coronavirus treatments and vaccines. Most experts believe these to be necessary before we can fully open the US and world economies and get back to normal. Senator Ben Sasse (R-NE) has introduced emergency legislation in an attempt to incentivize the research into these treatments and vaccines.

Patent Rights

It is generally recognized that patents provide incentives for research and development for new inventions. In exchange for the limited monopoly rights of 20 years from the earliest patent application filing date, patent applicants must disclose their invention to the public. In this way, others can build upon the inventions and research in patents to continue to innovate and improve upon the previously patented inventions that might otherwise remain secret. These provisions of the Patent Act are “[t]o promote the progress of science and the useful arts.”

The limited monopoly provisions can be especially important in the areas of medical research and pharmaceuticals. Various studies have estimated the cost of getting a new drug to market to be about $1 billion, with some studies suggesting the cost to be closer to $3 billion. If not for the monopoly profits that could be obtained by the drug companies, they would have no incentive to spend this money on the new drugs.

Monopoly Pricing

When a patent for a new drug expires, generic versions usually enter the market, which significantly reduces the cost of the drug for consumers. Many critics have argued that the pharmaceutical companies often receive patents that are unwarranted because they are only slight improvements on existing drugs and technology. They also argue that the pharmaceutical companies often engage in other conduct to prevent or at least delay generic versions of the drugs from entering the market, thereby keeping prices higher than they should be.

As a result, some very important and even potentially life-saving drugs have been priced beyond the reach of patients who need them. Some insurance companies even refuse to cover the cost of drugs that are priced particularly high.

Facilitating Innovation to Fight Coronavirus Act

Recognizing these competing interests and the need for swift development of treatments and vaccines for coronavirus, Sen. Sasse introduced S. 3630, which contains provisions related to patents.

The bill provides that the term of any patent covered by the act will be extended for 10 years beyond the regular term of the patent. This extension of the period of exclusive rights is not free however. In exchange for the 10 additional years, the term of the patent will not begin until the termination of the coronavirus national emergency declared on March 13, 2020 by the President under the National Emergencies Act. This means that any such patents could not be enforced as long as the national emergency related to coronavirus is in effect, which would allow others to make, use, sell, etc., the invention during the emergency.

The bill defines an “eligible patent” to mean “a patent issued for a new or existing pharmaceutical, medical device, or other process, machine, manufacture, or composition of matter, or any new and useful improvement thereof used or intended for use in the treatment of the Coronavirus Disease 2019 (COVID–19).”

Questions Raised

The bill raises a lot of questions that would need to be answered prior to passage.

• If a patented treatment or vaccine is manufactured by a large number of companies in order to get it to the public as quickly as possible, how would the patent rights be returned to the patent holder once the emergency ends?
• Will the provisions of this bill be mandatory or could a patent owner opt out? The demand for its patented treatments or vaccine will obviously be highest during the emergency so the owner may prefer to enforce its patent rights now and not receive the term extension.
• Will the bill apply to patents that issue before it becomes law?
• Most importantly, will this set a precedent for overriding patent rights during a national emergency? The pharmaceutical lobby has been very loathe to permit such overrides in the past, so the opposition to this bill may be strong.

The bill was referred to the Judiciary Committee in May, but has otherwise not received any congressional action to date.

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