RUTGERS MODEL CONGRESS 2008

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Dec 1, 2012 (4 years and 8 months ago)

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RUTGERS MODEL CONGRESS 2008

New York Republican

House Committee on Science and Technology

Intellectual Property Rights Re: Pharmaceuticals

Monica Parks

EAST BRUNSWICK HIGH SCHOOL


Parks
1


Intellectual property rights, while protecting the intere
sts of pharmaceutical
companies, are ultimately having a reverse effect on consumers of prescription drugs.
When a pharmaceutical company first markets a drug, it is usually under a patent that
allows only the pharmaceutical company that developed the drug

to sell it.

After the
patent expires, after twenty years in the United States, the product is now available for
anyone to produce and market their version of a drug.
Manufacturing drugs is especially
taxing for pharmaceutical companies

sometimes reaching

such astronomical fees,
upwards of hundreds of millions of dollars
.
However, the process that pharmaceutical
companies must go through carries more than just a financial burden;
the actual
manufacture of drugs is the final stage in an extremely lengthy p
rocess
, sometimes
extending a decade or longer to complete
.
The process begins with biomedical research
with the objective of either innovating new products or improving upon current
merchandise. The Research and Development departments of pharmaceutical f
irms begin
by hastily testing
hundreds of thousands of chemical compounds with the intent of
finding a symptom alleviant, or even a potential combatant to
a
disease.
The majority of
pharmaceutical companies entrust a significant portion of their
research a
nd development
budgets to applied research.
As the innovation of new drugs is quite costly,
pharmaceutical companies would greatly benefit from longer patents, as they can profit
substantially during the patent’s period of exclusivity due to the fact that
they are the sole
legal produc
tion agent

of the drug in question

(“Pharmaceutical and Medicine
Manufacturing” 1)
.

The Biotechnology Industry Organization (BIO)
, a trade organization
representing more than 1100 companies,

stated in a press release in respon
se to the
Committee on the Judiciary’s legislation regarding IP rights that “
The biotechnology

Parks
2

industry, fueled by the strength of the U.S. patent system, has provided jobs for over
200,000 people in the United States, and has generated hundreds of drug pr
oducts,
medical diagnostic tests, biotech crops, and environmental products. In the healthcare
sector alone, the industry has developed and commercialized over 300 biotechnology
drugs and diagnostics which have helped more than three hundred and twenty
-
fiv
e
million people worldwide; roughly 400 biotechnology products are in the pipeline
…in
the biotechnology arena, the patent system has done exactly as it was intended to do:
stimulate innovation and
research and development
. By and large, biotechnology paten
ts
are of high quality. That is not to say that there is no room for improvement, but rather to
urge that changes be considered carefully and not tip the balance of quid pro quo too
heavily in favor of some segments of the U.S. e
conomy at the expense of ot
hers


(“The
Statement of the Biotechnology Industry Organization on H.R. 1908”

3
)
.


However, the benefits of extended patents are usually only enjoyed by the
companies themselves.
Pharmaceutical companies recognize the immense profits that can
be made duri
ng the period of exclusivity, and thus raise the prices of the drugs to gain
back funds lost in the innovating process.
Unfortunately,
the costs can be so prohibitively
high that those in impoverished situations, like those affected by HIV/AIDS in African
nations, are forced to forgo the drugs, ultimately leading to worsening of their conditions
and
an increasing possibility of

death.
However, while
individual consumers

will benefit
from shorter patent periods and in turn lower prescription drug prices, pha
rmaceutical
companies will be more inclined to create new products if the law protects

them and
ensures their profit.

If the American pharmaceutical industry suffers extreme financial
losses, it will no doubt have a negative impact on
the American economy
as a whole
.

For

Parks
3

example,
a share of stock in the
New York based

biotechnology firm

Pfizer Inc. is $20.87
as of March 31, 2008.
“Our economy is increasingly based on technology and less on
manufacturing activities. Companies will continue to spend money to
protect what

s
valuable to them,” says
Frank Scherkenbach, a principal at Boston’s Fish & Richardson
law firm, which specializes in IP rights suits

(
LeClaire

1).

The economic issue is of utmost importance,

but the humanitarian side of the
issue must be exp
lored as well.
By complying with the WTO/TRIPS initiatives,
pharmaceutical companies are able to benefit largely; however, the third world countries
afflicted with HIV/AIDS and other ailments are subject to detrimental effects.


WTO/TRIPS stand for a re
-
co
lonization of the economically weak countries. The patent
right is an obstacle in the fight against the AIDS epidemic. These economic rules of the
game are partly to blame for the fact that people are dying,


says Dr. Subhash Hira,
director of the AIDS Res
earch and Control Centre (ARCON) in Mumbai.

More that 1.2
million deaths could be prevented in South Africa over the next five years by increasing
and hastening initiatives to provide access to antiretroviral therapy (ART), according to a
study released on
line by the Journal of Infectious Diseases

(Gerster 1)
.

The Republican Party
believes that
longer patents will ultimately benefit the
pharmaceutical industry, and in turn, those in need of healthcare.
It is the quality of the
pharmaceutical exports that is

truly af
fecting consumers of the drugs; hence, it is
necessary that pharmaceutical companies focus on
funding research and development as
to create the highest quality drugs to combat diseases such as HIV/AIDS, tuberculosis,
and influenza in developing na
tions

(“Pharmaceutical Industry” 1)
.

Research and
development expenses
for the pharmaceutical firm NovaDel
increased
to

$6.6 million
as

Parks
4

of

December 31, 2006
from

$11.9 million
the previous year
. The increase was
chiefly

attributed

to expenses associated wi
th the
c
ompany

s
recent
New Drug Application
(NDA) for ZolpiMist
, a proposed insomnia treatment
, as well as it
s advancing product
candidate, s
umatriptan oral spray,
proposed

for the treatment of migraine headaches.
Interest income for the year 2007 was $63
2,000, as compared to $337,000 for the
previous

year. As of December 31, 2007, the Company's cash and cash equivalents were
$6.4 million and net working capital was $3.8 million

(“NovaDel Reports Financial
Results” 1)
.

As shown in this example, expenditure
s concentrated in research and
development will benefit the firms as soon as one fiscal year, thus stimulating the
production of high
-
quality pharmaceuticals
which will be in turn exported to developing
nations and utilized domes
tically to combat illness i
n the United States
.
Contrary to
opponents’ beliefs, shorter contracts will lead to economic losses for pharmaceutical
companies
. (“NovaDel Reports Financial Results”

1)
. In the event of these financial
dilemmas, companies will be rendered unable to increa
se funding to their research and
development departments, which is an essential step in improving the production of
drugs.
Furthermore, companies will also suffer fiscally from the effects of
other
companies’ ability to manufacture a
generic version of the

drug, as generic drugs are
virtually always less expensive than their brand
-
name counterparts.
As

millions of dollars
are poured into

research and de
velopment programs, it is only fair that the company as a
whole is able to reap the rewards of a successfu
l drug, at least for a limited amount of
time.

New York is home to many
profitable
biotechnology firms, including Forest
Pharmaceuticals Inc., Nagase Pharmaceuticals,
Bristol
-
Meyers Products, and Pfizer Inc.


Parks
5

(“Pharmaceutical Manufacturer Information” 1).

T
he state is also

home to an
astronomical number of prescription drug consumers; hence, the issue of intellectual
property rights

is one that hits close to home.

Many buyers are either forced to buy
generic drugs or forgo their medications entirely because
of the outrageous costs of
prescriptions; Zocor, a popular cholesterol
-
lowering agent, cost up to
$3 per pill daily

in
2004

almost a
$2000 annual fee (Berenson 1).

However, consumers in New York will
ultimately benefit

from longer patents, as they will hav
e access to premier prescription
drugs due to the increased research and development funding invested
upon the extension
of a pharmaceutical patent.

To ensure the continuation of pharmaceutical innovation, New York proposes that
the patent length of 20 yea
rs be upheld.

Furthermore, patent holders must have the option
of extending their patent for the purpose of perfecting the pro
duct or to benefit
economically, as longer patents protect the company from direct competition from
generic companies.

This was ex
emplified by one firm in Canada,
which compared
satisfactorily

with its parent firm
with

regard to the number of publications and patents in
relation to the
research and development

budget, demonstrating the
viability

of
developing a productive and
indepen
dent research program like the Canadian model in
the United Stat
es (“
Research Output of the Canadian Pharmaceutical Industry” 1).

Joe Kiani, founder and CEO of the Irvine, California
-
based biotechnology firm,
perfectly summarizes the dangerous direction Am
erica is headed in the field of
biotechnology.

American ingenuity and innovation are beacons of progress for the
world. But they can't survive without strong intellectual property protection. At a time
when our economy is slowing and health care costs con
tinue to rise, lawmakers must

Parks
6

encourage innovation by strengthening patent protection rather than weakening it.
Regrettably, [
The
Patent Reform Act of 2007
(
S.1145
)
] as it now stands, would do the
latter
” (Kiani 1).



Parks
7

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.

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Parks
8


“Increasing Access
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Parks
9



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.

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