I don’t like the idea of methodological patents at all! Those are the ones that really slow research down, causing less innovation rather than more.

Also in fairness, when you look at how the biotech industry operates, there does appear to be a boatload of money in small companies with patents licensing to big companies (and big companies cooperating on patented products etc) – from my perspective it at least seems that ‘stealing’ of patents by big from small is not a common occurance (I may be wrong here, operating from a biased viewpoint as I do), and it is more likely that individual researchers (I know of a couple) from academia will hold a patent and make a buck or three when big biotech is interested in exploring that particular patent for efficacy (and considerably more should that gene make it to commercialization).

http://graphics8.nytimes.com/packages/pdf/national/20100329_patent_opinion.pdf

Also – Anastasia – in answer to your terse statement “If there is a better way to encourage innovation than to allow companies to recoup costs, I’d really like to hear it. Really.” I think pdiff and Ewan have covered many of the points I wanted to – that more IP can actually raise costs, that expanded patent scope encourages companies to defend existing patents rather than innovate, that bigger companies are more equipped to prosecute any patents (even crappy ones) than smaller companies (adding lots of unfairness), and that I am not arguing for the elimination of biotech patents, but simply better scoping.

I’d like to see fewer patents of the BRCA sort, where the patent adds a lot of friction to the breast cancer research and testing markets and doesn’t seem to cover an invention of any sort. I’d prefer more methodological patents (the best examples I can think of here are the PCR and transfection patents) as encouraging these substantial inventions moves research forward.

Ewan – The BRCAI/2 case is fascinating. I’m trying to convince a friend who has slightly more experience with IP than I to write a post about it and its potential ramifications for biotech. You care to take a swing at it?

Have to wonder how this will impact other biotech patents – my assumption is that a lot of transgenic crops etc won’t fall under this same description, as promoter+gene+terminator sequences are not native to nature (although the individual parts are, but that’s a different arguement) however things like genetic markers would appear (at least to me) to be completely covered by the not markedly different from native DNA as it exists in nature – as that is somewhat the point of a genetic marker.

Can’t find too much other info around the subject, but expect a post soon from you guys! =p

Suppose public funding would only kick in at the later levels of safety testing? Not every product is going to be getting that far, only those with good market potential, e.g. good potential for public benefit. In addition, testing is bid out to public universities, thus the public sees some benefit from investment in the university systems (without the potential for corporate coercion normally associated with direct “Big Business” university investments). This is not a model without precedence. The federal government itself, for example, has the final say in safety ratings of all vehicles. The public evidently does not mind paying for that.

“* I’ve heard it both ways. Some say regulatory requirements are most of the R&D costs for biotech, but I’ve heard others say it’s gene discovery that’s the biggest part. I suppose it depends on what sort of trait you are looking for. I can imagine quite a few traits that wouldn’t be very difficult to find.”

Gene discovery is, no doubt, expensive. I would view this, however, as a capital investment, no different than equipment, facilities, personnel. It is not necessarily related to one product and may lead to multiple products. It’s cost should be viewed over all potential products.

“But as I suggested in this post, if patents were somehow made more stringent to allow companies to prosecute other companies for using a protected method then the creating company (or individual) could more freely share those methods with academia and govt research.”

But what about the legal costs. Suppose you, Anastasia.com, just had monster corp, Duosanto, steal your patented gene? How could you possibly afford to challenge a giant like Duosanto in what will inevitably be an endless series of legal actions (a common practice in such things is to drag out legal challenges as long as possible in order to bankrupt your opponent). A desired solution should avoid litigation rather than encourage it. Academia as well, should not be assumed to be the nice player either. Take a look at this article I just happened to come across.

http://blogs.forbes.com/sciencebiz/2010/03/a-patent-purely-about-greed/

A pharmaceutical in cahoots with Harvard and MIT tried to enforce a human gene patent that would affect a huge array of drugs. They were demanding millions in royalties. Fortunately, this has been thrown out in court (for now). What you are suggesting relies on the benevolence of both corporates and academia, neither of which I believe deserve such reliance, as this shows.

I did notice your idea that regulatory burden be placed on the public. If it is true that regulation is the most expensive part of development of biotech traits* then this would reduce the cost of developing said traits and allow for innovation without the need for patents to allow for recoupment of regulatory costs. I think this sounds great. And it has a lot of other benefits as well – you get unbiased testing both in fact and in perception! The problem then is – why should taxpayers foot the bill for every company who wants to try out some new thing? I don’t know a way around that one. Maybe if we streamline the testing process.

I agree that in some ways patents have slowed down innovation – just think of the gene gun! Academic research was severely hampered until the patent ran out recently. But as I suggested in this post, if patents were somehow made more stringent to allow companies to prosecute other companies for using a protected method then the creating company (or individual) could more freely share those methods with academia and govt research.

* I’ve heard it both ways. Some say regulatory requirements are most of the R&D costs for biotech, but I’ve heard others say it’s gene discovery that’s the biggest part. I suppose it depends on what sort of trait you are looking for. I can imagine quite a few traits that wouldn’t be very difficult to find.

According the link/book Danny gave above, Michele Boldrin and David K. Levine point to several factors affecting this. They first note, however, that there are several historical cases where patents have appeared to restrict, sometimes severely, innovation on the part of the patent holder, as well as, third parties. Patent holders have no incentive to improve their designs while protected and others can’t gain access to the invention to tweek it. Therefore, the public does not benefit from the patent, which is the main rationale Boldrin and Levine imply that should be used to issue patents. So, to directly answer your question, they would say that patenting does not encourage innovation and, hence, only exists to generate money for the patent holder.

That said, however, one means that costs are recouped has to to with the cost itself. While the book does not cover biotech specifically, they do cover the pharmaceutical industry which is similar in costs and regulatory issues to GE tech. Their premise is that the majority of development costs (such as Ewan’s 100M figure above) are tied up in regulatory phases. I do not know for sure, but suspect this could be true for GE. They suggest that the regulatory costs and responsibility for testing could be burdened onto the public, presumably through the FDA. I mentioned that earlier, but Danny did not address it. For the developer, however, the cost of development is thereby reduced and there is substantially less to recoup. In addition, the developer is financially freed to pursue multiple products, reducing their overall risk.

Another means relies on free market principles. They note that, historically, those who market first often gain market advantage and that this is sufficient to essentially maintain monopoly over the product without protection. Likewise, a superior innovation in a product can have similar affect.

A third means is to rely less on selling the product itself and rely instead on selling services related to the product. Not sure how this applies to biotech, but it has worked well in some sections of the software industry. The software is free to use or sell, but support for the software only comes from Company X. In ag for example, one might imagine a company selling a freely available GE variety for a higher price, but with that price, the grower gets free assistance with growing the crop, some form of crop insurance, as well as the marketing muscle of the company to sell the crop at the end of the season. Some growers may find it economically advantageous to “bundle” services and product like that rather than saving the seed themselves or buying a cheaper equivalent seed and providing everything else themselves.

As always, my interpretation of these things (Boldrin and Levine) may be skewed