Who would have supposed that after several prior serious viral outbreaks, including SARS, MERS and the swine flu, the United States would find itself so short of the diagnostic tests needed to combat the COVID-19 pandemic?
Yet, the nation does find itself woefully short of test kits and the means to rapidly process test results. We obviously need much wider testing and need it immediately. In addition to identifying who has the disease, we need to identify who has antibodies and may now be immune, key information as we look to reopen the economy.
There are many reasons for this unpreparedness, but here is one that few people have heard of: In recent years, the courts have eliminated incentives for private companies to develop diagnostic tests by excluding such tests from patent protection. This has proved to be a colossal mistake. Patent protection is necessary to incentivize the massive R&D investments of private capital required for the development of new diagnostic tests. Without reliable patent protection, no venture capitalist or business leader can justify continuing to make such large and risky investments.
Until 2012, diagnostic methods could be patented. Then, suddenly, the Supreme Court made them ineligible, arguing that they relied on “natural phenomena” that should not be patentable. But this reading of the natural phenomena test made no sense in the context of diagnostic testing. Any diagnostic test has to rely on biochemical reactions of the human body; otherwise, the tests would be useless.
As a retired chief judge of the U.S. Court of Appeals for the Federal Circuit, the nation’s highest patent court, I was stunned by the Supreme Court’s decision. It upended settled law and the settled expectations of inventors, investors and patent professionals. As a citizen, I was appalled, for accurate diagnostic testing is the foundation for developing effective vaccines and cures.
Of all the types of inventions, diagnostic methods are arguably the most deserving of patent protection. Instead, they now get none. It is no wonder that the necessary investment in R&D for diagnostic tests did not materialize in recent years to ensure we were prepared for the current crisis.
My old court now strikes down every diagnostic patent brought before it. Many of the judges complain that they feel these patents should be upheld but have no choice under the Supreme Court’s precedent. One judge wrote: “The bottom line for diagnostics patents is problematic. But this is not a problem that we can solve. As an inferior appellate court, we are bound by the Supreme Court.” As a result, many companies have abandoned work on diagnostic methods. For example, the famed Cleveland Clinic all but stopped its diagnostics efforts after its early patents in the field were rejected.
If the government could do everything without private sector help, we would not have suffered the terrible shortage of tests kits that occurred early in this crisis when only the Centers for Disease Control and Prevention was involved. In fact, for the past four decades, the government’s main contribution to the development of new health technology was to fund basic science research and then leave it to the private sector, relying on patents, to develop the actual products and to manufacture them at scale. This division of roles worked so well that, until recently, almost every advance in human health was achieved in the United States. What drove this highly successful system was the power of patent protection to attract on-going streams of private capital investments.
Right now, biopharma companies and universities are working flat out on diagnostics, cures and vaccines, based largely on the urgent public need, not normal business incentives. But eventually, normal incentives will be needed again. Continued progress to prepare for the next pandemic or a return of this one can be promoted by restoring patent eligibility so private investments will once again flow into diagnostic methods and tests.
Fortunately, Sens. Thom Tillis, R-N.C., and Chris Coons, D-Del., are leading a bipartisan campaign in Congress to clarify the law and effectively reverse the destructive Supreme Court decision in this area. While their efforts are currently stalled, the present pandemic could generate renewed interest in moving forward. For the sake of everyone’s health, let’s hope so.
Paul R. Michel served as chief judge of the U.S. Court of Appeals for the Federal Circuit from 2004 to 2010. He was first appointed to the U.S. Court of Appeals by President Ronald Reagan in 1988. He currently serves on the board of the Intellectual Property Owners Education Foundation and also consults on appeals in patent cases.