Sowing the seeds – supporting biotech progress with IP

Biotechnology research can be expensive and may deliver delayed returns on investment. IP protection, particularly that from patents, is an essential instrument to help biotech industries recover the funds committed to the research and development of new drugs and treatments. Indeed, without proper IP protection, the biotech industry may not provide important innovations beneficial for human health.

However, biotechnology also faces unique legal and market pressures, meaning the sector's future is characterized by opposing priorities and relentless competition.

To explore how IP will shape and be shaped by innovation in biotechnology, our annual IP Trend Monitor survey questioned experts on topics ranging from protection strategies to scientific collaboration, collectively telling a story of things to come.

The matter of perspective: creation or invention?

Biotechnology has been a hot topic in scientific, medical and technological circles for decades and a subject of contention in patent law for nearly as long. One of the first issues to be dealt with was if a genetically modified organism could be patentable. The U.S. Supreme Court case Diamond vs. Chakrabarty of 1980 set a tone of deeply involved debate when the five-to-four ruling overturned a patent examiner's rejection of protections for a human-made bacterium. Far from suppressing innovation, this narrow majority may have helped foster continuous development in biotechnology and the ability of IP law to protect unforeseen inventions.

Collaborative research and market copies

This steady progress has yielded a plethora of biological medicines produced by bacteria, yeast or living animal cells, with a prime example of such a molecule being synthetic insulin. Unfortunately, the complexities of developing and producing these medications mean they are usually expensive for patients. To ameliorate the situation, biosimilar drugs often became available. These are close parallels to approved biological medicines, called "reference medicines," and are made and administered using similar processes.

To illustrate, where the Cohen-Boyer recombinant DNA process had 461 licensees between 1980 and its expiration in 1997, biosimilars differ in that they can only be released after the reference medicine's protections expire. This means that their presence often explodes when a popular product comes off patent.

Dennemeyer data shows biosimilar patent applications increasing from 18,932 in 2000 to 70,096 in 2015 and declining slightly over the next five years. Yet, even as yearly filings dipped more than 13,000, the market grew an estimated 56% annually and is projected to surpass $60 billion USD by 2030. The unequal ebb and flow of patent applications and valuation growth evidence a complicated relationship between advances, protections and market releases, indicating that progress in biosimilars and the entire biotech industry will remain as much a source of scrutiny as optimism.

Our experts felt the same, with 67% either agreeing or strongly agreeing that "open innovation and sharing of research findings" could lead to IP challenges and should be approached cautiously. At the same time, 80% said this shared progress is essential for accelerating innovation. An additional 32% felt collaboration should be limited to pre-competitive research, while another 30% disagreed with the same statement. This emphasizes the friction between exclusivity and evolution and the ongoing question of how balance can (or should) be achieved in biotechnology.

The essential role and uneven distribution of patents

Despite uncertainty around open innovation, the industry remains convinced that patent safeguards are critical. To wit, 38% of our respondents said protecting new drug compounds should be the primary focus of IP protection in this sector, followed closely by 37% for genetic sequences and gene therapies. Only 14% said bioinformatics and data analytics should be the emphasis, though this increased to 20% among patent specialists and 25% among corporate panelists. Finally, few respondents (11%) chose laboratory processes and techniques.

Taken together, it is possible to draw several inferences from these responses:

• In an industry capable of saving lives, experts recognize that shared innovation is crucial. However, consensus is still elusive regarding how heavily this weighs against the importance of exclusivity, market share and competitive advantage.
• The call for collaborative research has not eliminated the demand for patent protection. If anything, this trend will underscore the role of IP in signaling proprietary technology and the limits of what is permitted.
• Innovation is perceived to favor applications (drug compounds, genetic sequences and gene therapies) over approaches (bioinformatics, data analytics and laboratory processes).

The reality is that the biotechnology industry will grow as long as human health demands it. Concurrently, IP strategies and regulations will develop to keep pace with this industry's adapting situation.

The IP encoded into biotechnology

A March 2024 report from the European Commission's Joint Research Centre (JRC) explored the global biotechnology landscape, revealing that biotech patents constituted approximately 5% of all patents filed with the world's top five offices between 2001 and 2020. Most biotech patents were related to industrial (white biotechnology) and medical (red biotechnology) applications, together representing more than 96% of those analyzed. The distribution across regions showed that the United States leads in biotech patent development, contributing 39% of 2020's total. That same year, the EU was the origin of 18% of biotech patents, while 10% came from China.

Interestingly, a joint study published by the European Patent Office (EPO) and the European Union Intellectual Property Office (EUIPO) in October 2023 highlighted that biotechnology is the most IP-intensive sector when it comes to the usage of patents and registered trademarks. Overall, 65% of biotech startups sought to obtain these two types of intellectual rights. Breaking down this data, 47% filed for a trademark, 48% applied for a patent and 31% applied for both.

Patents impacting biosimilar market entry in Europe

Another study, this time on European patent applications for nine monoclonal antibodies, provided insight into market coverage. Notably, the study revealed that the duration of protection across the selected molecules was substantial (ranging from 10 to 17 years), primarily conferred by the basic patent and the additional safeguards provided by Supplementary Protection Certificates (up to five years) and pediatric investigation extensions (six months). These combined measures resulted in an average effective market protection of 15 years for the innovator product.

One method of further extending patent exclusivity involves filing for new indications (something that indicates a particular test or treatment should be used), often submitted alongside new dosage regimens or co-treatments. Consequently, biosimilar developers encounter specific challenges related to subsequent patents.

While some patents covering the innovator product can be circumvented by biosimilar developers — for instance, by claiming a distinct formulation — others, such as those related to specific dosage regimens, pose greater difficulties. In some cases, biosimilars can strategically exclude new patent-protected indications from their labels to avoid infringement and expedite market entry. Additionally, producers of biosimilars can file new patents primarily focused on novel formulations to shore up their position.

Patents impacting biosimilar market entry in the United States

Research published in Nature Biotechnology posited that the availability of biosimilars in the United States has been hampered by the prevalence of biologic drug patents and strategies to prolong exclusivity. In response to the long-standing perception of anti-consumer behavior, the Biologics Price Competition and Innovation Act (BPCIA) was passed to provide competitors enhanced means to dispute reference medicine patents and, ideally, resolve conflicts prior to a biosimilar's approval by the Food and Drug Administration (FDA).

However, the patent landscape for blockbuster biologics is dense and often compels companies to reach settlements under the BPCIA. The terms of these agreements can further stall the market entry of biosimilars, stymieing competition and failing to deliver the legislation's intended pricing controls. As of June 2020, only 14% of FDA-approved biologics had biosimilars in development or approved. For context, just two years earlier, the biologics bevacizumab, trastuzumab and adalimumab were covered by 86, 108 and an incredible 132 patents, respectively.

In 2022, experts at the Sturm College of Law found that, on average, nine times more patents are asserted against biosimilars in the United States than in Canada and 12 times more than in the United Kingdom. A second, perhaps even more significant, finding was that these drugs are slower to enter the market in the United States than in Canada and the United Kingdom. This emphasizes the correlation between delays and the dense overlapping of exclusive rights often referred to as "patent thickets." Hence, the researchers noted that "large numbers of low-quality or even duplicate patents" help exploit a systemic weakness in U.S. patent regulations.

This conclusion echoes what was described in the Nature Biotechnology paper. There, it was revealed that secondary patents, having a median filing latency of more than a decade after approval, play a significant role in litigation delaying or blocking biosimilars. Although the authors of that paper suggest limiting biological patent enforceability as a potential way to ensure healthy competition and fair prices, the nature of such reform would need to avoid doing more harm than good to drug research and development.

Patent thickets clearly have substantial implications for the biotechnology industry, facilitating market monopolies and stifling improvements, not to mention increasing prescription drug prices for patients in the United States. However, the problem goes far beyond health to encompass a huge variety of ethical problems across industries.

Competition and innovation: the opposing priorities of biotechnology

From the time of Diamond vs. Chakrabarty, IP protection has both limited and nurtured biotechnological growth. The case of Humira illustrates this often paradoxical relationship.

AbbVie's drug Humira is an antibody used to treat numerous health conditions, including rheumatoid arthritis. The main patent expired in 2016, but AbbVie holds 132 other protections attached to the medication, the latest expiring in 2034. A 2019 U.S. federal lawsuit called this an illegal monopolization of the market by the Chicago-based pharmaceutical company, but the case was soon dismissed. In August 2022, the 7th U.S. Circuit Court of Appeals upheld the earlier decision that AbbVie was not in violation of antitrust law.

Nonetheless, the case raised questions about the moral implications of holding large numbers of patents for the same subject – a practice that occurs across industries.

What does the future hold for biotechnology?

Patent protection is intended to help give inventors in all fields appropriate credit and protect their hard work. The patents themselves and IP law overall, therefore, are designed to be impartial. When both are "exploited" or otherwise used to limit rather than defend innovation, it may be asked whether that impartiality has been compromised and what can be done to restore it.

It is beyond doubt that IP law faces shifting demands and pressures as regards the biotechnology industry, but as we have seen, this is nothing new. Growth in this sector can only support a fairer, more efficient patent system as fresh discussions prompt a better understanding and balancing of moral versus financial considerations and competitive versus innovative drives.