The document summarizes key topics in intellectual property rights and regulations for the biotechnology industry in a global economy, including: 1) The role of patents in promoting innovation in biotechnology by protecting investments in research and development. 2) Challenges around patent reform legislation, healthcare reform provisions for biosimilars, management of intellectual property from federally funded research, and international intellectual property regulations. 3) Opportunities to streamline patent processes, support collaborations, and increase funding for university research to promote continued innovation.

1. Intellectual Property Rights and Regulations in a Global Economy Lila Feisee Managing Director for Intellectual Property BIO January 6, 2010 Washington Campus

2. About BIO Trade association with more than 1,200 biotechnology companies, academic institutions, state biotechnology centers, and related organizations in all 50 states. Vast majority are small, emerging companies with little revenue and no marketed products Health care, Agricultural, Industrial, and environmental biotechnology products

3. “ The very first official thing I did in my administration—and it was on the very first day of it too—was to start a patent office; for I knew that a country without a good patent office and good patent laws was just a crab, And couldn’t travel any way but sideways or backwards.”-- Mark Twain, “A Connecticut Yankee in King Arthur’s Court” 1889

4. Today’s Topics Role of biotechnology in the global economy Role of Patents in Biotechnology Challenges and opportunities in IP for Biotech Patent reform and the PTO Gene patents and management of IP arising from federally funded research Healthcare reform Compulsory licensing/access to technologies

5. Role of biotech in the Economy Jobs for more than 7.5 million people in the United States Commercialized more than 300 biotechnology drugs and diagnostics Health products used by m ore than 325 million people worldwide; Another 400 or so biotechnology products are in the pipeline. In the agricultural field simultaneously increasing food supplies, reducing pesticide use, conserving natural resources of land water and nutrients, and increasing farm income. leading the way in creating alternative fuels from renewable sources without compromising the environment.

6. The role of Biotech in the economy Market capitalization as of April 2008 was $360 billion U.S. health care biotech revenues from publicly traded companies rose from $8 billion in 1992 to $58.8 billion in 2006. U.S. publicly traded biotech companies spent $27.1 billion on research and development in 2006. The top five biotech companies invested an average of $170,000 per employee in R&D in 2007. Biotechnology attracted more than $24.8 billion in financing in 2007 and raised more than $100 billion in the five-year span of 2003-2007. The average annual wage of U.S. bioscience workers was $71,000 in 2006, more than $29,000 greater than the average private-sector annual wage. See Battelle report.. http://bio.org/local/battelle2008/State_Bioscience_Initiatives_2008.pdf

7. Patents and Biotech Ideas/research with potential are patented DNA, proteins, cells, transgenic plants and animals, methods of treating and detecting Long lead time and hundreds of millions of dollars of investment University research and government funding Investor financing and collaborations Ancillary benefits of patents: Jobs High-skilled workforces have a higher standard of living

8. Diligence Categories for Investors Management Intellectual Property Legal Technology Preclinical work Clinical Data Regulatory Diligence Manufacturing Financials

9. Pillars of Biotechnology’s Growth Strong public/private partnerships and innovative research Strong intellectual property protection Broad patent eligibility Predictability in term length Predictability in enforcement Stable regulatory environment Safety of approved product Timeliness of approval

10. Basic Research Invention & Patent Filing 0 12 20 Marketing Approval Applied Research (including clinical work to obtain approval) Market Exclusivity Period Patent Expiration - 6 Fed $$$ Timeline for biotech therapeutic Development

11. Industry Use of Patents To generate capital 90% have no products on the market To exclude competitors for a period of time 10% with products must protect investment As product for licensing Universities, mid-size companies

12. 700K patent applications 1 million in the next few years Increase in total number of licenses over the past decade Global Innovation

13. 46,576 total licenses/options executed from 1996 – 2006 **based on AUTM data

14. Challenges and Opportunities Patent and PTO reform

15. Challenges and Opportunities on the IP front Patent Reform Congress Legislation pending Expand opportunities to challenge patents (House and Senate) Decrease the value of patents through recalculation of damages (House) Lacks true front-end quality reforms (House and Senate) PTO New Administration, looking at ways to streamline patent process

16. Challenges and opportunities: In the Courts Business method patents: The Federal Circuit, in In Re Bilski , basically eliminated much-maligned patents on disembodied business methods Willful infringement: Under the Federal Circuit’s In re Seagate decision, willfulness is now a much more circumscribed doctrine that is harder to establish in litigation. Obviousness: In KSR v. Teleflex , the Supreme Court made it easier for the PTO to reject applications on combination inventions, and for defendants to prevail on an obviousness defense against asserted patents.

17. Is Reform Necessary? Stream-line patent office processes Collaborations with other patent offices Bring the PTO into the 21st century with the right tools and training

18. Challenges and Opportunities Healthcare Reform

19. Biosimilars Legislation In healthcare legislation Create a pathway for approval of biosimilars In both the House and Senate passed bills Both bills have biosimilars provision though the House bill’s patent provisions are a bit better for our members Congressional leaders (Dems) are meeting to try and reach a deal that will hold in both chambers. January-early February timeframe

20. FOBs Provisions 12 years DE (both House and Senate) Senate bill does not allow for additional exclusivity House bill allows for 6 months for pediatric exclusivity Allows interchangeability based on FDA assessment (Both House and Senate) FDA can set guidances but they’re not required to do so (Both House and Senate) FDA can require analytical data and animal studies or can waive this requirement (Both House and Senate)

21. Distinct naming provision (Generic naming) House has unique naming provision, Senate bill does not Patent provisions in Senate bill, more restrictive and burdensome on innovator, unlikely to allow for resolution of all disputes prior to approval of biosimilar and also has the potential to create additional litigation BIO is able to support both the House and Senate versions of the FOBs provisions.

22. Patent Provisions BLA triggers obligation to provide to innovator access to application (Both House and Senate) Identification of relevant patents is the obligation of the innovator (Both House and Senate) Process patents and method of use patents can also be used in infringement (Both House and Senate) The earliest date litigation can ensue is 4 years after licensure of the innovator product (Both House and Senate) Both bills would open a time window for litigation long before approval of biosimilar.(Both House and Senate) No stay of approval (both House and Senate)

23. Senate bill more restrictive in who can access confidential info to biosimilars No access to Scientists and individuals who are involved in prosecution of the relevant patents No access to Patent owners who have not exclusively licensed to the reference product sponsor The House bill is more flexible and relies on a contract-based confidentiality within the FDA.

24. Identification of relevant patents- The Senate bill follows a four step process while the House follows a 2 step process Both allow for a back and forth on the referenced patents But Senate allows for a negotiation of which patents should be litigated if no agreement reached there would be a “list exchange” of patents the two parties view as relevant and the innovator has 30 days to file suit on all common listed patents.

25. Under either bill the biosimilar applicant can certify that it will not begin marketing until patent expiration and parties may license instead of litigate. Senate bill provides for essentially two waves of litigation Early wave over the list exchange patents Late wave on patents identified but not common to both lists Senate bill does not allow for third party participation in the preapproval litigation process

26. Linkage- Senate requires appellate decision prior to approval of biosimilar House requires district court decision Senate provides for DJ action only after biosimilar’s intent to launch House has no DJ provisions Senate bill has cause of action when biosimilar certifies that a patent is invalid or unenforceable House has no such cause of action provision Senate bill has forfeiture and and penalty for those patents that could have been included in early wave but not timely litigated. House bill does not have such a provision

27. Gene Patents and Federally funded Inventions Patents are eroneously equated with high prices Stricter control over federally funded research Senator Wyden tried to include “reasonable pricing clause” in licensing agreements between federally funded labs and companies (last healthcare debate) Exercise march-in rights to compulsory license certain types of technologies Several hearings on how to manage federally funded inventions

28. ACLU sued Myriad Genetics for its breast cancer test--BRCA gene patented Questions quality The ability to get a second opinion Whether or not genes should even be patented SACGHS report on licensing of gene patents for diagnostics Possible legislation to limit licensing of gene patents– Wasserman Schultz

29. Understand the role of IP in developing new medicines for intractable diseases Increase funding of university labs and research Increase funding of university technology transfer offices Use IP incentives to bring companies into the fold during the “valley of death” stage

30. Challenges and Opportunities Global IP

31. International IP Biodiversity treaties Access and benefit sharing of genetic and biological materials Mandatory Patent Disclosure requirements for genetic and biological resources World Health Organization Access to Medicines Compulsory licensing, mandatory licensing, patent pools UN Framework Convention for Climate Change Funding of and access to climate change technologies

32. Patents are the Solution not the Problem Hidden driver of economic recovery Catalyst for innovation The impetus for addressing global challenges A solution to poverty The Property Rights Alliance study showed that countries that protect the physical and intellectual property of their people enjoy nearly nine times higher GDP per capita than countries ranking lowest in property rights protections. The study, the 2009 International Property Rights Index (IPRI), compared the protections of physical and intellectual property to economic stability in 115 countries representing 96 per cent of the world ’s GDP. http://www.propertyrightsalliance.org

33. bio.org/ip Thank You