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So our president jumped the gun. The country gathered recently to hear him announce limited federal funding for human embryonic stem cell research. “I have given this issue a great deal of thought, prayer and considerable reflection,” he said. Problem is, he forgot about patent law. Only after George W. Bush’s speech did America learn that the University of Wisconsin owns the patent for human embryonic stem cells. Patent No. 6,200,806, for “a purified preparation of primate embryonic stem cells,” was registered in March 2001. And with it — whether or not federal funds are available — Wisconsin can keep anyone, meaning any human embryonic stem cell in any laboratory in the country, from touching its cells. Wisconsin holds the key to more than the process it used to derive the stem cells and the cytoplasm in its petri dishes. It owns five of the 64 colonies that qualify for federal funding. It also holds the patent for the concept of isolated human embryonic stem cells in America. As one lawyer told The Wall Street Journal, “No matter how you derive a stem-cell line, [Wisconsin] has the right to block you from using it.” The subject matter of patents has to be “novel” and “nonobvious.” But don’t be guided by the dictionary definitions of those two words — U.S. patent law isn’t. Apparently, stem cells are “novel,” even though they’ve existed since humans. And they’re “nonobvious,” even though culturing body cells in a lab setting hardly seems like a “Eureka!” epiphany. And stem cells, somehow, don’t fall within the exception barring patents for natural phenomena. But never mind that. What matters more is how the University of Wisconsin’s property illustrates the collision between our patent and health care systems. OTHER PEOPLE’S MONEY The idea of patents comes directly from the U.S. Constitution. Article I, � 8 states that Congress has the power “to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.” The reasoning for this is fairly easy to understand. If you give risk-takers — those who invest their hard-earned money, against the odds, in their garage labs — the chance to make a bundle with a state-protected monopoly, that encourages others to take risks and protects America from intellectual and scientific stagnation. At least, that’s the idea. But there are profound problems with the system. Innovation comes about even when inventors have no chance of reaping Powerball-sized rewards from their work. The astounding revolution of the World Wide Web began in government-funded projects, while the upstart operating system Linux resulted from programmers working for the pure pleasure of programming. And to the extent that patents do encourage innovation, they do so by permitting limits on how inventions are distributed to the rest of us. Maybe that’s tolerable when we’re dealing with airplanes or Palm Pilots. But when it comes to health care and medicine, it’s not. The assumptions of the patent law system just don’t stack up in that field. And worse, the system might be downright counterproductive in helping society reap the full benefits of life-saving treatments. First, look at the money. Private inventors risking their own money in pursuit of knowledge? Not quite. The level of government funding in health sciences is awesome. The National Institutes of Health has a budget of more than $20 billion, largely for scientific research. In fiscal year 2000, $2 billion went to AIDS research, and $226 million went to various stem cell projects (not involving human embryonic cells). Much of that goes to university laboratories — like the ones at the University of Wisconsin. And this money is crucial to scientific advance. Business clearly knows the value of government money. Following President Bush’s announcement on federal funding of stem cell research, the stock prices of a number of publicly traded companies researching stems cells fell. Apparently, investors thought that the stingy number of stem cell lines qualifying for federal funds would slow the companies’ ability to develop therapies. Not surprisingly, one company whose stock price has risen since the announcement, Geron, has an exclusive license with the University of Wisconsin to perform certain research on stem cells. With that government funding — and with explicit authorization from a 1980 statute — the scientists can then go out and patent the inventions as their own property. But what’s the rationale there? What patent law theory explains the sense in letting scientists use public money to get private monopolies? If you accept the precepts of the patent system, you might imagine scientists petulantly sitting at home, waiting for a call from their lawyers giving them the go-ahead to put on their patent-protected thinking caps. There’s obviously no way to know for sure what motivates any individual scientist — money probably does play some role. But, as then-U.S. Supreme Court Chief Justice Warren Burger wrote in 1980: “The large amount of research that has already occurred when no researcher had sure knowledge that patent protection would be available suggests that legislative or judicial fiat as to patentability will not deter the scientific mind from probing into the unknown any more than Canute could command the tides.” And surely also some of those innovative scientists — the ones who took the Hippocratic oath — are motivated by the quest to alleviate human suffering. THE AIDS CHALLENGE But even if you ignore the fact that the assumptions of patent law are contradicted by the reality of medical research, the patent system strains at the seams when it comes to getting the goods out to the people who need them. Consider treatments for AIDS. Multiple pharmaceutical companies hold patents for drugs that combat the disease. In America, a patient’s standard drug treatment regimen can cost thousands of dollars a year — many multiples of what people or governments in developing countries racked by the disease can afford to pay. In response, foreign companies started making generic versions of the patented drugs, which they offer for just a few hundred dollars per patient per year. When the patent-holders threatened to sue, protests and negative publicity led at least one company to abandon efforts to force generic manufacturers to stop producing the drugs. But other disputes — for instance, over Brazil’s recent decision to manufacture patented AIDS drugs for its citizens — still smolder. To be sure, there are ways in which patent-holders can use state-sanctioned monopolies to help society. There have been efforts, for example, by patients with rare genetic diseases to patent their deficient genes. The force behind one such group — a mother whose two children have a genetic connective tissue disorder called PXE — told a newspaper that, in licensing gene patents, “We’re not as hard-nosed about profits. We’re more interested in the search for treatments and patient support and research.” PAYING THE PRICE Such creative use of the patent system is laudable. But it’s not the norm. The University of Wisconsin agreed to offer its cells to the NIH for basic research, but retains the right to profit from any therapies that the NIH might develop. Worse, Geron — which helped fund the university’s research and has a contract with the university to do certain types of research itself — has a licensing agreement for third parties that one researcher has called “punitive.” That mercenary attitude, when it comes to health care, can lead to tragedy. Look again at AIDS in Africa. Up to 25 percent of the adult populations in some sub-Saharan nations are infected with the virus that causes the disease. The lack of cheap and effective drugs undoubtedly has contributed to the crisis. This is not just an issue for the Peace Corps or Doctors Without Borders. Secretary of State Colin Powell announced in February that AIDS in Africa poses national security problems for the United States. In the past, when facing issues of national security, America has relaxed its patent laws. The 1980 statute allowing nonprofit organizations to patent inventions developed with government money has an opt-out clause for the government when “foreign intelligence or counter-intelligence activities” and other “exceptional circumstances” arise. Similarly, the Atomic Energy Act of 1954 mandates that “No patent shall hereafter be granted for any invention or discovery which is useful solely in the utilization of special nuclear material or atomic energy in an atomic weapon.” During the heyday of the Cold War, when innovation in atomic weaponry was seen as imperative for national security, the method chosen for attaining the high-quality science needed to resist Soviet threats was not the patent system. Why? Nationalizing all discoveries in the field ensured that atomic innovations would not be held hostage from the public that needed them. Similar reasoning might apply to health care today. Africa is facing such devastation that its health care failure threatens our national security. And our flawed health care system — though not a threat on the level of the Cold War — is still an ongoing source of profound concern. And the cause for that concern, by and large, is increased costs that largely stem from the patent system. Easing up on strong patent protection — at the least for treatments discovered with the help of federal funding — would help alleviate those critical problems. Property rights stalwarts might call such a policy absurd. But is it really any worse than the threat of hounding scientists out of their labs for trying to save our lives? Evan P. Schultz is associate opinion editor at Legal Times in Washington, D.C. His e-mail address is [email protected].

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