America’s startups deserve much of the credit for beating back Covid-19. Small businesses were responsible for nearly three-quarters of Covid-19 diagnostic innovations — more than 600 inventions in all, according to a new report from the U.S. Patent and Trademark Office.
Unfortunately, we might not be able to count on small businesses the next time a public health crisis strikes. That’s because our government may soon vote to betray startups by sabotaging their business model.
The moment of reckoning will come in February, when the World Trade Organization decides whether to adopt a proposal to waive patent rights for Covid-19 tests and treatments. It can’t do so without U.S. support.
The proposal would have no upside at all. Global Covid-19 cases are dramatically lower than the peak of the crisis, drug manufacturing capacity hasn’t been an issue for over a year, and countries around the world already have access to the most advanced treatments, thanks to patent-sharing agreements.
The downside, on the other hand, would be significant. A patent waiver would be fatal to American startups, which rely on steady financial investment. Reliable patent rights are the system’s linchpin, as I know from experience.
In 2010, two scientists at the University of Michigan began developing an antibody that could be used to treat inflammatory bowel diseases. After nearly a decade, they came up with an antibody called PTM-001.
The scientists were confident that PTM-001 would work, but they still needed to turn their invention into a usable medicine, and for that, they needed investment. In 2019, I joined up with them as co-founder and CEO, and we formed a startup, PTM Therapeutics. We applied for a patent on their discovery as a usable medicine.
Our San Carlos company is growing fast. But we will never reach our goal of changing patients’ lives without venture capital investment. And with all the challenges and risks involved in biotech startups, there’s no way we could attract enough money without secure patent rights.
It’s not just my company. The path we’re pursuing is well-traveled. In 2022 alone, U.S. founders launched nearly 1,000 startups based on technology developed at universities.
Patents are crucial to these companies’ success — because they offer investors a degree of safety. Startups that own a patent are 47% more likely to gain venture capital funding, 84% more likely to be acquired, and 128% more likely to go public. If the WTO decides to undermine patent rights, it’ll harm companies of all sizes throughout America’s biotech industry. Investors will hesitate to fund the startups that license many of the discoveries made in academic labs. Those startups, in turn, will be able to conduct less research. Breakthroughs that could have become lifesaving cures will instead be forgotten in the margins of research papers. Startups like mine will never be born.
And since about two in three new drugs originate at a small company, medical innovation overall will decline — even at big pharmaceutical companies. Patients — and the 4.4 million workers directly and indirectly employed by America’s biopharmaceutical industry — will suffer.
It’s not just the biotech industry that will be in danger. Suspending patent rights on one type of technology sets a precedent. The U.N. Secretary-General, for instance, has already suggested waiving patent rights on cutting-edge climate technology.
If the U.S. administration and other world leaders don’t take a strong stand to reaffirm the value of intellectual property, there’s no limit to how far these rights could erode — and how many startups, and their workers, would suffer as a result.
Jennifer C. Cheng is CEO and co-founder of PTM Therapeutics in San Carlos.