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Reading the tea leaves on the Trump Administration

The first weeks of the Trump presidency kicked off with a certain degree of, well, tumult.

From immigration to Obamacare to relations with NATO, the new administration’s policies seem unclear, uncertain, or simply ill-conceived.

This is less true with issues involving patents and intellectual property, but possibly because they haven’t yet been the focus of the new administration’s attention. This will likely change, and it is the reason VCJ turned to Vern Norviel, a partner at Wilson Sonsini Goodrich & Rosati, for his thoughts on where the new administration might go.

Norviel leads the patents and innovation counseling practice at the law firm and works with life sciences companies and venture firms. He anticipates an administration that will show itself as business friendly and pro-patent, but equally willing to take on high drug prices.

He also thinks patent reform, as pursued by the previous Congress, is likely dead.

As to the possible repeal of the Affordable Care Act, the impact will not be huge.

What follows is an edited transcript of VCJ’s conversation with Norviel.

Q: The new administration is a few weeks old and we haven’t heard much on patents. Should we expect the president to favor stronger patent protections? What is your sense so far?

A: One would think that perhaps an administration that is very business-focused would be very pro-patent. On that basis, one wouldn’t expect to see dramatic changes, perhaps maybe even to back off of some of the recent court decisions and make it less difficult to get patents. There have been (Supreme Court) decisions, such as those regarding Mayo and Alice, that have cut patents back.

Q: This would apply to the life sciences, I imagine.

A: In life sciences, the concern is some of his statements, which are frankly quite difficult to parse, have been counter to that. The administration, while supposedly being pro-business, seems highly anti-pharmaceutical from a pricing point of view.

Some of his statements might lead one to believe there would be a weakening of patents for pharmaceuticals. Those two are contrary and I don’t know how to make them out.

Trump Drugs Top of Mind
Vern Norviel, partner, Wilson Sonsini Goodrich & Rosati. Photo courtesy of the firm.

Q: Patent reform, as conceived under the previous Congress, is probably dead then.

A: I tend to agree. I think maybe in the other direction, though.

The changes the Supreme Court has brought and the recent legislative changes have to some extent weakened patents. There is some discussion it might be possible to get through legislation to reverse some of the recent Supreme Court decisions that have been vexing to not just the life science industry.

Q: Drug pricing is a big issue for venture investors. What do you see as Trump’s options on this issue?

A: Trump has made, in as clear a statement as he makes, that he wants to roll back drug prices. One way to do that would be to deal with the way drugs are reimbursed and draft regulations on pricing. Another way would be to weaken patents so they become generics much more easily.

Q: So there is a chance the administration could roll back drug pricing?

A: This one might be something that happens because it is one of the few issues where, between the Congress and the president, there might be some level of agreement.

Therefore, it might be something they could accomplish without a lot of drama.

Q: The 21st Century Cures Act passed Congress in December. Will that have an impact in the investment community?

A: Yes, that does. If it is followed through, it will significantly help with things like developing personalized medicine so that a cancer victim gets the right drug. That could enable more investment in those kinds of technologies.

Q: What do you mean by if it is ‘followed through’?

A: You have to have an executive branch that is willing to do something with it. You have a law, it has to be executed by the executive branch. Since it was not done by a Republican administration, maybe they don’t fund it, don’t put in people to deal with it and effectively it becomes hollow.

Q: What are looking for at the FDA?

A: It seems very clear they would like to reduce the difficulty of getting drugs approved, which I think everybody generally agrees is a good idea. That would be a significant boon to the pharmaceutical industry. But the question is: ‘Does that come with some sort of restriction on pricing?’

Q: What about the functioning of the patent office in light of Trump’s requirement that two regulations go if a new one is enacted?

A: There are a lot of mundane, apolitical rules-making from the patent office. If they can’t do this kind of routine business, I’d say that is another underlying concern because of the overall aversion to any kind of rules. You could slow down or weaken a system that works pretty good and is fairly apolitical.

Q: Do you expect much of an impact on investing from the repeal of the Affordable Care Act?

A: I don’t think it will have a huge impact if that is all they do. As long as they don’t replace it with some sort of draconian drug price controls.

Action Item: Read more about Vern Norviel and his bio at http://bit.ly/2kFbI6e

Photo of President Trump during a meeting with health insurance company CEOs at the White House in Washington, Feb. 27, 2017. Reuters/Kevin Lamarque