An open letter to Tim Ferriss about the value of patents in the psychedelic world

Dear Tim,

As I said in my previous Twitter post, I am huge fan of your work and feel privileged to be having this public dialogue on such an important topic.

First off, I applaud your support of active scientific research into psychedelic compounds via your funding of both the Imperial and Johns Hopkins psychedelic research centers, and your funding activity in 2015 was clearly prescient. My earlier comment was in no way meant to sound dismissive of the magnitude of your support, but only to highlight the enormous resources needed to advance a single compound through to a commercial product within the highly regulated medical model that requires the FDA and clinical trials.  

To preface my letter: I have several investments in the for-profit psychedelic space and actually will reveal several additional for-profit investments but also some non-profit initiatives soon. However, I am writing this letter in my personal capacity not speaking for any particular company and all opinions stated are my own. 

Let me summarize my position as follows: The patents in question only protect very specific, synthetic, isolated compounds and associated processes, and - in my view - they represent the best means of accelerating patient access and optionality in the midst of a mental health crisis. They do not infringe upon new scientific research or the rights of indigenous/sacred practice.

Patents were actually implemented in the US in the Constitution (!) to reward innovators in the short term with a temporary monopoly and at the same time to ensure that these innovations become public good in the mid-term term.

Patents and any similar forms of protection like data exclusivity can be compared to a mortgage on a house. For a certain period of time, society has to pay back the mortgage (assuming the house is great, and people want to move in), but after that society owns it and can live there rent-free.

My views on patents in the psychedelic world in detail

The focus on the medical model leads immediately to a discussion on intellectual property (IP), and in my view, this includes both patents on substances, on their production process as well as data exclusivity. It is all the same concept: reward entrepreneurs and their investors for the work done and investment put at risk which created NOVELTY. And it is not random: government agencies have to grant these patents and they decide ultimately what is “novel” and what is not (additional to many other criteria to be met).

It is also worth re-emphasizing at the beginning of my response that it is impossible to patent “nature”, such as naturally occurring plant materials; it is possible, however, to obtain patent protection on isolated, synthetically or semi-synthetically produced compounds useful to ensure quality commensurate of a pharmaceutical product (e.g., patents encompassing synthetic routes, crystal forms, etc. with optimized pharmaceutical characteristics). 

"None of the for-profit companies will ever come knocking on somebody’s door to confiscate homegrown plants – which seems to be the worry of some."

Hence, because the patents are not on the naturally occurring plant materials itself, none of the for-profit companies will ever come knocking on somebody’s door to confiscate homegrown plants – which seems to be the worry of some.

Moreover, it should be noted that in the context of most for-profit psychedelic companies, these compounds are part of larger medication assisted therapy programs, a model which represents a paradigm shift in the clinical psychopharmacology space. From my point of view, this is the only acceptable way to introduce in the medical context such powerful compounds to all of the patients who may benefit from them.

Such programs involve developing standardized protocols for delivery of both medication and therapy which are specific to the products being developed by these companies, and as such, may avail themselves to novel methods related to these particular products and hence could be patented. 

What is important to note is that different companies and players may develop their own versions of the off-patent and/or naturally occurring compounds and their own therapeutic regimens and patent or not patent their innovations as they choose. That’s the nature of free enterprise, free market and free choice.

In the end, the marketplace—initially investors but ultimately the regulatory authorities, payers, and most importantly, the patients—will decide whose strategy ultimately turns out to be the best.

Hence, to your question if I think a monopoly/duopoly is good for innovation/the ecosystem: IF a monopoly/duopoly emerged, it suggests that all the other would-be competitors had failed with their own creative and entrepreneurial endeavours. Then it would be a sign of quality and constitutional reward. In that case, you should not blame them, but blame the rest, who then clearly would have not done a good job. And once more, don’t forget the arbiter is neither me, nor you nor Twitter, but the US legal system and the market - systems that I do have a great deal of trust in. 

I want to add that in my point of view though already the characterization of a monopoly or duopoly is wrong. The mental health market is (unfortunately) enormous and there will never be a one-size-fits-all solution. Most patients don't care whether they take a psychedelic or any other treatment if it helps their mental health issue. A monopoly would only exist if there was only one company left treating depression/ psychiatric disorders which will never be the case. There will always be dozens of approaches for treating depression: drugs (SSRIs, SNRIs, Ketamine, tricyclics, antipsychotics, Benzos...), behavioral treatments, physiological treatments, exercise, nutrition, psychotherapy etc.

And as a side note, my feeling is sometimes that the ones raging the loudest against patents are the ones who *claim* to have found their own ways to bring these therapies and own versions to market but might not be able to deliver on their promises, and now want to distract from their own shortcomings.

I want to reiterate again: competition is healthy, keeps (my portfolio) companies focused on execution and at the end ensures the best outcome for patients. The question what helps patients best should always be the guiding principle in biotech. Hence, I always welcome competition.

And of course, patents do not hinder science. Scientists will always be free to do research and will be free to choose with whom they want to work or not.

For-profit enterprises are at the center of delivering modern healthcare solutions

As we have seen for many other diseases, for-profit enterprises are at the center of delivering modern healthcare solutions. To be clear, for-profit companies—NOT governments—were the entities that researched, developed and delivered the COVID vaccines in record time, and are now rightly so applauded and rewarded for this heroic effort.

"Without the chance of turning millions into billions, the investors disappear, and without the hundreds of millions of dollars from investors, progress to bring these medicines to patients slows to a glacial pace. Patent & data exclusivity help set up an incentive structure to make something happen that otherwise would not be happening – building a new therapy, even from a psychedelic, is not a zero-sum game."

Where the marketplace incentivizes a broad number of companies to pursue different therapeutic development strategies, the marketplace’s decision will likely be driven, in part, by speed of execution, particularly given the unmet medical need in the mental health space. As you are likely well aware, the cost to bring a drug to market is often measured in hundreds of millions of dollars and approx. 7-10 years of development time, depending upon the stage of initial development. As such, timely access to large amounts of capital is critical. Given those timelines and amounts needed, it should come as no surprise that investors want to eventually see a substantial return on their initial investment. An alternative way to think about this: the not-for-profit, donation driven model has been a challenge, given the sheer sums of money required for commercial drug development on a yearly basis.

Given the complexity of commercialization due to the inclusion of therapy (the paradigm shift noted above is a double-edged sword), the ramp up of sales might in some cases be slower than a new drug that is prescribed in the traditional way. This, in turn, means that maintaining exclusivity—through both intellectual property and regulatory strategies—is even more necessary so as to ensure the return on investment required by investors.

Without the chance of turning millions into billions, the investors disappear, and without the hundreds of millions of dollars from investors, progress to bring these medicines to patients slows to a glacial pace. Patent & data exclusivity help set up an incentive structure to make something happen that otherwise would not be happening – building a new therapy, even from a psychedelic, is not a zero-sum game.

Further, even after the first psychedelic assisted therapy will be approved, post marketing surveillance, FDA imposed Risk Evaluation Mitigation Strategies (REMS) and continuing medical community education and engagement will entail ongoing costs and manpower to ensure patients get the safe and effective treatments that they deserve. Hence, those businesses will need to remain adequately funded and resourced to continue to serve the large patient populations over the medium- to long-term.

The patent debate does not feature prominently within other areas of medical research

It is interesting to note that every comment made above is applicable to drug development in general, be it in cancer, cardiovascular disease, or mental health. Indeed, many drugs based upon natural products have been developed over the last few decades without outrage over commercialization (and, thus, intellectual property); these include tamoxifen for breast cancer, gamma-hydroxybutyrate for narcolepsy, and delta-9-THC (the psychoactive moiety in marijuana) for chemo-induced nausea and vomiting. There was also no outrage when older, off-patent drugs—like thalidomide—were commercialized for new indications (with associated new method of treatment patents).

The concept of generating exclusivity—short-lived in the grand scheme of things—as being important to support the significant costs underlying innovation is accepted by ALL significant healthcare system stakeholders, including scientists, entrepreneurs, investors, regulators, health insurers, physicians, and patient advocacy groups. That degree of acceptance means the greatest availability of novel care and removes complicating factors from the ultimate patient access model. In fact, especially scientists do actually profit from patents, as new research money funneled to them for new topics is not coming out of thin air, but often – additionally of course to government and non-profit funding – is coming from profits made of patent-protected ventures.

It is strange that the dispute about patents rages loudest in psychedelics (more thoughts why that is below), but it is for good reasons a non-existent discussion in the rest of healthcare. 

Confidentiality and bad actors

Regarding your question if certain companies would be willing to allow scientists who have signed deals with them to share their agreements publicly (i.e., waive confidentiality clauses), as said above, I cannot and do not want to speak on any individual company’s behalf, but in general such confidentiality clauses are very standard, especially for companies who operate in highly regulated environments (FDA, SEC, etc.).

I do believe in free markets and free choice, and no scientist or any other individual has to work for any of these companies. As I know some of these scientists personally, I never had the feeling they were forced to partner with any of my portfolio companies, but to the opposite that it is mutually beneficial cooperation (as it happens in many other biotech fields).

Your comments about bad actors, price gouging, etc. are valid indeed but are surprisingly not as big a problem in ‘innovative biotech’, but more in taking drugs that are already off patent (!), have already made their investors a return, and are now having their price jacked up. And it is definitely not a psychedelic-specific problem.

And the best answer – once again - to that is competition, which is possible indeed as stated above. There are reasons for the high cost of medical care in the US—with drug prices being only a minority part of that issue—but that’s a much broader and more complex discussion.

The broader picture – indigenous connections, modern medical application, decriminalization, and the practical realities of developing solutions  

Please let me also touch on some other aspects of the discussion, which are not directly linked to the medical approval process.

My biotech portfolio companies have a patient-centric mission, which intimately balances all stakeholder interests and appropriately utilizes talented research, capital, patents and other contributory factors. They operate thoughtfully and considerately to all, and in my genuine belief, will drive the best societal impact to manage the mental health crisis.   

One common counterargument against psychedelic patents is derived from the view that these drugs should not need approval at all, as shamans have been using them for thousands of years and they are available now (licitly or otherwise). This argument from my point of view regularly comes from a place of entitlement and privilege. Just the fact that some people can afford to go to Burning Man, or maybe to an ayahuasca ritual in a country where it is legal/available does not mean the hundreds of millions of patients who really need access to new mental health treatments also can afford it. Moreover, they may lack the impetus and the courage to do so in the absence of a physician’s prescription and guidance.

Those patients need to get these substances within their existing healthcare framework, at the place where they live, from a doctor/therapist they trust, paid by a healthcare insurance. The only way to achieve this is by approving them as said as medical drugs.

In no way do I believe the for-profit medical model will negatively impact the lives of indigenous shamans. There are two very different audiences – the ones seeking medical help with their therapist and the ones seeking use in a spiritual or recreational manner– and I believe they can both co-exist next to each other and even foster and support each other: As clinical trials are the ways how we formally determine in the Western world whether a drug works or not, these well controlled clinical trials will be able to give people the confidence to come over the fence and hence increase the interest also in the spiritual side.

I, for one, wouldn’t dare to have certain spiritual discussions with friends and even on podcasts etc, if I didn’t have the backing of science for some of my arguments. Moreover, many people wouldn’t listen if there were no science to back it up.

One point which is very dear to my heart in this context is decriminalization. Nobody should get arrested or blamed for growing sacred substances him/her/themselves. I am actually convinced that our efforts to grow an active funding market and for-profit companies in the psychedelic therapy space will help promote broader awareness into the potential of these compounds, thus supporting decriminalization efforts.

However, I want to emphasize that I am NOT an advocate for recreational use. These drugs are incredible powerful tools, which from my point of view have to be used under controlled settings be they ritualistic or medical, the former representing how these compounds have been used over thousands of years. My concern is that if people with mental health issues started self-medicating with psychedelics as a result of commercial availability without adequate medical and therapist supervision, this could lead to very bad outcomes.

The ones who would likely suffer are the real patients in need, who already had been betrayed once by the reckless behavior of certain people in the last era of psychedelics.

Various other discussions mixed up with the patent issue

Additionally, I feel that this important discussion is mixed up – consciously or unconsciously - with other societal issues, which are equally interesting and important to discuss, but not specific to psychedelics.

Many use this discussion to express their discomfort with current FDA regulations. While it is burdensome that trials take that long and require that much capital, in general the approach of regulatory authorities in balancing safety and efficacy on a per indication basis is the right one from my point of view, and we see with the swift approval of Covid-19-vaccines that the FDA is doing an excellent job. But I am up for the discussion if FDA rules should be reformed, or if for example the accelerated timeline for Covid-19-vaccines could be the new norm for other pressing illnesses like the mental health pandemic. But it is much broader than a psychedelic-specific discussion.

Some others use the patent discussion to express their discomfort with capitalism itself. I personally believe that capitalism – though it has its flaws – is by far the best economic system tried to date and that many, especially young people who flirt with socialism at the moment forget the destruction, pain and death socialism has brought for hundreds of millions of people over the years. I would be interested in having this discussion, but again, it is not a psychedelic discussion.

And lastly, I see a risk that psychedelics exactly because of their spiritual connotations – despite the fact that I am personally very spiritual and believe in the mystical part of a trip - can also create a number of zealots - as many religions unfortunately have done and still do. These crazy ones detract from the value psychedelics offer to the average person and are poisoning the scientific discourse with their claim to own the absolute truth.

Tim, I have always tried to ensure that my portfolio companies in the biotech space put the patient at the core of what they do and put the goal to find affordable, accessible solutions for some of the most pressing medical issues of our time at the forefront of their considerations. I am always happy to learn, and of course still would be pleased to continue this discussion.

Be well & be happy (because that’s what we are here for)

Christian

PS: I hope I succeeded to make it clear for the readers of this open letter that there is a diversity of players without any hostility among the legit ones. There isn't just one way of doing it.

If you, dear reader, feel more connected to the non-profit way, then please do not put this letter away too quickly, but please put your money where your mouth is and visit www.maps.org and DONATE.

Twitter and social media don’t change the world. Action does.