Multiple studies show Myriad destroys biopharma innovation

One of the main disputes following Myriad was over what effect the decision would have on investments within the biotech industry. Although some argued that Myriad would open up the industry to greater collaboration,190 others saw Myriad as a harbinger of the downfall of American biotechs.191

Several studies have tried to get a handle on what impact Myriad actually had on the biotech industry. In “Patent Eligibility and Investment,” Professor David O. Taylor surveyed 475 venture capital and investment firms to find out.192 Taylor found that investors were generally less willing to invest in biotechs that did not have patent protection covering their most important products.193 He further found that almost 40 percent of investors who were aware of the Supreme Court’s decisions in Myriad, Mayo, and Alice believed that the decisions had negative effects on the firm’s existing investments; additionally, approximately 33 percent of firms indicated that these decisions caused them to shift investments away from impacted industries—especially biotechs and pharmaceutical companies.194 As a whole, the study indicated a general hesitancy of investment firms to back biotechs following Myriad.195

In similar studies, others have found that, although investment in the biotech field continues to grow, it has done so at a slower rate after Myriad. Looking at venture capital investment data, A. Sasha Hoyt found that although investments in the biotech industry were higher than before Myriad, they were growing at a slower rate compared to other industries.196 Hoyt concluded that, had the Court not upended subject matter eligibility in Myriad, Mayo, and Alice, investments in disease diagnostic technologies would be $9.3 billion greater than their current level.197 Likewise, from analyzing venture capital data from 2004 to 2017, Professor Mark F. Schultz found that although venture capital investments have expanded in recent years, biotech’s share of those investments dropped significantly following Myriad.198 Although biotechs and pharmaceutical companies constituted over 50 percent of the market share of startup investment in 2004, by 2017 their share had fallen to about 28 percent.199 Schultz determined that, absent some change in patent policy, a shift in investments away from biotechs would have a profound impact on the industry.200

Attempting to view the issue from a different angle, Professors Jay Kesan and Runhua Wang examined the impact of Myriad from the USPTO’s perspective.201 They found that, following Myriad, Mayo, and Alice, the USPTO experienced both a lower rate of patent applications and a higher rate of rejection of those applications than before these decisions.202 This effect was disproportionately felt in the fields most affected by the Supreme Court’s decisions, such as the biotech industry.203 Kesan and Wang concluded that both the greater uncertainty around patent approval and the increase in time and resources necessary to get a patent approved led to a reduction in the number of patent applications from biotechs.204

Collectively, these studies indicate that the Supreme Court’s decisions in Myriad, Mayo, and Alice have had a general chilling effect on investments in the biotech industry. They suggest that increased difficulties and uncertainties in the ability of biotechs to obtain patents has led to fewer biotechs patenting their inventions which in turn has led to less investment from venture capital firms.