[OPINION] Rethinking patent policies in the coronavirus era and beyond

The race to develop a vaccine against the coronavirus disease (COVID-19) is on. Countries have funded and incentivized the private sector and the academe to develop the vaccine, although their approaches are rather different.

In recent weeks, the United Kingdom announced $79 million of additional funding to support the vaccine development project of Oxford University, which already entered into a licensing agreement with a global pharmaceutical company, AstraZeneca, for the manufacture and sale of the anticipated vaccine. The United States, through the Biomedical Advanced Research and Development Authority, also provided $1 billion in funding for this project, in addition to funding similar vaccine projects of other pharmaceutical companies such as Sanofi and GlaxoSmithKline. The Philippines has a rather novel policy — the government has not expressed intent to fund research and development efforts but offered $1 million prize pot for a Filipino scientist who can develop a COVID-19 vaccine. (READ: The latest in the global race for a coronavirus vaccine)

More interesting, however, is whether or not the developer and manufacturer of the vaccine will claim and exercise its exclusive rights over the product, and if so, how “restrictive” it will be of its patent. Patents are argued to be important for the pharmaceutical sector to continue investing in the development of new drugs. To recuperate large investment costs, patents give a company the exclusive right to manufacture and distribute the product (essentially a monopoly) for a limited period of time, usually 20 years. However, because of the public interest involved in this pandemic, there have been calls by various groups to ensure that patent-policies-as-usual would not apply once the vaccine is developed.

The World Health Organization (WHO) and Costa Rica launched a “Technology Access Pool” (C-TAP) where all COVID-19 related knowledge, intellectual property rights, and data are voluntarily pooled for common use. The C-TAP is comparable to the Global Influenza Surveillance and Response System (GISRS), which is a global information-sharing platform to combat and address influenza. This cooperation at a global level, which existed since 1952, allows for the development of flu vaccines and sharing of best country practices. In the GISRS, there is one element absent: a patent holder that has a monopoly of information, profits, and power. As expected, the C-TAP, which has been endorsed by 38 other WHO member states so far, was met with hesitation by big pharmaceutical companies. Their public pronouncements imply that efforts should be focused in ensuring a fair and equitable distribution of the vaccine and not towards pooling patent rights. (READ: Dutch, French, Germans, and Italians form virus vaccine alliance)

For far too long, big pharma has been using a familiar defense: “no intellectual property, no innovation,” implying that the exclusive rights to manufacture and sell are the heart and soul of what makes their R&D investments profitable and worth taking in the first place.

This is the same tune that the public heard from big pharma after the United States Supreme Court Decision on FTC v Actavis (2013), a case ruling that the Federal Trade Commission could scrutinize and litigate pay-for-delay agreements, which are common in the pharmaceutical industry, for potential violations of competition law. Indeed, this Ruling makes it easier for generic competitors to enter the market and pose a challenge to the patent holder even before the patent expires, because an agreement entered between the patent holder and generic competitor that involves delaying market entry in exchange for payments is likely to be met with antitrust scrutiny. One can argue, as Chief Justice Roberts did in his dissent, that the decision weakens the protection afforded to innovators by patents. 

Sounds frightening. But did innovation really decrease after this decision? The short answer is no, at least in terms of new drugs approved in the US market. The number of novel drugs approved by the US Food and Drug Administration (FDA) was actually higher in years after the Supreme Court ruling in 2013 (except 2016) compared to the most recent years preceding the decision. This tells us that current patent policies have “wiggle room,” where the degree of the protective power of the patent can be lessened to increase consumer welfare through lower prices while still maintaining the rate and pace at which pharmaceutical companies innovate. 

In the coronavirus era, governments are not always powerless over pharmaceutical companies that strongly exercise their monopoly power through patent rights and inequitably distribute the drugs in the market through high prices. The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) provides mechanisms by which governments can prioritize public health over a patent holder’s exclusive rights. One such mechanism is the ability of governments to issue compulsory licenses for other manufacturers to produce the patented good even without the patent holder’s consent. (READ: Sanofi says ‘no favoritism’ when COVID-19 vaccines become available)

During a global pandemic, which is inarguably also a global emergency, compulsory licensing of the coronavirus vaccine ought to be the rule rather than the exception. This will allow multiple manufacturers of the vaccine that can compete on the basis of price. Governments can bid, consumers can choose, and treatment can reach those who are in most need faster.

Beyond the coronavirus era, both national and multilateral actions are necessary to make equitable access to fairly priced drugs part of our new reality. On a national level, when licensing agreements for critical novel drugs take too long to actualize, governments must be ready to swiftly utilize its compulsory licensing powers. On a multilateral level, global cooperation and information sharing platforms, such as the GISRS and the C-TAP, should be promoted and supported by more WHO member states.

More concretely, in rethinking patent policies, some guide questions that can help policymakers decide moving forward are: (1) how critical has the protective power of the patent been in terms of encouraging innovation and incentivizing the creation of novel drugs over the last few decades?; (2) should private sector innovation that have been funded at least in part using public money be granted full intellectual property rights, if at all?; and (3) should governments be held liable for failing to use its powers of compulsory licensing to address pandemics and outbreaks?

Indeed, rebuilding a post-coronavirus economy should include a reconsideration of how much protection governments give in the form of patents and, more importantly, when the promotion of public interest should outweigh the protection of private property. – Rappler.com

The author is a Master of Public Policy student at the Hertie School of Governance, Berlin. He was formerly a technical staff for the Economics Office of the Philippine Competition Commission. He finished his Bachelor’s in Economics from the University of the Philippines. His current research interests are development and innovation. You can reach him through vjrr07@gmail.com.