With a Covid-19 vaccine patent waiver likely, time to rethink global intellectual property rules
Updated 7:36 AM ET, Fri May 7, 2021
On Wednesday May 5, the US moved to back a Covid-19 vaccine patent waiver that was being debated at the World Trade Organization (WTO).
The proposal, first put forward by South Africa and India in October 2020, seeks to temporarily lift certain intellectual property rights that belong to pharmaceutical companies so that other nations can develop generic versions of the drugs.
As awareness of vaccine inequality has grown, patents and other types of intellectual property have become central to how the world emerges from the pandemic.
Ironically, the patent system was supposed to improve public welfare. Here's how the rationale goes: in return for disclosing her invention -- i.e. by seeking a patent -- an inventor would be able to, among other things, exclusively make, use, and sell that patented product for 20 years. This would -- as the US Constitution puts it -- "promote the progress of science and the useful arts" by incentivizing the creation and dissemination of lifesaving products.
In practice however, the global patent system has enabled the creation of drugs that pharmaceutical companies can sell at high prices, to the patients who can afford them and largely for diseases prevalent in wealthy countries.
Pharmaceutical companies argue that these high prices are necessary to recoup substantial research and development (R&D) expenditures, but patent rules also prevent poor countries from producing medicines locally to meet domestic needs.
In 1995, in response to growing competition from the burgeoning generic drug industries in countries such as India and Brazil, multinational pharmaceutical companies in the developed countries urged negotiation of a new multilateral Agreement on Trade Related Aspects of Intellectual Property Rights -- the TRIPS Agreement -- which is administered by the WTO. This required countries to offer patent protection in all fields of technology.
Prior to the TRIPS Agreement, some developing countries restricted patent rights on pharmaceutical products. Many wealthy countries, such as Japan, had themselves done this, even as recently as the 1980s.
But as knowledge-based goods became an important source of national wealth for industrialized nations, multinational companies sought more stringent protection for intellectual property (IP) globally. This led to TRIPS' unprecedented merger of trade and patent law, along with an unparalleled expansion of rights over pharmaceutical products.
As the Nobel prize-winning economist Joseph E. Stiglitz wrote in his book, Making Globalization Work: "We worried that when the [TRIPS Agreement] was signed, we were simultaneously signing the death warrant for thousands of those in developing countries who would be deprived of life-saving drugs. Our worries turned out to be real."
What now? We need new models to incentivize innovation
Given the gap between the intended societal benefits from innovation and lack of access to medicines, and taking into account that patents are an important source of economic return for the risks involved in innovation, a rudimentary question to ask is this: is a different model of funding at least some pharmaceutical innovation feasible?
The answer is yes. Not only is a different model feasible, it has already been used in the US -- at the onset of the pandemic.
On March 30, 2020, The US Department of Health and Human Services (HSS) began Operation Warp Speed (OWS), intended to expedite the development of a Covid-19 vaccine.
According to one analysis, OWS "fundamentally changed how pharmaceutical and biotechnology companies assess the risk of conducting large-scale clinical trials on a brand-new vaccine."
The US government built the requisite infrastructure and guaranteed the manufacturing of any successful vaccine candidates. Writing in BioSpace, Will Brothers adds: "They also purchased allotments of the vaccines prior to knowing whether any of the OWS-funded companies would be successful ... [T]he HHS making the decision to substantially de-risk this process in order to expedite the development of candidate vaccines proved to be a game-changer. As many people were preoccupied with bearing the brunt of the first wave in North America, Covid-19 vaccine development quickly began."
That government-funded Initiatives such as OWS substantially subsidize drug development and reduce the risk of innovation undermines arguments for strong global enforcement of pharmaceutical patents, and for high prices to reward investment.
Campaigns such as the People's Vaccine are calling for the vaccine to be made "available to all, everywhere, free of charge." The People's Vaccine echoes longstanding concerns about the patent system in global markets and point to one of the factors that could help the world find a way forward in this pandemic: waiving the patent rules so that vaccines can be made around the world, in a rapid and efficient way, to meet the demand.
But access to patents alone does not translate into optimal short or long-term ease of access to medicines. So, what else is needed?
There is a need for technology transfer related to the vaccine patents.
My colleagues and I have argued that in the short-term, collaborative licenses between patentee/innovators and individual potential manufacturers, brokered by the US government (or an international organization), could more quickly advance vaccine production in time to save hundreds of thousands of lives especially if a TRIPS waiver proves intractable as seems to be the case. (The European Union and Switzerland are yet to support a patent waiver for Covid-19 vaccines and other related products.)
Governments who have funded vaccine development hold important leverage over private pharmaceutical firms, and they could wield that leverage to bring patentees to the table to issue licenses to qualifying generic firms.
Local production of pharmaceuticals is also key.
A recent paper I co-authored notes that for the foreseeable future, healthcare nationalism will continue to drive scarce products first to developed countries. Only after national needs are met will the needs of poor regions become a consideration.
Africa, for example, is far behind all other continents in terms of vaccines administered, and large parts of Africa are unlikely to be vaccinated before 2023. To make matters worse, countries that depend on Indian vaccine manufacturers are experiencing delays as supplies have been disrupted.
In the medium to long-term, important adjustments must be made to enable developing countries -- ideally operating through regional economic communities -- to engage in local pharmaceutical production as an essential pathway to health independence. Local production could also reduce the widespread distribution of fake or substandard medicines and vaccines.
Of course, patents on pharmaceutical products are not the sole culprits behind the vaccine gap between rich and poor countries. Nor are they the only reason people living in poverty don't have access to lifesaving medicines.
Know-how to produce complex products such as vaccines is needed, and there is work to be done to improve and simplify supply chains in low-and-middle-income countries; removing the intermediaries in the market so as to reduce shortages.
However, the role of patents in creating a barrier to accessing medicines and vaccines is clear.
To fight the pandemic, people need access not just to