This opinion piece first appeared on IPWatchdog, April 18th 2020
“Traditional rivals within the life sciences industry have pledged to cooperate by sharing data, patent libraries, and, if necessary, manufacturing capacity. This unprecedented pooling of resources can only happen where IP rights are protected.”
With two-thirds of the world in lockdown and no clear way out of the novel coronavirus crisis, it’s increasingly obvious that biopharmaceutical innovation will play a pivotal role. A new treatment that can mitigate the worst effects of COVID-19, and ultimately a preventative vaccine, could, literally, save the world.
Such life-saving technology is less likely to be forthcoming if, in their panic, governments sacrifice intellectual property (IP) rights for new COVID-19 therapeutics and vaccines.
The signs are not promising. IP-skeptic governments in Chile and Ecuador have taken preemptive measures by permitting compulsory licensing of any new COVID-19-related technology. Otherwise innovation-friendly Canada and Germany have passed legislation to issue compulsory licenses more easily.
Even in the United States—the center of modern biopharmaceutical innovation and a major player in ongoing COVID-19 research and development (R&D) efforts—there is pressure to break patents. In February, 46 members of Congress wrote to President Trump asking him to “use every tool of the federal government to ensure a coronavirus vaccine is affordable and accessible.” They also asserted that, “providing exclusive monopoly rights could result in an expensive medicine that is inaccessible, wasting public resources and putting public health at risk.”
The System is Working
But, in reality, the patent system is working very well. More than 140 experimental coronavirus treatments and vaccines are under development worldwide, including 11 in clinical trials. Another 254 clinical trials are underway for coronavirus treatments or vaccines derived from drugs already approved to treat other diseases. Life sciences companies everywhere are searching their patent and molecular reference libraries for promising compounds. The patent system has made all of this possible.
The global innovative life sciences sector has marshalled an enormous, immediate response to the coronavirus threat. That has only been possible thanks to an effective life sciences innovation ecosystem, built over several decades, that includes robust public and private biomedical R&D investment, strong IP rights and mechanisms like the U.S. Bayh-Dole Act to incentivize IP development and technology transfer.
Nor is it likely that the winners of the race to create new COVID-19 treatments and vaccines will price them at inaccessible levels. Johnson & Johnson, which is investing $1 billion in COVID-19 research, has said its vaccine would be available on a not-for-profit basis. Similarly, Gilead Sciences says it will provide its entire 1.5 million dose supply of remdesivir, in clinical trials as a possible coronavirus vaccine, at no cost to patients with the most severe symptoms. Claims that IP will make COVID-19 drugs so expensive as to be inaccessible are completely speculative.
Nevertheless, as the crisis continues, the calls to dilute IP rights will likely become louder. In the United States, pressure is focused around the use of Bayh-Dole “march-in-rights.” These provisions, introduced in 1980, give the federal government a tool to control drug prices by reclaiming and potentially compelling non-exclusive licensing of IP in certain instances.
Be Skeptical of ‘Marching In’
The government should be skeptical. The Bayh-Dole Act is instrumental to current COVID-19 research efforts. Take Moderna, the company that has come the farthest toward developing a vaccine, with Phase 1 clinical trials underway in Seattle. It credits the pivotal role of patents in the field of messenger RNA (mRNA) and associated mRNA delivery technologies, licensed from Harvard and the University of Pennsylvania. Elsewhere, Cepheid, the first company to receive emergency use authorization for a point-of-care COVID-19 diagnostic, says IP it licensed from the Lawrence Livermore National Laboratory has been instrumental.
Bayh-Dole clears the path to commercial production and provides a powerful incentive to private investors and venture capitalists to stand behind risky research confident they will see a fair return. Research companies are comfortable using their own funding for Covid-19 R&D as the act allows them to transfer the IP rights needed to commercialize or market their inventions. This has allowed even small biotech firms, largely funded by private capital, to join the coronavirus vaccine race.
Given that on average 80% of the overall cost of drug development comes from the private sector, biomedical innovation would be dramatically undermined if the government acquiesces to Congress and uses march-in rights to seize IP supported by federal funding. A reticence to license IP coming out of U.S. universities or national laboratories would mean fewer life sciences innovation startups spinning out of university research. Companies would prioritize their own R&D and IP, focusing on “safer” or less risky drug targets/therapeutics. It would jeopardize many current COVID-19 projects and darken the skies for future U.S. life sciences innovation.
The threat of march-in rights leads us to question the impact of broader use of compulsory licensing, or related practices. For instance, under 28 USC section 1498(a) (also called the “eminent domain” provision), the U.S. government has the authority to use or manufacture any patented invention (whether derived from federal funding or not) without a license or permission, so long as reasonable compensation is provided.
Patents Aren’t the Problem
But, in whatever form, compulsory licenses will do little to increase access to the treatments currently being researched. First, the fundamental challenge is that we currently don’t have a coronavirus treatment or cure, showing that IP itself isn’t the problem, it’s that we don’t have enough IP: issuing compulsory licenses against IP that doesn’t exist will accomplish little. Moreover, securing patents on new IP that will be created will likely take several years; enterprises will rush coronavirus treatments out long before patents are secured. At the same time, several possible coronavirus therapeutics (such as hydroxychloroquine) are off-patent and therefore available for generic manufacture.
When it comes to vaccines, patents typically cover modes of delivery or other constituent parts of the overall product. IP rights other than patents are often more important for vaccines, including manufacturing know-how (protected by trade secrets) and proprietary clinical test data. The same is true for biologic drugs, several of which show promise for COVID-19. Even under compulsory license or in a national emergency, there is no explicit waiver to clinical test data exclusivity in U.S. law.
For vaccines, confiscating IP rights is especially misguided given the need to mobilize sufficient resources to manufacture billions of doses and distribute them globally in a short space of time. Few governments have the capacity to manufacture novel, complex vaccines at vast scale, and therefore cooperation with rights holders, rather than coercion, is far more sensible.
Fortunately, those in the innovation value-chain are rising to the challenge. The Gates Foundation recently committed billions to vaccine manufacturing capacity to speed up delivery. Traditional rivals within the life sciences industry have pledged to cooperate by sharing data, patent libraries, and, if necessary, manufacturing capacity. This unprecedented pooling of resources can only happen where IP rights are protected.
Don’t Extend the Damage
Calls to suspend IP rights in this crisis ignore the important issue of incentives. If governments choose to compulsorily seize IP, they destroy companies’ incentives to develop precisely the technologies we need in emergencies. The dozens of companies working right now on COVID-19 diagnostics, medical devices and therapeutics will halt rapidly if they perceive that there will be no opportunity to recoup their investment and make a return in the future. The coronavirus has already destroyed enough. Calls to cast off foundational IP would extend the damage and harm a bedrock pillar of the successful life sciences innovation system, responsible for 153 new drugs over the past three years in the United States (25% more than in any three-year period since 1938).
We’re all counting on the tremendous promise of novel biomedical innovation to get the world through this crisis; now would be the worst time to undermine the IP rights that underpin life sciences innovation.
