Property Rights and State AGs’ Assault on Remdesivir: A Conservative Perspective

By now, everyone in the IP arena has heard about the demands of more than 30 state and territorial attorneys general (AGs) regarding the promising COVID treatment remdesivir. These AGs seem to disrespect the exclusive rights of limited duration that patents afford.

California Attorney General Xavier Becerra (D) and Louisiana Attorney General Jeff Landry (R) led a bipartisan effort getting colleagues to write the U.S. Department of Health and Human Services and call for what’s tantamount to eminent domain on intellectual property.

Extremists on Both Sides

To a conservative who works on IP matters, this demand in and of itself is troubling. Bedrock conservative principles include property rights, free enterprise and the rule of law. The AGs advocate government’s abrogation of all three of these foundational principles.

Their effort is all the more concerning because the chief law officers of several states with Republican (and presumably at least somewhat conservative) governors signed this letter. Besides Louisiana’s AG, GOP signatories include those from Alaska, Idaho, Kansas, Nebraska, North Dakota, Ohio, South Dakota and Utah. Here they are, advocating the unlawful exercise of a narrow provision of a law that doesn’t even apply to the underlying patents.

When the radical fringe element of one party or the other lines up behind some wacky idea, that’s not surprising. That’s like Rep. Lloyd Doggett’s (D-Tex.) compulsory licensing bill, H.R. 1046. But this letter draws anti-IP extremists from both parties.

The Demise of Core Principles

Moreover, these AGs display disregard for private property rights. They seem eager to deprive Gilead Sciences, which owns the patents, and company inventors, of the fruits of their labor on a drug therapy that has been in development for a decade, with billions of private dollars poured into the invention, the R&D and the drug development. So much for property rights and free enterprise.

Core conservative principles lead one to value, encourage and protect private initiative. This involves fostering and respecting private investment of time and resources that lead to innovative breakthroughs. It respects private risk and reward; conservatives generally are aware that startups and small businesses drive the U.S. economy, most startups fail, and new enterprises built around IP are more likely to survive and thrive.

This leads to an appreciation for private risk-taking, sinking capital into R&D for the long haul and bringing to market the tangible fruits of private enterprise’s labor. Conservatives tend to view the products of R&D, where the risks are great, failures are frequent and the rewards on the handful of successful products of high value, as reflective of the value of the innovation process and the “new and improved” consumer and market benefits these inventions bring. That’s why patent exclusivity is so vital a part of the innovation ecosystem.

Whether it’s a standard-essential microchip in 5G or a vaccine, treatment or cure for COVID-19, exclusivity over the IP is central to reaping the invention’s rewards. Remdesivir and other medicines that survive the clinical trials-regulatory approval process should carry a price tag that reflects not only the huge investments in the one success and the nine others that fell short, but also reflect the value the invention adds. And notably, Gilead is donating 190,000 remdesivir treatments this year, right off the bat.

Flawed Cost and Legal Analyses

As for its value, remdesivir reduced COVID hospitalizations by four days in a clinical trial, which produces significant direct health care savings. It also preserves medical capacity and resources, speeds COVID patient recovery and restores these patients’ economic and social contributions throughout society. That’s a win for society, but the AGs view it only as a cost to state health budgets absent any accounting for value and savings. From a principled perspective, such grossly imbalanced accounting treats high-value inventions as commodities.

These AGs portray this antiviral medicine, which the Food and Drug Administration has only approved for emergency use in hospitalized COVID patients whose cases are serious enough to require oxygenation, as expensive and in short supply. It’s neither.

More tellingly, they call for the march-in provisions of the Bayh-Dole Act to be used as the means of this IP eminent domain — but without the just compensation part the Fifth Amendment so annoyingly requires for government takings of private property.

There is no federal research funding behind remdesivir’s patents, and the risk has been borne by this firm and investors. Thus, Bayh-Dole may not lawfully be employed. The AGs say, use it anyway. So much for the rule of law.

A Naked Power Play

The demands by the state AGs, as unprincipled as they are, should give pause. The blue-state AGs’ outrageous stance deserves pushback from the IP community. The red-state AGs should be further reminded of the foundational conservative principles they’re forsaking. This is happening.

The Conservatives for Property Rights website has posted a blog on this matter, calling the AGs’ demands “nothing more than a naked power play. These lawless demands must be rejected if remarkable COVID and other medical innovation is to continue apace.”

The Taxpayers Protection Alliance (a CPR member organization) says in a statement, “The AGs’ proposed actions would undermine innovation and set a disturbing precedent for property rights violations.”

The Trade Alliance to Promote Prosperity’s blogpost says, “No one can predict where the palliative therapies or the cure for COVID-19 will originate, but we know that the United States biopharmaceutical industry is well-positioned to help in their discovery because our country has aligned incentives to achieve the objective of providing the most innovative environment—including strong IP protections. Misapplication of Bayh-Dole would disrupt that innovative environment, ultimately to the detriment of Americans’ health.”

A Prescription to Recover Lost Minds

Here’s a conservative prescription for the derelict GOP AGs who signed the Becerra-Landry letter; this medicine should help them recover their lost minds. Repeat 50 times a day until socialistic symptoms have disappeared: “Private property rights, free enterprise and the rule of law — these are the paramount American and conservative principles I shall live by.”

Image Source: Deposit Photos
Author: MysteryShot
Image ID: 362140294