“In the past, when developing countries have issued ‘compulsory licenses’ it has taken years for generic manufacturers to receive the drug formulas, work out logistical and payment challenges, and scale up production.”
India and South Africa recently urged the World Trade Organization to suspend intellectual property protections for COVID-19 vaccines and treatments. The claim is that this would allow developing countries to manufacture “cheap” COVID-19 therapeutics and vaccines, hastening the end to the pandemic—at least, that’s what proponents claim.
They’re wrong. Dangerously wrong. Gutting IP protections won’t make COVID-19 medications more readily available but it will set a terrible precedent that will chill future medical innovation.
Without Patents, Drug Research Won’t Happen
Drug research is risky and expensive. For every 5,000 molecules developed in the lab, only one successfully advances through lab, animal, and clinical testing and receives regulatory approval. After accounting for all these failures, it costs almost $3 billion, on average, to bring a single medicine to pharmacy shelves.
Biotech investors only take these risks because of strong patent protections, which prevent rival companies from copying an innovator’s idea and selling it as their own. When a startup receives its first patent, the firm’s chances of attracting funding from institutional investors—such as venture capitalists—increases 53%, according to a National Bureau of Economic Research working paper.
If patents didn’t exist, few companies would ever invest in drug research and development. Why invest billions in creating a new medicine if a rival could simply freeload off that work and sell a cheaper knockoff version?
Countries with strong patent laws produce higher volumes of new treatments. The United States has the most robust IP protections, which explains why American scientists develop over half of the world’s new drugs invented globally. Gutting patent protections would discourage research and development here in America and around the globe.
Historically, Compulsory Licensing Has Not Worked
Developing countries obviously need COVID-19 vaccines as quickly as possible. But removing IP protections won’t accelerate vaccine distribution in these nations. In fact, it could slow it down.
In the past, when developing countries have issued “compulsory licenses”—which effectively allow domestic manufacturers to create knockoff treatments even before drug patents expire—it has taken years for generic manufacturers to receive the drug formulas, work out logistical and payment challenges, and scale up production. In one case, it took over four years to bring a generic AIDS drug to Rwanda with half that time spent settling a contract between the domestic manufacturer and the patent holder.
Such extreme measures simply aren’t necessary. The companies that created lifesaving COVID-19 vaccines and therapies have already promised to share them widely in the developing world. AstraZeneca has pledged to give over 64% of its doses to developing nations. Johnson and Johnson, whose COVID-19 vaccine will likely receive regulatory approval within weeks, has likewise promised to allocate up to 500 million COVID-19 vaccine doses to lower-income countries.
Patent protections incentivize firms to make big research investments, which in turn produce breakthrough treatments not just for COVID-19, but for other diseases, like cancer. Weakening these protections would be enormously foolish and counterproductive. It wouldn’t speed the rollout of existing vaccines, but it would ensure we’re less prepared to fight the next pandemic.
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4 comments so far.
AnonApril 29, 2021 05:31 pm
Analysis is hand-wavey as it relates to supposedly chilling innovation. The companies make their money from the developed countries that are not issuing compulsory licenses.
Rahul VijhFebruary 23, 2021 02:56 am
While the patent system as a whole is a huge benefit to the world, in pharmaceuticals it is nto always the case.
“In one case, it took over four years to bring a generic AIDS drug to Rwanda with half that time spent settling a contract between the domestic manufacturer and the patent holder” as evidence that compulsory licenses can still take years before the end users see the medicines. But without compulsary licenses, the end users very often would not have access to those medicines even after 4 years or if they do, it would undoubtedly be at a much higher price than most developing economies can afford. That is the problem that India and and RSA are trying to solve. On a perfectly normal day, patent rights should be respected and awarded. But in times of a pandemic, especially one where fatalities are real and mounting, patent rights must take a backseat. Human Needs > Corporate Greeds.
BPFebruary 19, 2021 10:19 am
“Without Patents, Drug Research Won’t Happen”
Please, let’s stop the “fake news”: “$456 million the U.S. government promised to J&J for vaccine development in March”.
Let’s see, half a billion taxpayer dollars? And, did R&D happen? And, that’s only one example.
If the policy basis for a government grant of a patent is to recoup R&D costs, then what do we do when the government pays those R&D costs upfront?
Please, let’s hear an answer? Taxpayers pay twice?
We really need an intelligent conversation on pharmaceuticals, particularly for epidemics and pandemics. Let’s drop the “fake news”.
And, have you seen what passes for “peer reviewed” today? Or the garbage being posted by crackpots under the NIH Preprint Pilot? Increasingly, we see academics that are hardly independent and hardly science based. And, where are the university IRBs?
The healthcare ecosystem stinks of big dollar influence and the revolving door (see Bill Moyers’ “Washington’s Revolving Door Is Hazardous to Our Health”).
Also, Google/YouTube has a de facto complusory licensing scheme for copyright sync licensing and the US has had mechanical licensing for decades.
Here, the term “compulsory licensing” is being hijacked.
Gene, your site is too important to allow posting of paid “fake news” advertising masquerading as balanced, fact-based opinion. As the piece is clearly biased, it should be removed.
MaxDreiFebruary 19, 2021 08:35 am
The C 19 viral pandemic is unprecedented and so the response is unprecedented. Big pharma had more or less abandoned research into vaccines, patent or no patent system, its investors preferring research to be into the diseases of the affluent, and into chronic (life-long) conditions requiring life-long medication.
Here in Europe, we watch how vaccines have been developed in Germany (BioNTech/Pfizer), England (Oxford Astra-Zeneca), USA (Moderna, CureVac), Russia (Sputnik V), China and India.
True, patent rights on these brand new products are not the rate-limiting step. Waiving patent rights, compulsory licensing, won’t help. What did help the UK to get to 20% of the population vaccinated even while mainland Europe is only on 3% was the UK Government’s pragmatic decision to grant Astra a waiver of any liability should its product turn out to be a killer. The EU Commission was(sadly) not so imaginative.
But now I read that the world’s rich countries have already stockpiled a billion doses rather than let them flow through to the poorer countries. That is a bit short-sighted and dangerous because the over-riding objective should be to immunise people in poor countries at a rate faster than they rate at which they are generating the mutations that will in time kill the residents of the rich countries.
But we live and learn. The race is now on, to find new ways to curb the spread of antibiotic-resistant bacteria. Can Big Pharma help? Will Big Pharma find it profitable to invest in that search? I do hope so.