The Biden administration’s support for a waiver on intellectual property rights in respect of Covid-19 treatments has utterly changed the direction of travel of the developed economies on this issue. A complete waiver means taking a very blunt instrument to a structure that seeks to finely balance the competing considerations of immediate and longer-term public health needs.
All pharma now has to be “big pharma”: the cost of development of a new drug is now generally recognised to be about $1 billion. Much of that cost is made up of the essential trials to demonstrate safety and efficacy, which most proposed drugs fail.
Several hundred billion dollars is spent globally each year on drug development. The taxpayer does not and never will be able to shoulder that cost. If we wish to maintain the pace of drug development, private investment will always be needed. Absent a pandemic, public funds are most sensibly used to target development of treatments for neglected diseases more prevalent in less wealthy countries.
What incentivises all this vast private investment in drug development is the patent system: the exclusive right to exploit a newly invented drug for 20 years. The quid pro quo is that the patent proprietor must fully disclose the technology when applying for the patent, resulting in the publication of a vast global directory of research.
If there was no patent system, there would be a compelling incentive to keep drug research secret.
Provision has to be made for situations where it is right for a state to intervene to override the monopoly conferred on patent holders when the common good requires it.
Working out how to best achieve the common good is a complex assessment: as public funds could never fund the modern level of drug development, short term gain runs the risk of long term pain: undermining the incentive provided by patent monopolies would deprive the world of important medicines in the future, maybe including vaccines for future pandemics.
The Trade Related Aspects of Intellectual Property Rights (Trips) Agreement is an international agreement on the fundamental features of intellectual property protection adopted by World Trade Organisation members.
Trips was amended in 2005 to allow a state like Ireland to compel patent proprietors to grant compulsory licences to manufacture, in Ireland, patented medicines to address public health emergencies in less developed countries.
The EU has been pushing its support for the WHO schemes aimed at subsidising vaccine supply and facilitating production in less developed economies. However, as an Oireachtas committee recently noted, these measures only work if there is enough vaccine production available.
For states like India, with both a large population and advanced pharmaceutical manufacturing capacity, in principle it may be possible to compulsorily licence manufacture, but the current compulsory licensing regime does not seem to be meeting their urgent and dire situation.
India, South Africa and another 58 other WTO members have sought a decision from the Trips Council in June which would involve a wholesale suspension of all intellectual property rights in relation to the pandemic. They cite the cumbersome process for compulsory licensing of the multiplicity of patented technologies involved in vaccine manufacture.
Completely waiving the IP protections would mean that no legal mechanism would exist for payments to be made to the developers of vaccines from these markets.
Opponents point to the impact on incentivisation for drug development: but this argument is undermined by the extent of public funds involved in developing the vaccines. These amounted to $12 billion under the Trump administration alone. They also point to the loss of control over manufacturing standards — although that is something really for state regulators.
However, simply waiving IP rights will not result in a sufficiently rapid transfer of materials and knowledge required for production and so is not an easy fix. Waiving IP rights may actually lessen the pressure on states like the US to use public funds to ensure supply to less developed countries.
The real difficulty is in the diagnosis of the cause of the current limited supply in less developed economies: is it due to a failure by the pharma companies to voluntary licence and to transfer know-how? Is it due to a shortage of raw materials? Is it down to insufficient production capacity globally, which has been snaffled up by states which funded the vaccine development?
Waiving IP rights may not solve these problems, but rather serve to undermine the patent system which has underpinned the extraordinary advances in science that delivered vaccines within a year of the pandemic beginning. The US administration’s support for an IP waiver increases even further the pressure for these problems to be addressed. However, it is critical for the solutions arrived at to address what are the actual bottlenecks in production and at this time there is very little clarity on what exactly they are.
Jonathan Newman, SC, has been practising in patent litigation in Ireland for 25 years