Patent Rights on Treatments During a Pandemic

Patent Rights on Treatments During a Pandemic

With the deadly Covid pandemic ongoing in much of the world and the limited resources available to fight it, some in the public health community have raised the idea that governments should suspend intellectual property protections for critically needed medical technology to treat and stop the spread of the virus. In fact, on May 5, United States President Joe Biden came out in favor of waiving intellectual property protections for coronavirus vaccines due to concerns about vaccine access in developing nations.[1] The removal of patent protection for Covid-related medical technologies would allow for manufacture of these technologies by third-parties. It would be part of a global effort to increase the supply and affordability of vaccines and therapeutics, especially for export to low-income countries.[2]

The pros of removing patent protection, of course, is that it would free up other companies to manufacture the vaccines faster than cheaper than just relying on companies like Pfizer and Moderna to do so. On the other hand, removing protection disincentivizes those companies from innovating in this area. For example, if a new Covid variant emerges that required development of booster shots, will Pfizer and Moderna be willing to spend hundreds of millions of dollars to develop them if they think they will not be able to control their production afterwards? Moreover, the government could theoretically buy the rights to the patent or buy larger quantities of the vaccine itself from these companies. Is instead simply stripping them of the intellectual property rights by statute an unfair taking of property? These are some of the complex ethical questions that go into the analysis. So, let’s look also at the legal landscape of this issue.

Intellectual property protection is grounded in the US constitution, which authorizes Congress to secure exclusive copyrights and patents to the inventor or creator, and Congress has enacted comprehensive legislation to achieve this goal.[3] In addition, the United States is a signatory to the Agreement on Trade-Related Aspects of Intellectual Property Rights, an international agreement which requires member nations to protect patent rights. TRIPS requires countries to prevent third parties from making, using, offering for sale, selling or importing a patented product or process without consent of the patent’s owner.[4]

However, both US law and TRIPS provide exceptions, in which the government may use or authorize a third party to use a patented product without consent of the patent owner under special circumstances. This is known as compulsory licensing.

Compulsory licensing may be authorized when a member nation faces a national emergency or extreme urgency. It is up to each nation to determine the circumstances under which compulsory licenses may be granted.[5] While the United States has not enacted a general compulsory licensing scheme as part of patent law, forms of compulsory licensing are envisioned under some statutes.

For example, in 1980, Congress passed the Bayh-Dole Act, which provided for ‘March-in’ rights to be exercised by the federal government. This permits the government to compel the license of a patent if that patent was developed with the help of federal funding. The conditions under which the government may “march-in” to license a patent to a third party are met when the action is necessary “to alleviate health or safety needs” or “to meet requirements for public use.”[6]

As a number of drug companies received substantial federal funding from the federal government to develop vaccines and other Covid therapies (under programs such as “Operation Warp Speed”), attention has focused on whether the government should invoke these march-in rights to license patented technology resulting from this funding.[7]

Doing so would be unprecedented, as no federal agency has ever invoked march-in rights in the past. The National Institute of Health, for example, refused to exercise these rights against pharmaceutical companies developing HIV/AIDS medications it helped to fund, despite being petitioned by public interest groups, who cited high drug prices as a barrier to public health.[8]

Even were the government to pursue this route, the law requires a lengthy agency decision-making process, followed in all likelihood by litigation. The time-frame involved in the march-in process makes it a poor option for the near-term goals of combating the spread of the Coronavirus.

Another avenue open to the government does not involve compulsory licensing per-se, but rather relies on a provision of the US Code concerning government use or manufacture of a patented invention. Under the law, when the US government authorizes a third-party to manufacture a patented product on behalf of the Government, that third-party is protected from liability even if neither the third-party nor the Government received consent from the patent owner. Instead, the remedy for patent infringement is only available against the government itself, in the Court of Federal Claims. Moreover, remedies in such cases are limited to “reasonable and entire compensation for such use and manufacture” of patented items, and companies do not have the ability to stop the use or manufacture of their patented products.[9]

Unlike march-in rights, there is precedent for the government using this provision. In the 1950s, the Department of Defense relied on these protections when it purchased antibiotics from a company that did not own their patents. More recently, the threat of invoking this law allowed the government to successfully pressure the makers of Cipro to lower their prices during the 2001 anthrax scare.[10]

A similar discussion is underway in countries around the world. Unlike the United States, many European countries, as well as India and Canada, have domestic legislation which specifically provides for compulsory licensing to encourage public access to pharmaceutical products. Utilizing such laws is seen as a way to boost production, and thereby ensure affordable access to lifesaving medical interventions and vaccines during the pandemic, especially for poor and developing countries. India and South Africa have proposed that the World Trade Organization exempt TRIPS-member countries from enforcing patents and trade secrets to allow other drug companies to produce cheaper generics without fear of being sued for patent infringement.

Some have argued that suspension of patent rights alone may not suffice to enable production by third parties, since company trade secrets and other non-public information may be needed to effectively manufacture products such as vaccines, and there is little clear legal authority to force companies to turn over such information.[11] Likewise, there has been pushback on the grounds that complex therapeutics and vaccines require sophisticated production facilities, and that it is the lack of such infrastructure as well as access to needed raw materials- rather than intellectual property rights- which is holding back the supply.[12]

In light of these logistical concerns, governments and pharmaceutical companies have also looked to alternate approaches to increase the supply of vaccines and therapeutics where they are needed without limiting patent protections. Some of the major pharmaceutical companies have agreed to selectively license their technologies without profit, to reserve a fixed quantity of vaccine doses for low-income countries, and to participate in the WHO’s COVAX program, the cooperative international effort to distribute vaccine doses around the world.[13]

So, while mechanisms exist to get around patent protections as a barrier to making Covid vaccines and therapeutics available around the world, these mechanisms may be insufficient and it’s unclear whether the political will exists to use them. Either way, more direct measured may be necessary to help fight Covid in less developed countries.