Patents Aren’t Everything

Patents Aren’t Everything

Earlier this month, the Niskanen Center hosted a webinar with Charles Duan of the R Street Institute discussing the role of intellectual property in the supply of vaccinations. Later that week, I had an article in The Hill about the need to liberalize all restrictions on vaccine-related know-how so other countries can get in on the game of manufacturing COVID-19 vaccines.

While the main thrust of both the webinar and the article is the need to get as much knowledge out as quickly as possible, ideally by reducing the legal barriers put in place by U.S. intellectual property laws, one qualification to this argument is necessary: waiving a magic wand and undoing all COVID-19 related IP protections won’t be enough. Tech transfer is as much about talent as it is about legal rights, and there are material manufacturing constraints that must also be dealt with.

Fleshing out the relevant issues is a blog post on Written Description by Jacob S. Sherkow, Lisa Larrimore Ouellette, Nicholson Price, and Rachel Sachs from the intellectual property blog Written Description, arguing that patents are neither the cause of nor the solution to vaccine shortages.

To begin, they list five reasons why liberalizing or doing away with patent protections isn’t a cure-all for vaccine shortages:

First, the less-patents-more-access theory is based on a simplistic model of patent owners artificially restricting supply in order to raise prices. But given the enormous global demand for any available supply, profit-maximizing COVID-19 vaccine producers currently have an incentive to expand supply, not artificially restrict it…

Second, even without patents, new firms can’t enter the market because there is currently no regulatory pathway for generic vaccines. Vaccines aren’t like small-molecule drugs with a healthy generic industry—they are complex biologics that are more difficult to replicate…

Third, even if the scientific barriers to regulation were resolved, removing patents would not be enough: other forms of intellectual property would also need to be overcome before the FDA could approve a biosimilar vaccine application…

Fourth, even if other firms knew how to manufacture these vaccines, it would take time for any new manufacturer to build up the relevant facilities…

Finally, removing patents (and other IP) would decrease the incentives for the original manufacturers to cooperate in expanding production and transferring knowledge.

These points are all valid, and the second and third ones deserve special attention. Since vaccines are biologics–which are vastly more complicated than small-molecule drugs–the regulations necessary for their manufacturing are significantly different, and the biosimilar market is far less developed than the generic small-molecule drug market. We can thank the leisurely pace at which the FDA issues guidance, approves drugs, and generally functions for this.

With respect to the third point, there are various restrictions that function like patents (like exclusivity under the Orphan Drug Act, reference product exclusivity for biologics, and trade secrets) but aren’t. This is what makes an “all of the above” approach to tech transfer important. Taking down legal barriers is essential, but it’s not enough. 

When discussing the deleterious effects of regressive regulations, it’s tempting to simply remove or dial them back and call it a day. This should be done for its own sake, but innovation policy is one area where misregulation is just as much a problem as overregulation. Dialing back patent protections may be valuable on their own, but the best policy results will replace them with something else.

More generally, intellectual humility is valuable. It’s tempting to view your issue as the issue, and folks working in intellectual property are not immune to this temptation. But, as the authors write:

The most important thing policymakers can do with respect to vaccine patents is straightforward: recognize that patents aren’t the most important innovation tool for vaccines. As we have noted above, many want to cast patents as either savior or villain in the COVID-19 vaccine context, especially around scale-up. But patents don’t seem to be the dominant factor here.

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By |2021-03-10T11:51:59-08:00March 10th, 2021|Blog, Intellectual Property|