The Food is Terrible and the Portions are Too Small: Patent Edition

The Food is Terrible and the Portions are Too Small: Patent Edition

I have previously written on the absolute necessity to make the know-how necessary to manufacture and distribute coronavirus vaccines available as soon as possible. Life can’t truly return to normal in the United States unless the entire world is vaccinated, and as a recent report from the Government Accountability Office found, most vaccine manufacturers were operating near capacity before the COVID-19 pandemic. This is an all-hands-on-deck moment, and we need every country in the world to have access to the technology needed to make vaccines.

There is, however, predictable opposition to measures like compulsory licensing and waivers currently proposed at the WTO based on respect for patent rights. I won’t relitigate the arguments here, but I want to point out a curious contradiction I have identified in two articles opposing the liberalization of COVID-19 vaccine intellectual property.

The first comes from Peter J. Pitts writing in IPWatchdog and the second comes from Adam Houldsworth writing in Intellectual Asset Management. The articles are the mirror image of each other. Pitts starts out by arguing that respecting IP rights is necessary to bring drugs into creation, while that is Houldsworth’s closing argument.

Pitts wrote:

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.

From Houldsworth’s piece:

[L]et’s not forget that the potential returns offered by IP protection – and the predictability afforded by IP licensing – encouraged the investment of significant sums of money in the manufacture of doses well before any vaccine had been approved. The focus now should be on helping AstraZeneca, Moderna and Pfizer/BioNTech, as well as the makers of other vaccines that may soon be approved, to boost their global manufacturing partnerships and strengthen their cross-border supply chains.

These arguments are problematic considering the significant sums of money (the billions needed to create new medicine) have already been invested by the U.S. government through Operation Warp Speed (among other big spenders). However, even if we take this as a given, it’s curious to simultaneously argue that large firms need exclusivity and that even if we open the door to competition it won’t work.

From Pitts:

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.

Houldsworth argues that imploring companies to simply relinquish their IP…

…overestimates the number of companies capable of producing the cutting-edge vaccines. Unlike small molecule drugs, traditional vaccines and manufactures in other industry sectors, the covid-19 vaccines can only be produced by means of a complex and difficult set of biotechnological processes, depending on an extremely intricate supply chain. This is especially the case for Pfizer/BioNTech and Moderna Therapeutics’ mRNA vaccines, whose labyrinthine manufacturing processes are explained here.

It is this difficulty that largely accounts for AstraZeneca’s troubles supplying its viral vector vaccine to Europe. As CEO Pascal Soriot commented, the processes involved usually take years rather than months to implement; and there is a “variability of yield” across its different supply chains.

This means that the sharing of patent rights would have little or no impact. Large quantities of trade secrets, data and proprietary know-how must also be actively transferred to allow other companies to produce and sell versions of these vaccines.

It can certainly be true that in general drug patents–a legal measure to prevent free-riding–are necessary to bring new products into creation. It can also be true that simply releasing intellectual property to the world won’t magically vaccinate everyone overnight, since there are basic questions of capacity and non-patented “know-how” need to manufacture vaccines.

But it’s curious to argue both. If compulsory licensing or other ways of knocking down legal barriers to drug manufacturing are ineffective, then why should we be concerned about free-riding? If you already maintain a natural monopoly, you don’t need a legal one on top of it.

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By |2021-02-23T08:36:45-08:00February 23rd, 2021|Blog, Intellectual Property|