Patents Are the Bedrock of Innovation
It’s an all too familiar pattern: medical researchers meet with success and create a new medicine—a cure or an effective treatment—and there are calls to extinguish their patent rights.
This is happening right now with COVID-19 vaccines, therapeutics, and anti-viral treatments.
Some public health advocates argue that the World Trade Organization, which through a complex international trade agreement known as TRIPS oversees the protection and enforcement of intellectual property around the world, should “waive” the rights of COVID-19 medicine patent holders.
That is, that the WTO should authorize use of COVID-19-related patents without consent of the patent holders.
This is a bad idea with very little, if any, short-term benefit, and huge medium- and long-term negative consequences for public health and innovation.
To grasp how disastrous a policy choice the WTO waiver would be, it’s important to understand the what and why of patents.
What Are Patents?
A patent is essentially a government license granted to an inventor to exclude others from making, using, or selling the inventor’s invention for a set period.
In the U.S., patents only have a 20-year life. If you were to discover the cure for cancer or a solution to global warming, your ownership of the intellectual property you created is just 20 years.
This means that whatever complex recipe you created—no matter the cost and how long it took—after 20 years the recipe is open to all to copy and use.
In fact, since inventions are patented when discovered, before they are perfected or ready for sale, the actual patent life for most medicines is significantly less than 20 years.
Compare patent and copyright rights. If you were to write the great American novel, you would have the exclusive right to sell, reproduce, prepare derivative versions, distribute copies, put on performances, etc., of your novel for your life plus 70 years!
Patents Incentivize Innovation
Patent holders are given a 20-year monopoly to incentivize innovation.
It takes more than a dozen years and about $2.8 billion to bring a new medicine from lab concept to FDA approved drug. And most drug concepts fail in the lab or along the way in clinical trials.
Only one in 1,000 new drug candidates succeeds in making it to pharmacy shelves.
Who would devote so much time and money to something so risky if, upon success, anyone could take the recipe and produce the drug for just the cost of manufacturing it and without paying for any of the R&D?
Successful drugs are profitable, but the profits pay for all the R&D—for the few successful projects and all the many well-intentioned and well-designed projects that just don’t pan out.
Patents Made COVID Vaccines, Treatments Possible
Biopharma companies reallocated and mobilized their R&D resources—scientists, laboratories, clinical trial infrastructure—from a host of other projects to address COVID-19 in record time.
In less than a year, a safe and effective vaccine was developed and, as important, produced in vast quantities and distributed far and wide.
In addition, COVID-19 therapeutics and anti-virals were developed, many with treatment value for non-COVID-19 diseases and conditions.
The next time an unknown pathogen threatens us, will biopharma researchers be as willing to divert research budgets to address the new pathogen if the IP they develop could be given away for free?
WTO Patent Waiver Is Ill-Advised
Unfortunately, this is precisely what the WTO has decided to do.
In June, after much lobbying by developing countries, most notably India, the WTO agreed to waive certain rights of COVID-19 vaccine IP patent holders and grant access to patented COVID-19 technology.
The European Union, Switzerland and the United Kingdom pushed back in opposition owing to the effect it would have on innovation.
The U.S. initially was in opposition as well, but then the Biden administration relented on the grounds that the waiver would be a one-time policy adjustment to address a purported COVID-19 vaccine shortage.
The waiver turned out to be unnecessary for several reasons.
Low vaccination rates in many developing countries were often due to vaccine hesitancy. And, by the time the waiver was issued, the biopharma industry’s voluntary sharing of IP and its manufacturing and distribution expertise resolved what supply issues did exist.
WTO Waiver Expansion Makes Even Less Sense
Even though the logic behind the June waiver was flawed, the WTO is now considering expanding the patent waiver to COVID-19 diagnostics and treatments.
Industry advocates, including CBIA’s Bioscience Growth Council, have voiced their opposition.
Since there is no supply shortage, the proposed waiver expansion amounts to a giveaway to developing world manufacturers.
The profits they would reap will be dwarfed by the catastrophic effect such policies have on innovation.
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