Ed. Note: Prof. Sapna Kumar has been working on international intellectual property law issues for decades. In fact, I believe we were students in the same international IP course at the University of Chicago way back when, along with Prof. Rantanen. I asked Prof. Kumar to provide some of her thoughts on how our international IP system is responding to the COVID-19 Pandemic. A draft of her recent on-point article is available online: Compulsory Licensing of Patents During the Pandemic.
By Sapna Kumar, Law Foundation Professor of Law at the University of Houston Law Center
Due to the global nature of the COVID-19 pandemic, vaccines and treatments are in short supply and prohibitively expensive for many countries. For this reason, some scholars and foreign governments have argued that all IP rights should be suspended for such drugs for the duration of the pandemic. Others have made the more modest recommendation that countries be permitted to use compulsory licensing under TRIPS Article 31 to produce generic versions of needed drugs, in exchange for paying “adequate remuneration in the circumstances of each case” to the patent holder. This raises the question of whether patent rights are creating an impediment to getting people needed drugs during the pandemic.
The United States has not been particularly consistent in its attitude towards non-permissive government use of patented inventions and compulsory licensing. In the 1950s and 60s, it imported patented drugs from generic manufacturers to cut costs. During the anthrax scare in the early 2000s, after Canada licensed Bayer’s patented Cipro drug to a generic manufacturer, the U.S. government threatened to do the same to help negotiate a better price. Since 2010, there have been at least three cases of patent holders seeking compensation for the government’s unauthorized use of their defense-related inventions.
Notwithstanding the U.S. government’s regular unauthorized use of patented inventions, it has been quick to punish countries that use compulsory licensing to provide life-saving drugs to its citizens. When South Africa was suffering from the worst of the AIDS epidemic and seeking to import generic antiretroviral drugs, the Clinton administration placed South Africa on the Special 301 Report Watch List. Subsequent Democratic and Republican administrations have punished other countries seeking to utilize Article 31 to provide drugs to people who would otherwise go without treatment.
This brings us back to the current shortage of COVID-19 vaccines and treatments. Whether IP rights are harming patients and whether compulsory licensing can help depends, at least in part, on the type of drug at issue. Consider Gilead’s small-molecule drug remdesivir, which can be used as a COVID-19 treatment and was scarce during 2020. The Bangladeshi company Beximco was able to independently recreate remdesivir in just a few months. It began selling its generic equivalent in May, more than a month before any of the Gilead-licensed facilities began production. Other Bangladeshi companies soon began producing the generic, leading to a growing surplus that allowed Bangladesh to export to at least 21 other countries. As a Least-Developed Nation, Bangladesh is exempt from various TRIPS requirements, which allowed it to recreate the patented drug without retaliation.
Consequently, in the Summer of 2020, remdesivir was not scarce in Bangladesh, nor was it scarce in low- and middle-income countries that were able to buy from Gilead-licensed generic manufacturers beginning in late June. Yet during the same time period, the United States was facing an acute shortage and had to ration the drug. This tells us that the U.S. shortage was likely based on patent rights—Gilead failed to maximize all available production facilities and failed to grant countries like the United States access to drugs produced under license in countries like India. Had the government issued a compulsory license, it would have lessened the shortage.
Compulsory licensing, however, is not a cure-all for drug shortages. Biologics, including vaccines, can be difficult to recreate without know-how that is protected by trade secrecy. Issuing a compulsory license won’t force companies to divulge the optimal manufacturing conditions for producing the drug. Moreover, compulsory licensing won’t increase a supply of a needed drug if there is a shortage of raw materials or manufacturing capability—as is currently the case with various COVID-19 vaccines.
Consequently, for the current pandemic, compulsory licenses or other mechanisms for circumventing patent rights are only going to be useful for countries that will not be receiving an adequate vaccine supply in the near future and that have access to needed raw materials and manufacturing facilities. For countries like the United States that have pre-purchase agreements and the means to buy more vaccines, a compulsory license may not be helpful in the near term, given the amount of time it would take to recreate the drug. But for at least some low- and middle-income countries, compulsory licensing could make it possible to save lives, especially if revaccination is periodically required.
Any move that is taken with regard to IP rights during pandemics must be done with an eye towards not threatening drug development for future pandemic responses. Suspending all IP rights for the duration of the pandemic will give pharmaceutical companies little incentive to develop new drugs when the next pandemic arises, absent a change in how we incentivize drug development. But the same is not true for compulsory licensing and government use of patents. There is scant empirical evidence that the practice harms innovation, given that adequate remuneration must be paid under TRIPS. This is particularly true for licenses issued by low-income countries, which spend little on drugs compared to high-income countries.
One lesson from the pandemic is clear: the United States needs to reassess its inconsistent approach towards government use and compulsory licensing of drugs and should reassess the lack of concessions that it asks for when it pours billions of dollars into private pharmaceutical companies. Current U.S. law does not make it easy enough for a willing third-party manufacturer to petition for a license to a scarce drug, as several prior drug shortages have illustrated. U.S. agencies also need to expressly address know-how in their contracts when providing funding for research. Federal funding recipients that develop a drug or treatment should be required to utilize out-licensing to generic manufacturers to keep pace with demand after an initial grace period, in exchange for fair compensation.
Finally, the United States needs to join the European Union in revisiting its ugly practice of punishing low- and middle-income countries that utilize compulsory licensing to provide life-saving drugs to its citizens. If South Africa or other countries are forced to utilize compulsory licensing to produce COVID-19 drugs, will we repeat the mistakes we made during the AIDS epidemic? Or will we recognize that a global pandemic represents the kind of extenuating circumstance that TRIPS Article 31 was meant to address?
OT but a good Markman reminder:
“Claim Construction Issues Cannot Go to the Jury, and Limits on the Doctrine of Equivalents. In Olaf Sööt Design, LLC v. Daktronics, Inc., Nos. 2020-1009, 2020-1034 (Fed. Cir. Jan. 7, 2021) (non-precedential) (Prost, Lourie, and Reyna), the Federal Circuit held that claim construction disputes must not be submitted to the jury..”
[Now if this was also properly applied to Design patents suits it could do even more good for patent suit clarity and economy.]
Not sure that I can agree that the mere “properly applied to Design patent suits” carries what you WANT it to carry.
I agree with the author that if ever there were a circumstance that would justify invoking the compulsory licensing TRIPS provision, this is it. That said, I am not really clear that compulsory licensing will actually get you anything worth having in this particular crisis.
The Biontech patent at issue here was nationalized (see URL below) in AU, CA, EP, JP, & US. In other words, there are no low-income jurisdictions covered by these patent rights. One does not need to invoke compulsory licensing laws in order for low-income jurisdictions to start manufacturing the Pfizer vaccine on their own. If, e.g., South Africa or Bangladesh want to start their own vaccine manufacturing efforts, they should just go for it. There are no patents to stop them.
Of course, the obstacle to that plan is that the highly effective new vaccines work on a revolutionarily new technological platform—lipid vesiculated RNA. There are only a handful of factories worldwide that can manufacture this technology. But invoking compulsory licensing provisions is not really going to do much of anything for this infrastructure limitation.
I have no objection to invoking compulsory licensing laws as the author proposes. It is unlikely to harm. I am dubious, however, that it will do much to help, when all is said and done.
link to register.epo.org
If Joachim states that he “hates” to say what he wants to do, then he is expressing reluctance to say what he wants to do. I do understand that he wants to hose them all down, but his perception of reluctance to express that urge, is well-founded, because hosing down is not appropriate. His urges are based on misconceptions., as i tried to explain to him.
Joachim, are you there?
You still go 180 to what he is actually stating.
You do this through a facade of politeness.
Be direct.
State what you agree with.
State what you disagree with.
Do NOT agree and then spin some 180 position — as if you and he are still in agreement.
That type of writing is both inte11ectually dishonest and IMpolite.
Re: “This raises the question of whether patent rights are creating an impediment to getting people needed drugs during the pandemic.”
Indeed, and a related question is why are several academic and other writers starting with that as an assumption rather than a factual evidence based investigation?
… because it is “known” that “patents are bad” and the public will tolerate only that which they MUST….
/s
There are at least three basic architectures for an anti-viral vaccine.
Current anti-Covid vaccines use at least two of the preceding architectures.
At present two vaccines are in use and three more vaccines are finishing phase 3 trials.
I have not seen any suggestions that once patents issue, huge numbers of lawsuits for infringement will be filed.
Development of pharma technology is becoming similar to development of computer & networking technology. There are often many more than one way to achieve the same vaccine functionality.
The patent system enables the sharing of knowledge. Weakening the patent system will only discourage knowledge sharing and slow down development of pharma technology.
One must wonder whether the patent system is causing pandemic drug shortages or whether testing regimes, lack of production facilities, or lack of funding to set up more production facilities cause pandemic drug shortages.
If the cause of shortage is any of the last three possibilities, weakening the patent system won’t solve anything and will make the situation worse.
It is worth noting that it has become much easier in the last decade or so to bring new pharma production facilities online.
I hate to say it, but it is probably time to hose down a lot of IP lawyers that specialize in pharma IP.
Can you provide additional insight into your statement of, “I hate to say it, but it is probably time to hose down a lot of IP lawyers that specialize in pharma IP.”
What do you mean “hose down?”
What do you mean “IP lawyers?”
How does your early comments tie to any aim to do anything to anyone “specializing in Pharma IP?”
I should have been more specific — I was referring to scholar lawyers that advocate weakening the patent system without actually analyzing why sufficient vaccine might not be available.
The problem really belongs first to operations research and not to law. Only after operations research and analysis has taken place does it make sense to think about tweaking the patent system.
Ah thanks — “scholar lawyers” translate to “academics” as opposed to any practicing attorneys.
Joachim, you are right with your reluctance to say “hose down”. There is no need for such actions.
Without the incentive of the patent system, there would be no innovation in pharmaceuticals. I’m still alive thanks to innovation in the pharmaceutical industry.
As to compulsory purchase, the mere existence of the possibility is enough. Check out what UK Health Minister did in the 1950’s, to preserve a flow of life-saving drugs to the UK public.
It’s a bit like discovery, deposition and cross-examination in English law – the mere threat of it is what keeps witnesses honest.
If you want an example of vaccine supply chain snafu’s, check out the current dispute between Astra-Zeneca and the EU Commission, unfolding as we speak.
MaxDrei,
Your attribution is 180 – Joachim is not being reluctant to hose down; he is saying that it is time TO hose down. He may not like to say it, but he IS saying it.
This conflicts directly with your next statement of NO need.
Either you are missing the point or you are being impolite with your “politeness” (it is an insult and disingenuous to “agree” with someone when they are saying the opposite and then turn that agreement into having the person’s view stand on its head).
If Joachim states that he “hates” to say what he wants to do, then he is expressing reluctance to say what he wants to do. I do understand that he wants to hose them all down, but his perception of reluctance to express that urge, is well-founded, because hosing down is not appropriate. His urges are based on misconceptions., as i tried to explain to him.
Joachim, are you there?
At this point there is no obvious reason to believe the patent system is impeding distribution of vaccines. From the little I can determine from browsing the web, the problem comes from a lack of logistic planning of the sort that is well-understood.
Unfortunately certain academics pounce on any problem in getting a product to the end-user in order to screech the need to weaken the patent system.
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