Innovation is required for scientific and technological progress within the pharmaceutical industry. It is important to note that the grant of patents may not always result in such progress Further, It is also pertinent to consider the barriers they create. To overcome the barriers of patents, alternatives must be given due consideration.
Intellectual Property Rights (‘IPR‘) refer to those exclusive legal rights given to innovators to protect their creative inventions for a specified time. These rights include copyright protections, trademarks, and the granting of patents. IP protections apply to a wide range of sectors such as the food industry, trade, pharmaceutical industry, and global health access. They also play a crucial role in the field of healthcare, particularly in the form of patents. A patent is an exclusive right granted for an invention that is novel, non-obvious, and offers a technical solution to a problem. Patents are granted for products and processes. In the pharmaceutical industry, they are granted for medical and diagnostic products, chemical compounds, and pharmaceutical compositions.
IPR has a significant part to play in accelerating the discovery of production processes and the development of new products within the sphere of public health. On contrary, strong IP rights act as a barrier to affordable health care. At the outset, the article seeks to further explore the role of patents within the health care sector. Subsequently, the article suggests various alternatives to patents as IP protection.
DEFENDERS OF DRUG PATENTING
Defenders of drug patenting put forth the argument that much of the research and development (R&D) undertaken is based on an assurance that there are sound patent protections in place. These protections are said to guarantee the innovators exclusive rights to reap the monetary benefits of their product. Furthermore, patents as incentives will motivate cash-rich corporations and industries to invest in the R&D programs of pharmaceutical companies. Research is required to bring new drugs and related healthcare products into the market.
This large-scale innovation enables countries to meet the supply requirements of products necessary to prevent, diagnose, and treat diseases.
A survey conducted by Edward Mansfield (1986) concluded that 65% of commercially introduced inventions in the pharmaceutical sector would not have been made public without patents. Moreover, 60% of the products would not have been invented without patent protection. Large pharmaceutical industries and important investors may be under the impression that patent systems are the only efficient means by which they will be reimbursed for transactions undertaken by them. Other arguments put forward in support of patents include the promotion of technology transfer, an increase in FDI, and the assurance of product quality.
Ergo, although patents are heavily relied upon to stimulate innovation and technological progress, nonetheless, the negative connotations associated with them must be considered.
HARMFUL IMPLICATIONS OF PATENTS
To begin with, Madhavi Sunder argues that the monopolistic rights that accompany patents allow for pharmaceutical corporations to price their drugs at a high rate. Further, drug companies target only a small portion of a country’s population, those who have the means to pay. These highly-priced drugs remain inaccessible to the poor. Innovation can thus be considered as futile if patents impede the distribution of newly developed drugs to all sections of society. Besides, the patent system has failed to incentivize research that addresses diseases affecting the rural population and is believed to skew innovation towards serving financially strong markets of the developed world and.
It is also imperative to note that the relationship between FDI, technology transfer, and patent protection, as previously stated, is not as linear as it is made out to be. There exist factors that influence FDI and technology transfer, apart from patent protections. These determinants include the imitative ability of economies, the countries’ market size, and the openness to trade. Imitative ability refers to the capacity of a country to re-produce foreign products.
Further, I argue that developing countries may not be able to avail the benefits of technology transfer owing to an insufficiency of funds. A fair amount of capital is required to procure advanced factors of production to imitate foreign goods. Therefore, patents only incentivize drug production in countries that already have sufficient technical capacity and funds for breakthrough research.
Apart from criticisms relating to accessibility and skewed innovations that favour developed countries, I believe the patent system has proved to be an inconvenience during grave circumstances. This argument will further be explored in the context of the current global pandemic. The current health crisis requires expedient and efficient countermeasures to mitigate the serious implications of COVID-19. Pharmaceutical companies ought to work in harmony and unison to ensure the proposed countermeasures are successful. As it shall be observed, this has unfortunately not been the norm.
To illustrate, the Pharmaceutical industry Roche initially refused to reveal the recipe of its lysis buffer, used in RC-PCR testing kits for the novel Coronavirus. This formula would enable numerous Dutch laboratories to manufacture the kits, thereby increasing the production capacity and tests conducted. Similarly, Intersurgical is another company that refused to reveal the technical designs for manufacturing a medical valve required for the treatment of COVID-19 patients. Italian volunteers proceeded to use reverse engineering and create 3D versions of the lifesaving valve. As may be observed, large pharmaceutical industries have shown to be uncooperative and unwilling to relax their patent protections, even in the face of a global pandemic.
In such situations, National governments must intervene in the interest of public health. For example, the Governor of Kentucky, to ensure the availability of personal protective equipment, called upon the company of 3M to release its patent for N95 masks. Former President Donald Trump has also criticized the actions of 3M and invoked the Defence Production Act to ensure more masks are acquired.
On an analysis of these examples, it is evident that a balance is required to ensure that the innovator is reimbursed for the research and development undertaken, while at the same time, the public mass is ensured affordable and easily accessible healthcare. To ensure this balance is achieved, it is important to explore alternative incentives apart from patents. Alternatives aim to de-link the reimbursement of R&D through an increase in product prices
One of the most commonly suggested alternatives involves cash prizes given by governments. The innovator is given cash in place of patent rights for the product. A suggested method for calculating the proper amount of a government-funded prize involves deciding a prize budget and establishing a group of experienced economists and doctors to fix the appropriate value of the vaccine or any pharmaceutical product. The amount to be given can also be evaluated based upon the cost of R&D. An example of a cash prize fund is the Medical Innovation Fund, which aims to replace product monopolies by providing more than $80 billion in annual rewards for beneficial investments in R&D for new healthcare products. In my opinion, this alternative is beneficial to manufacturers as they are guaranteed an amount of money proportional to the efficacy of the drugs. Patent systems do not provide such an assurance as there is no guarantee of consumer demand for the product, even in dire circumstances. As discussed earlier, in such situations, patents have shown to act as obstacles to accessing healthcare, requiring government intervention.
Patent pools and open source have also been suggested as solutions for the problems of a heavily patented regime. Open source involves ‘free access’ to patented knowledge, including the manufacturing processes of health products. If such information were to be easily accessible, it would enable third party entities to develop required products on time, without the threat of an infringement suit. Further, developing countries would be able to proceed with the generic manufacturing of drugs. Open source is viewed as an alternative to patents as it prevents others from obtaining a patent for the same invention but allows competitors to freely use the invention along with the manufacturing process for their own benefit.
The philosophy of open science is based on the idea of pharmaceutical research departments pooling in all their respective knowledge and scientific research and releasing the same into the public domain, free of charge. Such open access allows for third party entities to develop the product, thereby ensuring its increased availability. For example, in 1953 Dr. Jonas Silk introduced a successful polio vaccine into the market and chose not to patent it. He believed that patenting it “would have represented double charging”, referring to the donations received while developing the vaccine. The un-patented vaccine subsequently saved millions of lives.
Further, the sharing of information on an open access platform may lead to the development of the product at a quicker pace.
The current global pandemic mandates for such speedy and efficient measures to be taken. To further illustrate, a successful open source is the Global Initiative on Sharing All Influenza Data (GISAID), which has been instrumental in tracking the spread of the virus. It is a collaboration that has enabled the timely sharing of genetic sequencing data related to COVID-19, which is easily accessible on a free database. GISAID has also positively impacted the development of vaccines, antibodies, diagnostic kits, and prototype viruses for research.
Patent pools allow competing firms to combine their patents. It is an arrangement under which numerous patent holders pool in their respective patents and license amongst themselves. The patents are also licensed to non-members on pre-determined terms, thereby providing them the intellectual property required to develop products. In this manner, patent pools benefit the licensors as they earn revenue and the licensees as they acquire the technology. As a response to COVID 19, various patent pools have been established.
For instance, The Oxford University Innovation, responsible for technology transfers at Oxford University, has released guidelines for such non-exclusive licensing to third party entities interested in acquiring their COVID-19 related intellectual property. The University intends to offer royalty-free, non-exclusive licenses for the duration of the pandemic.
Patent pools have been promoted in the interest of public health as they overcome the barriers of inaccessible and unaffordable healthcare. All patents belonging to a pool are licensed at a single rate, thereby avoiding the additional costs involved with acquiring numerous license agreements.
Further, pharmaceutical companies may now divert the extra funds towards accelerating and improving their research programs. Patent pools have been promoted by various international organizations on account of their various advantages. For example, The World Health Organisation (WHO) has proposed the creation of a COVID-19 Technology Access Pool (C-TAP). The objective of C-TAP is to accelerate the discovery of vaccines and the development of medicines and related technologies through open-science research. This will further ensure the equitable distribution of existing and new COVID-19 health products. The UNITAID is another organization that initiated a patent pool to deliver HIV/AIDS medicines to the world’s poor.
Even though such open-source alternatives are underway, national governments have not shown ample support to these efforts. The conventional model involving exclusive monopolistic rights being given to innovators is preferred. Considering the fact that alternatives to patents have not gained momentum as of yet, another solution to overcome the problems of the patent system is to perhaps reform its existing application. The reforms proposed include raising the standard for non-obviousness so that patents are granted only for inventions that can be industry applied, reducing the burden of proof for challenging a patent in court, and shortening the term for which a patent is granted.
As the race to develop a vaccine for the novel Coronavirus intensifies, an increase in the number of patent applications filed is expected. Resultantly, the development and subsequent release of the vaccine will perhaps be delayed. The reviewing of a patent application is a lengthy process that involves various steps and the current circumstances warrant for intellectual property to be largely available to address the urgent public health crisis. Moreover, the race to obtain a patent may involve wasteful research expenditures as two or more firms may encounter the same roadblocks while developing the vaccine. Patents may also be filed for other COVID-19 related health products, such as personal protective equipment, diagnostic kits, and antibodies.
We are amid a global pandemic with devastating effects and these products are required in large quantities for the treatment of the virus. Providing patents will only limit the manufacturers producing such products. Further, patent rights are sometimes accompanied by frivolous patent infringement suits, thereby delaying the release of the product into the public domain. For example, Labrador Diagnostics LLC had sued a company known as BioFire that manufactures COVID-19 tests for infringing two of its patents but later announced royalty-free licensing to third party entities producing the same tests.
It is also important to note that patents do not always incentivize innovators. The drug Aspirin initially manufactured by Bayer was a lasting success even in the absence of patents. Despite the loss of IP protections, its success can be attributed to the expansion of its medicinal uses, its periodic reformulations, and extensive advertising of the product. Although, healthcare is universally characterized as a human right. The existing patent systems require reforms to ensure that all sections of society can access affordable health care. National governments out to increase awareness regarding the availability of the alternatives.