COVID-19 vaccines’ patents: a critical legal overview
Updated: Sep 8
Even though Intellectual Property (IP) law has always been a branch of law generating intellectual and commercial interest, most recently, IP law, and more specifically patent law, has become the heart of heated debates on an international level in the context of the COVID-19 pandemic. All of the vaccines – alongside the medical therapeutic and diagnostic equipment – that were used to save lives were patented inventions, owned by companies and then bought (through specific procurement methods) by countries. Both the legal regime governing patents and the way these patented vaccines were developed and bought, were two factors that determined their global distribution – from research and production facilities to vaccination centres around the world. Before diving into the more complex legal questions that have arisen because of this health and humanitarian crisis, more basic questions need to be answered and first of all the following: how are vaccines patented?
The COVID-19 Vaccines
According to the World Health Organization (WHO), there are currently 166 vaccines in clinical development and 198 in pre-clinical development developed for the novel COVID-19 virus. These vaccines were developed and tested under the pressure of the pandemic, but the WHO has evaluated a number of different vaccines and confirmed their safety and efficiency. The most known ones were the Pfizer/BioNTech, the Moderna, the Johnson and Johnson, and the AstraZeneca/Oxford vaccines. Although the vaccines were developed by private and, in most cases, multinational companies, national governments have also heavily invested in the manufacturing and the distribution of the vaccines; this is what happened mostly with the U.S.A. and the Pfizer/BioNTech and the Moderna vaccines, but also the U.K. with the AstraZeneca/Oxford vaccine.
When it comes to vaccines, which are more specific and complex inventions, a common misconception is that the whole substance composes one single patent. However, there are different patents covering different patentable inventions that compose the vaccine or that help create the vaccine, such as the active ingredient, its derivatives, combinations, and formulations, the compounds and/or the different methods of production of the vaccine. It is important to note that vaccines are created using already-existing pieces of technological and medical know-how, and some of the substances or procedures used can already be patented by another inventor.
The case of Moderna and Pfizer is an excellent example showing the complexity of vaccine patents. Arbutus Biopharma and Alnylam Pharmaceuticals claimed royalty to Moderna’s and Pfizer’s vaccines and filed separate lawsuits stating that the major companies used decade-old technologies created by the plaintiffs and protected by respective patents. Moderna first tried, without success, to invalidate the Arbutus patents and then asked for the civil responsibility to be shifted to the U.S. federal government, since the company developed the vaccine as the Federal State’s contractor, which has been regarded by American jurists as an interesting and novel defense in a patent-infringement trial. The complexity of vaccine patent and royalties-potential is also shown by the case of Covaxin, the vaccine developed by the Indian Council for Medical Research (ICMR) in partnership with the private vaccine company Bharat Biotech Ltd (BBIL); since the Indian government has largely invested in the development of the vaccine technology, questions are being raised on whether the Indian government is entitled to royalties on the private company’s net sales, and if yes, how much.
A critique of the vaccine patent regime - a Bioethical issue
It is true that patents serve as major incentives for risky, costly, and time-consuming R&D. It is the exclusive rights on the invention the patent grants and the prospect of utilising one’s invention that drives the technological and scientific research in the first place in today’s liberal economies. Without legally guaranteed – and relatively long-lasting – exclusiveness on the patented invention, there would be no investment for its development, unless the invention is of critical importance for the government, in which case it is public funds that support the R&D and the manufacturing of the necessary equipment. This is especially true for pharmaceutical companies developing drugs and vaccines, since the costs of clinical research required to create an effective and safe drug/vaccine are enormous, as are the risks. According to PHRMA, it takes on average 10-15 years and costs $2.6bn to develop one new medicine.
For pharmaceutical companies developing new drugs, the 20-year protection guaranteed by the patent may even be too little to make profit because of the excessive investment and the uncertainty of the success of the drug (especially of vaccines, which are generally less efficient than therapeutic drugs), whereas, for other inventions, the duration of the legal protection of the invention may be disproportionately generous compared to the needed investment, thus leading to vast profits for the patentee. In short, the one-size-fits-all approach of the current legal patent regime seems rather counterproductive: the protection it offers is not proportionate to the effort and resources engaged in the invention in question.
This train of thought could suggest that an even longer duration of the exclusive rights on vaccine production and development is recommended, exactly because of their costly and risky development and production, meaning a long-lasting monopolistic control of life-saving inventions. Licensing, or even compulsory licensing, can be a successful remedy to this problem, since it maintains ownership of the patent (thus encouraging investment in R&D) while making the technology accessible for wider vaccine production. Nevertheless, provisions relevant to compulsory licensing both in the WTO TRIPS Agreement (Articles 30, 31 (f), and 31 bis) only refer to “domestic” product distribution and competition laws, thus excluding exports from their scope. It’s the European Regulation 816/2006 that makes a more important step in this domain – but only for its Member States – by allowing compulsory licensing of pharmaceutical patents for export to countries in need of life-saving drugs and equipment. It should be noted, however, that this remedy is nothing but that, a remedy, and does not offer a long-term solution to the problem of inequitable prices and access to vaccines worldwide caused by the current patent system. On top of that, a recent study showed that a rise of compulsory licensing led to a significant decline in patenting rates by U.S. inventors.
Even after having secured the necessary investment for the development of the drug, when starting to think about its distribution, another issue arises relative to vaccine patents. “Patent thickets”, the phenomenon consisting of the accumulation of many different patented technologies forming one final invention, were also a problem for the COVID-19 vaccines, which were complex scientific creations, consisting of a number of autonomous technologies, but were also manufactured thanks to others. The case of Moderna and Pfizer being sued for damages and royalties by other biopharmaceutical companies for the exploitation of their already-existing inventions (v. supra) is proof of that. The owners of these inventions - rightfully - claiming damages for the infringement of their exclusive rights, stall the manufacturing and the distribution process of vaccines, making them even harder and time-intensive to reach the final recipient, for whom the vaccines were developed in the first place; and time, in the context of a fast-spreading pandemic, matters.
Considering new ideas & initiatives
Recently, the EU, India, South Africa, and the U.S. have drafted a resolution to be presented to the rest of the WTO Members, demanding a TRIPS waiver of IP rights, in order to facilitate the world production and distribution of the COVID-19 vaccines. They essentially recommend the production, use, sale, or import COVID-19 vaccines without the authorization of the patent holder, which - thanks to the waiver of the TRIPS Agreement - will not be considered as an infringement of the patentees’ rights. What is special about this resolution is that the waiver will be enforced on an optional basis, should the resolution be adopted by the WTΟ. This initiative seems promising. Nevertheless, there are issues related to the actual effectiveness of such a measure; to understand them, one needs to go back to the basics.
Τhere is no international patent and a fortiori no “TRIPS patent”. All the Agreement does is offer some kind of international recognition of patents, which otherwise continue to be filed on a national level, as were the ones protecting the COVID-19 vaccines. It also obliges WTO Member States to recognise the patents filed in another Member State. However, patents continue to be subject to domestic legislation restricted to the territory of the country where they were filed. This means that the TRIPS waiver of IP rights would not have concrete legal effects. A concrete consequence this resolution would have, according to the IP specialist Wen Xie, is that WTO Member States would “no longer recognize that foreign entities enjoy the same property rights as nationals, which is a dangerous precedent.” Lastly, one could not forget the impact of such a message to R&D investors, who are incentivised by patent protection and largely contribute to technological and scientific innovation.
It is the proposal of two Law Professors, Miriam Marcowitz-Bitton and Yotam Kaplan, that gives a direct answer to the problem by targeting the logic behind IP and patent rights. According to their paper, the so-called “recoupment patent” is ideal. The recoupment patent offers the same protection current patents offer, but with the difference that it is adjusted to the “level of investment required to create the invention”; the patentee would be entitled to all the exclusive rights ensured by the patent until they have recouped their investment (so as to not have losses) and earned some profit. After this point, the monopolistic control the patentee holds over the invention ceases to exist, the product becomes open to competition and can be exploited by other agents. According to this mechanism, the inventor would have to document the actual and anticipated investment put into the development and the manufacturing of the invention at the same moment that they file for the patent, in order for the competent national institution to determine the duration of the legal protection.
It is important to mention that this model would take into consideration private investment only. In the context of the pandemic this would mean that vaccines ordered by governments but manufactured by private companies, like in the case of Moderna and Pfizer with the U.S. government, the duration of the legal protection would last less than twenty years, since a significant part of the investment were public funds. Consequently, not only will this recoupment patent ensure patent protection proportionate to the risk and investment required for each invention, but also, in the context of a health crisis where the State takes most of the burden and usually its private contractors reap all the benefits, the vaccine patents will expire faster, allowing the production and distribution of the vaccines around the world in fair market prices, with initial patent owners making much more honest and proportionate profits.
The recoupment method is only a proposal and has yet to be put to the test. One problem that can already be identified is that - at least in this relatively short legal article published in the UC Irvine Law Review by the two professors - it is not presented what profit margin will be deemed “sufficient” by the national Patent offices upon filing for the patent. In other words, after having allowed to recoup the investment, it is unclear how much longer the protection will remain to allow profit to be made for the patentee, which might be the most important issue here. This becomes more complex when considering that the proposed model is an international one, meaning discrepancies between countries are bound to arise.
Other options have also been considered to counter the barriers raised by excessive patent protection over such precious technologies; there is a proposal to modify Article 55 of the European Patent Convention (EPC) to permit inventors to make inventions available to the public for a limited period of time without sacrificing novelty. Also found in the EPC, article 53 (a) states that a Member State may oppose the grant of a patent on grounds of morality or ordre public. Lastly, another ad hoc method to avoid patent thickets and the anticommons problem, emerged through the U.K.’s Supreme Court decision Actavis v. ICOS in 2019, where the Court “limited the ability for inventors to patent second medical methods by narrowing the definition of ‘inventiveness’”.
All these elements - legal, political, or economic - considered, this remains a complex issue. Intellectual property has been present since the Middle Ages, following a similar logic up until today. Nevertheless, property has ceased to be an absolute right and it does succumb to the duty to protect fundamental rights and values, like the right to life or the guarantee of public health. In the conflict of innovation v. global health, both sides are important and interdependent; innovation and the development of new drugs are a prerequisite for public health and safety, but without generalised access to these new drugs, they are rendered useless.
The COVID-19 crisis has put to a test not only national healthcare systems, but also the philosophy of IP Law and of international cooperation and solidarity. The only certainty is that Patent Law, the branch of Law that is supposed to lead and inspire innovation, is rigid and obsolete. New, more adjustable rules need to be adopted, leaving room for incentives and rewards to inventors, and providing some reasonable flexibility to be as effective as possible for each type of invention, while ensuring the widest possible access to the people, who deserve to enjoy the benefits of innovation no matter where they live. The dynamics of the international community have to be taken into account too; divergent national legislations for patent protection are counterproductive to the quest for equality and solidarity. Last but not least, transparency is crucial, especially in the medical sector which directly affects peoples’ lives.
In the quest for transparency and equal access to healthcare and to innovation, it is balanced policies and legal reforms, that respect the patient as much as the inventor, that are the answer.
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