"Interfering with patent protection means playing with fire"

A good year after SARS-CoV-2 was first discovered, there are now five vaccines available against the virus, but they are in short supply; so much so that India and South Africa have called for a relaxation of patent protection rules. Their proposal to temporarily suspend intellectual property (IP) rules related to Covid-19 vaccines and treatments is currently being discussed at the World Trade Organization. But is this proposal the right approach? In an interview, Reto Hilty, Director at the Max Planck Institute for Innovation and Competition, explains why he thinks laying hands on patent protection is dangerous.

India and South Africa are shaking up international patent law with their request for a temporary suspension of patent protection for vaccines. More than 100 countries support the initiative in the World Trade Organization (WTO) Council, followed by human rights organizations and the Vatican. Professor Hilty, can worldwide patent protection simply be suspended?

Not really. The intention is to suspend only certain obligations of WTO member states arising from the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement). Specifically, patents for inventions related to Covid-19 vaccines would then no longer have to be respected. If the proposal were to be accepted, each individual member state would be able to decide for itself whether or not to suspend patent protection; those who cannot currently afford the vaccines would be most likely to make use of it. Indeed, without significantly cheaper access to vaccines, the situation will not change for them even if a sufficient number of doses do become available one day. The problem, however, is that suspending patent protection in one’s own country is of no use if no local company is technically capable of producing such vaccines.

Which patents are affected?

Ironically, it is not just patents relating to Covid-19 vaccines that are at issue. Although we may assume that such specific patents have been filed by now, we do not yet know what exactly was applied for, because a publication of the application only takes place after 18 months. The examination of whether or not the patent requirements are met takes significantly longer, which is why the first patents for those new vaccines are not expected to be granted for at least three years.

The crucial factor, however, is that the modern vaccines, especially those from BioNTech/Pfizer and Moderna and, if authorized, in the future from Curevac, which are all based on messenger RNA and can be readily adapted to mutations, are derived from technologies that are themselves protected by basic patents that have already been granted or are still to be granted. However, these technologies also have other, very promising areas of application, namely in cancer therapy. If the patent protection for vaccines were to be suspended, this would also have to be the case for such basic patents, because they play a role in production. It is unlikely that this would increase incentives for the pharmaceutical industry to continue investing in such future technologies. Those who challenge patent protection at this point are therefore playing with fire.

Granting of compulsory licences to manufacturers is also being discussed, as seen recently in the Bundestag on the initiative of the left-wing party Die Linke. How practicable is this?

Compulsory licences essentially are nothing new. The TRIPS Agreement allows them to be granted under certain conditions. In addition to an exceptional situation, which naturally exists in the case of a pandemic, the patent holder also needs to have refused to grant contractual licences. However, a compulsory licence has to be sued for. This can entail lengthy court proceedings. Alternatively and more quickly, a state can grant the right of use directly to suitable manufacturers on its own initiative. This makes sense if there is an undersupply that has to be remedied promptly. However, this is of no more use to countries without their own industries than is the suspension of patent protection.

But the word is, there are countries that have corresponding industries and would be interested. What about them?

The idea that there is simply one patent for every vaccine for which an order for exploitation could be issued hardly corresponds to reality. If there is a whole network of existing patents or even just filed applications, and potentially different holders are affected, complex assessments are required to ensure that such state intervention in the market is ultimately effective. If instead it can be achieved that the market players involved, who usually know the competitive situation better than government agencies, cooperate with each other and grant each other the necessary licences on a contractual basis, this is generally more efficient.

Isn't the shortage in vaccines due to overly cautious licensing practices?

In the meantime, a whole series of commissioned productions on the basis of licences has become known. Of course, this industry is often not very transparent. But I would not assume from the outset that the pharmaceutical companies that developed the vaccines are now refusing to grant licences to independent manufacturers. Already the development of the vaccines has been based on an unprecedented level of cooperation between competitors. Now it is a matter of exploiting market opportunities for those whose vaccines have been authorized. After all, with each new vaccine competition is becoming increasingly fierce. This creates the right incentives.

Such as?

No entrepreneur likes to leave the market to its competitors. Whoever lacks their own production capacity can secure market shares by involving licensees. The only problem is: There are not that many suitable manufacturers for modern vaccines at present. An illustrative example is the cooperation between BioNTech/Pfizer and Novartis or Sanofi – all global corporations. They are among the few that are even capable of filling of vaccines into vials. This transformation of one plant alone takes months for each partner. It is also worth mentioning in this context, moreover, that without patents such cooperation between the otherwise fiercest competitors would hardly occur. Patents are the very prerequisite for cooperation on technically complex products. They not only protect against imitation, but also provide the legal certainty that a licensee will use the company's proprietary technology in accordance with the contractual specifications.

Millions of people in developing countries cannot afford even the most basic of medicines. This also applies to vaccinations, such as the one against Covid-19. Is it not a humanitarian imperative to relax patent protection here?

The disparity between privileged and underprivileged countries is indeed worrying. However, those who reduce the problems down to patent law and blame the pharmaceutical industry are taking the easy way out. At the moment, everyone – and the EU at the forefront – is struggling primarily with factual problems. These cannot be solved overnight. If sufficient vaccine doses can be produced one day, it will not be international patent law that stands in the way of worldwide vaccination.

How will less-developed countries get the vaccine doses they need?

The TRIPS Agreement allows member states to establish a special form of compulsory licensing to allow pharmaceuticals to be produced exclusively for the purpose of export to those least-developed countries that are unable to do so themselves. Switzerland, for example, introduced such a regulation back in 2008. But it is naïve to believe that a manufacturer from which its shareholders expect profits would be interested in such an unprofitable business. As a result, this provision is in vain, because market mechanisms alone are not capable of solving such problems. It is not without reason that rich countries have already contributed substantial funds for the development of vaccines. That is great and it has certainly brought about many positive effects. But if not just their own populations are to benefit, further costs will inevitably be incurred to supply economically weak states as well. Hopefully, the EU can do a lot of good there soon. If it receives and also takes delivery of all the vaccine doses it has ordered, it will have far more than it needs itself. The Vatican, too, could perhaps open its coffers instead of pointing fingers at the pharmaceutical industry.

Wouldn't it be the pharmaceutical industry that profits in the end?

Certainly, no one should make a fortune from the pandemic, not even the pharmaceutical industry. However, governments do not have to allocate funds unconditionally, but can stipulate certain requirements. In this regard, however, transparency is scarce not only within the pharmaceutical industry, but also among public donors. The fact that in the USA, in proportion to the number of inhabitants, three times as many people already have been vaccinated as in Germany or in the EU as a whole indicates that the US government has negotiated more far-sightedly with its own industry than other governments in the allocation of funds.

What other lessons does the Covid-19 crisis hold?

We have seen an unprecedented feat that illustrates what can be accomplished in the health sector when the determination is there. There are other areas where this is needed. For example, we have long complained that common antibiotics are no longer effective against an increasing number of resistant bacteria. But hardly any new drugs are being developed in this area. This is no coincidence. After all, this is mass medicine, where prices are kept as low as possible for socio-political reasons. In fact, this largely researched-out area probably needs new innovative impulses. Admittedly, this entails considerable investment risks. The pharmaceutical industry is willing to take such risks – but only if it can count on making a worthwhile profit in the end. This is where the public sector comes in. With a sensibly coordinated use of sufficient government funds, research incentives can be created. But the Covid-19 crisis has also shown that clear agreements with the pharmaceutical industry are necessary to ensure that the research results are actually available to the general public under reasonable conditions.

Interview: Michaela Hutterer

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