PATENTS FOR VACCINES IN THE COVID-19 SITUATION: An Economic Analysis

-by Ayushi Bhutra

The world is facing the threat of an unprecedented Corona Virus which has proved to be fatal for the economy as well as human life. The world is desperately waiting for a vaccine that cures and treats the patients affected by this virus. In light of this, the countries such as China, U.S., Germany etc. are rigorously trying to develop a vaccine for curing this deadly virus.  The problem with this fact is that all of these countries are working to complete each other rather than collaborating.

In a normal circumstance, it might not be a very problematic situation because every company and country would be willing to benefit from whatever they have invented. However, in the times of a pandemic where the infection and fatality rates have increased to a large extent, the world should work together which is, sadly, not the case.

This article will focus on the patents of such vaccines and the possible threats and challenges to the world at large. It will also discuss the economics involved and the possible approaches to adopt replacing the current system of exclusivity of rights of a patented invention.

Why Get Patent Rights?

Understandably, a patent is granted for a product or process which involves an inventive step. If the patent is granted, the patent holder gets the exclusive right to use or license such invention. Hence, the patent proves to be beneficial to the holder to exploit the economic benefits of the invention and to avoid the problem of the free-rider. Therefore, patent tries to prevent knowledge of the invention to become a public good.

Research and Development (R&D) to create a workable vaccine or drug for a virus can cost billions of monies as well as experienced scientists. Granting a patent in such cases is making sure that medical and scientific innovation is continued and promoted. However, if the patents are not granted, the costs related to the development of such a vaccine would not be recoverable, which would lead to less investment in the field. Therefore, this property right would provide the inventor with a mechanism to recover their costs through exclusive right to manufacture, sale and licensing of their inventions.

Why Granting Patents is Problematic?

It is a controversial topic as to whether pharmaceuticals and vaccines should be granted patent or not because of the importance of the knowledge that the patent protects. The current global political scenario creates a threat that the nation who gets a patent with respect to a vaccine will have a right to control the licensing and how and when should the vaccine be shared or distributed to other countries. Patent rights would make sure that the country holding the patent can use it as a political weapon in distributing the vaccine. Another criticism that is associated with it is that it creates a monopoly and therefore grants the right to change the price of it as per the patent holder’s whims and fancies. Therefore, when the world is trying to fight off a scary virus, the patent protection of a vaccine would be problematic.

Economic Perspective:

The theories against the patent protection state that patents restrict or lock up the existing knowledge when someone has invented something. As a result of which, the patent prevents the use of the existing knowledge to further innovation. For instance, if a patent is granted, it would restrict the use of that knowledge to lead to further developments and innovations.

When it comes to patenting of pharmaceuticals or vaccines, it is claimed that the current patent regime grants the patent holder the benefits in terms of a monopoly rather than on sunk costs. This is relevant in the patent of vaccines because most of these projects are funded by the government i.e. through public. Therefore, the critics comment that the public has to pay twice for the same invention, once at R&D and second, to purchase the invention.

However, one of the theories supporting patent protection is that the inventor would be thrown out of the market by the rivals if no protection is granted. It is because of the fact that the rival would benefit out of the invention by selling it at a slightly low price without having to bear any cost on the creation of the invention. Therefore, there will be a lack of investment and development because the investment, at last, does not allow the investor to reap the benefits of its produce.

This theory with regards to vaccinations is a genuine and legitimate concern because the development of a vaccine is a time consuming and expensive task. Moreover, they also affect the value of a company’s prior technological inventions and the future prospects of research and development. But one cannot overlook the fact that patents in vaccines would create monopolies and subsequently high prices. This would lead to denial of human rights i.e. Right to health.

Possible Approaches:

The first approach is to continue, as usual, to grant monopoly rights of the COVID-19 vaccine, whenever it is developed and with that give them the monopoly rights. This would mean that the process would be set high because of more demand and limited supply of the vaccines. In the absence of a strong interference by the government, it would cost the life of a lot of people.

There is, therefore, demand for adoption of alternative approaches. For instance, Costa Rica’s government called the WHO to establish a voluntary pool of IP rights for COVID-19 treatments, which would allow the manufacturers to supply the vaccines at more affordable prices. This would improve coordination and efficient approaches to combat patent thickets (overlapping set of patent rights) and would ensure sharing and use of patented or copyrighted technologies to combat COVID-19. The United Nations and WHO through Medicines Patent Pool sought to increase the access to treatments such as AIDS, Hepatitis C, etc. Hence, it replaces the monopoly and establishes principles of cooperation and shared knowledge. This way, the vaccine’s cost could be cut down because the organizations will provide technology and share the costs and all of them can together form a vaccine based on that knowledge.

Another alternative approach can be to adopt a system based on government-funded prizes. The Governments should join and grant economic benefits and financial prizes for the vaccine. This way, the others can also utilize the vaccines to administer the patients and the inventor would be able to reap the economic benefits of the invention.

Political Consideration:

Although science and knowledge should ideally not be subjected to politicization, it has, in the current times, become a political issue. Companies in Europe, the United States and China have claimed that they are close to developing a vaccine for COVID-19.

Europe has given assurances that if they get the patent, they would license it widely to ensure that the developing countries also get access to it. However, when it comes to China or the United States, both of them have been engaging in a trade war since 2018 and both of these countries have responded in this situation with strong nationalistic sentiments. Experts are of the opinion that if either of them acquires a patent, it would be used as a political weapon against the other. Political tensions between the two countries have already been seen in the case of information and knowledge sharing with regards to COVID-19 medical kits. Political conflicts should not threaten the access of such life-saving vaccines at the time where human life is at stake.

Conclusion:

The arguments of economic theory in favour of granting patents are not going to benefit society. There is an immediate need to break out of this current system in order to ensure that the vaccine is accessible to everyone at affordable rates. Therefore, this is the time of adopting a new approach. For a long period of time, we have been in a myth that the patenting of vaccines and drugs are necessary to encourage innovations but in the current situation with the death toll rising because of Coronavirus, we should question this wisdom and morality of the system that let the investors enjoy and benefit from the invention at the cost of millions of human beings to suffer and die every day.

Therefore, the vaccines for COVID-19 should not be a part of nationalist or political competition or weapon. The government all around the globe should work together to adopt an approach that does not create a destructive economic nationalism and should not rely on the current patent system for vaccines because that would not be a fast and efficient solution to fight this global pandemic of COVID-19.

The views are personal.

Image Courtesy: The Jakarta Post.

ABOUT THE AUTHOR

Ayushi Bhutra is a third year student at Maharashtra National Law University, Nagpur.

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