Malaphor: Digital Health Law in Canada

health + tech in law = mixing chalk + cheese

How a COVID vaccine patent waiver could provide real world data on the value of patents

This week, President Biden expressed his support for a proposal before the World Trade Organization (WTO) for waiving certain patent protections for COVID vaccines. In summary, if the proposal goes forward, countries such as India and South Africa would be permitted to exempt the application of vaccine patents within their border without being subject to a trade complaint from other countries. I won’t go into further details of the proposal, if you are looking for one, check out the one at Ars Technica here.

Given the US’s history in pushing for increasing IP rights in bilateral or multilateral trade agreements over and above the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement standards that apply to all WTO members, Biden’s support for this vaccine patent wavier is a pretty big deal. Obviously, the companies that have developed and are selling these vaccines are resistant to the proposal.

Photo of a staff member of the USTR upon hearing President Biden supporting the vaccine patent waiver proposal

I have a question

I’ll leave the debate as to whether this is a good or bad idea to others. I’m more interested in what the data that acceptance of the proposal (whatever the form it is ultimately executed as, since the exact terms are to be negotiated) could tell us. Specifically, I would like to see the inferences that could be made towards answering two related questions that I have had a long interest in: 1) what is the “value” of a patent (or group of patents on the same product), and 2) what is the optimal level of patent protection?

By “value”, I mean not only the economic benefit to the patentee, but at a broader level, the benefit to society for access to the technology taking into account the costs paid by society arising from the way things work, e.g. in the pharmaceutical context, in addition to the monopoly rents, the costs from lack of access for those who cannot pay and the inability of taxpayers to recoup their government’s funding of basic scientific research that ends up being used in the technology. Or, recognizing the risk and investment innovators take on themselves to develop the technology, the question can be put more simply as: Is the patent system, as it currently exists, a fair bargain between innovators and society?

It might be hard to answer

Although a number of scholars (as well as government commissions/committees – see this report from Australia) have tried to tackle these questions, it would be probably be impossible to get a definite answer since there are many non-IP complicating factors that would change the calculation. Even the industry where the innovation occurs can make a large difference – in probably most cases, one can see that the development of costs a pharmaceutical product would far exceed the development of a software product (yes, I know is probably not the best example since it may or may not be patentable depending on the jurisdiction).

Just focusing on the pharmaceutical space, even though various pharmaceutical patents would be largely treated in the same manner in a particular jurisdiction, the development costs of specific products can vary widely. For example: How well understood is the science behind the product? What kind of clinical tests need to be conducted? As well, the societal “value” of those products could depend on things such as the prevalence of the disease in the population, the severity/effect of the treated disease on individuals and the availability of therapeutic alternatives.

The COVID “experiment”

Obviously, any data analysis using statistics/numbers relating to COVID and COVID vaccines and those arising from any vaccine patent waiver scheme won’t be applicable to every other drug product. Still, some important inferences could probably be made from the data based on facts specific to COVID, for example:

  • The timeline for developing the vaccines happened in a short period of time. Thus, the investment/costs (by business and by governments) attributable directly to the development of the vaccines could relatively accurately be pinpointed. Some vaccines were built on pre-existing technology, but because COVID was “sudden”, work done specifically for the COVID vaccines might be more easily separated out.
  • In a similar vein, governments contributions to the development of the vaccines may be relatively definitely be ascertained.
  • Further, fairly accurate numbers of initial candidates and ultimately viable products could likely be determined not only by what has been reported, but also from government information about grants distributed for developing the vaccines.
  • Many countries have been keeping statistics (although reliability and accuracy may vary) on COVID and vaccinations over time. In addition, most of the population needs to be/will need to be vaccinated; below a certain level of vaccinations, there are costs in terms of healthcare (including having an overloaded system and loss of life) and the costs of alternate measures (lockdowns, etc.). Therefore, from these figures, the estimates of costs and benefits to society might be considered to be at their “maximum”.

Because of the existence of these facts, a vaccine patent waiver could make it possible to, among other things,:

  • Observe whether/how companies in countries that waive the applicable patents are able to make use of patented technologies.
  • Make some comparisons (always with some caveats of course) to other countries which chose not to or otherwise did not make use of the waiver.
  • See within the same jurisdiction, the before and after effects of the waiver.

Conclusion

The COVID pandemic has, in its tragedy, been a stress-test of many of human civilization’s modern societal systems. Hopefully, the experiences will provide us with learnings to improve those systems, including insights on the balance between the needs for innovation and those of human health.