Guest post by Ken Shadlen of the LSE
The Covid-19 pandemic has sparked a global race of public- and private-led research to develop vaccines and treatments. Will patents hinder access to the products it generates?
My summary? With regard to treatments (the dynamics around vaccines may differ), access problems will mainly affect middle-income countries. While low-income countries will likely receive drugs at discounted prices, and with governments and philanthropic donors covering the costs, middle-income countries will face higher prices.
To understand why, let’s compare Covid-19 to HIV/AIDS, and consider one potential treatment that has advanced in clinical development and about which we have enough patent information for an informed discussion.
First, some nerdy but necessary background. Patents are government-granted monopolies that provide exclusive rights over the manufacture and sale of inventions. Patents are national, e.g. a patent on a drug in the UK doesn’t provide rights of exclusion outside of the UK. Firms need to apply for patents in every country where they seek exclusive control over the invention.
Prior to the 1990s, most developing countries were off limits; they prohibited patents on pharmaceutical products. Firms with patents in the UK would also obtain patents in the US, for example, but not in India. This changed with the World Trade Organization’s (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which obliged all countries to allow pharmaceutical products to receive patents. The “globalization of pharmaceutical patenting” produced by TRIPS means that drugs can obtain patents in all WTO countries except 36 identified as “Least Developed.”
Looking at Covid-19 Through the HIV Lens
By the early 2000s the emergence of effective medicines had converted HIV into a treatable infection in the Global North, but it remained a death sentence in much of the Global South. Antiretroviral treatment was scarcely available (outside of a handful of countries that had embarked early on treatment, such as Brazil), and prohibitively expensive. Yet treatment took off in the early 2000s, and by now reaches nearly two-thirds of people living with HIV/AIDS. Inequalities in access remain, but are nothing like as stark as 2 decades ago.
Much has been written about the various factors that brought this about, including the role of governments, international organizations, philanthropists, health activists, and pharmaceutical firms. Authors have highlighted the key role of activists in shaping the debate around prices; an award-winning film was made. While many factors contributed, one thing, ultimately, brought prices down and enabled the massive expansion of AIDS treatment: competition — specifically, competition in the form of antiretrovirals from India. Not only were Indian drugs affordable, but their presence led originator firms to lower the price of theirs too.
At this point, readers may be asking: if TRIPS requires countries to grant patents on pharmaceutical products, then how is it possible that Indian firms were able to supply these drugs? The simple answer is that AIDS treatment expanded on the basis of older drugs that pre-dated TRIPS and therefore never obtained patents in India.
The current pandemic is different – new drugs for Covid will be eligible for patents in India. We didn’t need to overcome patents on AIDS drugs in India because older drugs didn’t have patents there. But new drugs do. Indeed, not just India: new drugs are likely to obtain patents in all countries that have pharmaceutical production capabilities.
So if the mechanism that helped solve the HIV logjam no longer exists, what are the implications for access in the current pandemic?
What Remdesivir Tells Us
Consider the case of remdesivir, an antiviral medication that was developed unsuccessfully by Gilead for the treatment of Ebola, repurposed (by Gilead and teams of publicly-funded researchers) for Covid, and subsequently granted authorization for emergency use in the US (and other countries). Years from now it is unlikely we’ll look back at remdesivir as an important treatment, but as it has a known global patent portfolio and an access strategy, it can illustrate the present challenges.
In May, Gilead announced that it had signed licenses with 5 firms in India and Pakistan to sell authorized versions of remdesivir to 127 mostly low-income countries, and that it was entering into discussions with additional producers and the Medicines Patent Pool (an organization that brokers licenses between originator and non-originator firms) to widen its network. Although prices within the licensing network are unlikely to be as low as they would be under full competition, as was the case with HIV, remdesivir should be affordable in these 127 countries, perhaps with donors picking up the tab.
But what about the rest of the world? 127 countries is a lot, but it’s far from global. Many middle-income countries, including Mexico and all 10 Spanish- or Portuguese-speaking countries of South America, are excluded. Yet middle-income countries have high levels of poverty, a situation only worsened by the pandemic. It made little sense, before Covid, to treat middle income countries with seriously constrained health budgets differently, and it makes even less sense to do so now.
There is a loophole, but it may not be much use. TRIPS allows countries, under certain conditions, to circumvent patents and allow production and distribution to take place without the patent-holder’s permission. However, for all the attention that “compulsory licenses” (CLs) are receiving in the context of Covid, to generate competition they need to be complemented by either local production capabilities or external suppliers.
And here’s the rub: few countries have sufficient production capabilities to generate competition, not even the middle-income countries excluded from licensing schemes; and if the most capable foreign firms are licensees and thus restricted by the patent-holder from selling to these countries, then importing from external suppliers isn’t a feasible option either.
There is the possibility that producers in a “Least Developed Country” that hasn’t yet introduced pharmaceutical patents may be able to step into the gap, as a Bangladeshi firm is attempting to do (or that a rogue Indian firm without a license from Gilead may try), but it seems unlikely that this can occur on sufficient scale to recreate the scale of global supply that was lost by the introduction of patents in India.
An email exchange I had in May brought home the problem. After Gilead announced its “global” licensing scheme, a pharmaceutical firm in a large Latin American country that was excluded from the scheme got in touch to ask what it could do. Over the course of our exchange it became clear that the firm can’t produce the active ingredient itself, nor obtain it locally. So any discussion of a CL became irrelevant. Nor was Gilead going to revise the licenses to include this country. Ultimately, the company had but one choice: attempt to negotiate a license with Gilead to supply the local market. The country’s government is also negotiating with Gilead, on price – and is also doing so from a position of extreme weakness. In these negotiations, the patent holder has all the power.
It’s impossible, at this point, to know how patents will eventually affect prices and access. It could be that, when treatments become available, the effects of patents will prove to be unimportant relative to other factors affecting production and distribution. And the story with vaccines may be different too. But the reason why so many of us are worried is because it’s entirely possible that patents may restrict access, and these effects are likely to be felt differently throughout the Global South.