The complex world of patents in a pandemic – Fellows’ seminar by Christoph Ann

10 August 2021

“I doubt it will happen, much less help in this pandemic. People think patents are a golden nugget but they often are only segmental and in the end no more than a recipe – for which you need expertise and facilities to turn it into a product. In a sense, technology transfer is much like a kitchen: it’s not just about recipes, but even more about chefs and kitchen crews. In other words, patent access does not help, if you don’t have capacity,” said STIAS fellow Christoph Ann of Munich’s TUM School of Management.

STIAS Fellow Christoph Ann during his seminar on 5 August 2021

In his STIAS seminar, Ann was referring to the TRIPS (the World Trade Organization’s Agreement on Trade-Related Aspects of Intellectual Property Rights), for which the governments of India and South Africa, with the support of 62 of the 164 WTO member states in October 2020 proposed to temporarily waive (most) intellectual property rights protections for technologies needed to prevent, contain, or treat COVID-19, including vaccines and vaccine-related products.

“The TRIPS waiver is about making vaccine patents available,” explained Ann. “It was first raised in 2002 and was pushed by Médecins Sans Frontières. The idea is that COVID-19 vaccine patents and other COVID-related IP rights should be suspended until the crisis is over.”

In May, US Trade representative Ambassador Katherine Tai released a statement announcing the US Administration’s support for the waiver proposal and its willingness to “actively participate in text-based negotiations at the WTO”.  The European Union, in contrast, did not support the proposal, calling existing mechanisms sufficient and pointing to time as the major factor in fighting the pandemic.

“To some extent I see the US statement as a decoy,” said Ann. “They not only know that negotiations will take years, they even say so in their statement.”

“We don’t know what the waiver would look like. And we have to ask why small developers like BioNTech, for example, should let their business go with impact beyond the pandemic? Let’s take trade secrets. Once you have released them, there is no way to put them back into the bottle – sharing a secret simply is not reversible. So we need to carefully address, what the cost of a TRIPS-waiver would be and who exactly we are asking to pay. Because while having rich countries pay may be negotiable, having high-tech start-ups pick up the cost, we as a world at large in the end may lose more than we gain. We might just kill the incentive. Still, we must make more vaccines available to countries that need them and – importantly! – that can administer them before the vaccines go bad.”

Patents and innovation

Patents, Ann described as both, “over- and under-rated” but at the same time “indispensable to foster innovation”, because “we need incentives for companies to come up with novel solutions so that technology can progress: COVID-19 being a telling example”.

Here, the intricacies of the patent process come in because patents are exclusionary rights aimed at incentivising innovation. They last 20 years from receipt of the first priority application, which for pharmaceuticals and plant protection can be extended to 25 because of time-consuming market approval. During that period, no one may use the patented invention without the patent holder’s consent. For pharmaceuticals patents are the tool that allows industry to recoup their R&D investment; which, in the case of pharma research, may very well exceed a billion US dollars.

Patents generally only cover small parts or components of products, which means that one product may be covered by many patents. And, patents are expensive, involving attorney, translation and progressively increasing annual fees for every country in which protection is sought.

“A patent has to be filed in such a way that it protects a business and will hold up in court,” said Ann.

He also emphasised that patents must show novelty – “so for anything that has been around for a long time the application would be dead on arrival. If you can google it, it’s not new. Outsmarting the patent system is not easy”.

Patents are also territorial. The more countries in which protection is sought, the more expensive a patent.

“Patents monopolise technologies, rather than markets,” said Ann. “If no one wants your product, you can have as much monopoly as you want, you still won’t sell anything. Many more patents never make a profit than do. The figure usually quoted is that only 10% of all patents ever lead to a profit.”

Ann also pointed out that “what pharma has achieved by making effective COVID-19 vaccines available in less than a year is very impressive. But would industry have engaged here as quickly, had there not been incentive? Would we have reached working vaccines as quickly? Unlikely!”

“Still the remaining problem is unequal distribution which is not only a problem of developing countries. Even in Europe, that seems equally rich, there are quite a few countries with either dysfunctional health systems or vaccination sceptics, as for example, in Switzerland, one of Europe’s richest countries.”

“In simple terms, the business mechanism behind vaccine distribution can be described as something like this: the developed world is getting vaccines first, but also is paying a premium price. For countries coming later, the price will be much lower. So in effect, the US, Europe, and Japan are paying for the R&D. The rest of the world is paying for a reasonable profit – under the watchful eyes of the global public.”

“The often-heard allegation that developed countries have only exported small amounts of vaccines thus far, is simply false, at least in general terms. As of May 2021, mainland China had exported about 42% of its entire vaccine production, the EU 34%, and only the US and the UK hardly anything at 0.9% and 0% respectively. Most likely, these numbers are the reason, why the US supported the TRIPS-waiver.”

The idea that developed countries should start offering their populations third booster shots, when not even 10% of many poorer countries’ populations are vaccinated, Ann “called objectionable, if not obscene”. He therefore welcomed the World Health Organization Secretary General’s plea to put this on hold until at least 10% of the world population is vaccinated.

So what now?

Highlighting what needs to be done, Ann pointed to the need to secure vaccine R&D and production everywhere, rather than expecting developed countries to take on diseases like Ebola that don’t even affect them. “Africa, in particular, needs to step up its efforts, but that would require keeping African researchers, epidemiologists, and other specialists on the continent, i. e. to stop the brain drain in this area.”

“We must secure not only vaccine supply, but enable developing countries to address this and future pandemics on their own. And, as this will be a recurring theme, we better think about it now.”

As far as this pandemic is concerned, Ann said, there was no way around the truth that the countries with R&D – as well as production capacity were mostly in the developed world – certainly the USA and Europe, but also China and India. “Right now, no country in Africa – except maybe South Africa and Nigeria – could handle the manufacture of vaccines, much less their development,” he said. “So we must think now about how to increase R&D as well as production capacity and also the infrastructure to get vaccines to the people before they go bad, as has happened in a few West African countries with doses from the United Nation’s COVAX programme.”

“A good example of what can be done instead of focusing on TRIPS is Cape Town’s vaccine company BIOVAC. The South African government should have asked it to approach BioNTech/Pfizer for a licence. And, they are turned down, then go public with that refusal to license,” he added.

“But meaningful R&D must happen in Africa,” Ann continued. “Local solutions for local problems – e.g. vaccines for hot climates that don’t need to be cooled and are long lasting. I strongly encourage Africa to take technological development for its own purposes into its own hands.”

“Patent access will be a lesser problem. Also, because stopping the next pandemic won’t work without incentives. African R&D too will need incentives – and that incentive will need to be patent protection, just like everywhere else.”

Michelle Galloway: Part-time media officer at STIAS
Photograph: Noloyiso Mtembu




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