IP profit v human loss

As an elusive covid-19 vaccine draws closer, big pharma is licking its lips at the monetary potential of what could be a virtually limitless ongoing global demand. But governments may use compulsory licensing regulation to inject a measure of affordability as the death toll escalates. Never before have intellectual property rights been so starkly pitted against massive human loss. Freny Patel reports

As the covid-19 pandemic threatens lives and the global race to develop a vaccine gathers pace, governments around the world are beefing up legislation to ensure affordable access to appropriate drugs and vaccines to combat the virus. The death toll from the pandemic has already spiralled past the one million mark and public health concerns are likely to supersede the protection of intellectual property (IP) rights. Multinational pharma players are bound to take a hit as governments choose to strengthen laws and interfere in the pricing of any treatment or vaccine in the public interest.

One way for governments to dampen multinational pharmaceutical companies’ ability to mint megabucks is the use of compulsory licensing. Compulsory licensing is one of the flexibilities in the field of patent protection that enables a government to allow a third party to produce a patented product without seeking the consent of the patent holder.

India is among the first few countries to have invoked compulsory licensing, back in March 2012, when it permitted NATCO Pharma, a domestic company, to manufacture and sell the generic version of Bayer’s patented and protected anti-cancer drug, Sorafenib Tosyalte. This landmark judgment saw multinational pharma companies raise a hue and cry as they feared the loss of their exclusivity rights in India. But what it really did was ensure that drugs sold by international pharma companies in India were affordable and, more importantly, that “supply met demand”.

Compulsory licensing is a powerful bargaining tool for price negotiation. Whether governments choose to use this tool will depend on the availability of any vaccine, as well as rights holders’ ability to meet states’ needs at an affordable cost, Gordon Gao, a partner at Fangda Partners advising on intellectual property, tells Asia Business Law Journal.

It is “more of a bargaining chip for governments in negotiations with pharmaceutical companies, for achieving lower drug prices and balancing public interest of rights holders,” says Gao.

While Bayer’s example paves the likelihood of India forcing down the price of a covid-19 vaccine, mainland China has never triggered article 49 of its Patent Law, which provides a patent compulsory licensing system for pharmaceuticals.