In conversation with Robert Grant, Senior Director, International Affairs, at the U.S. Chamber of Commerce’s Global Innovation Policy Center (GIPC)

Q 1. How can countries garner solutions for IP challenges in the pharmaceutical industry? How can IP protections address the current healthcare crisis?

First, I’d like to take a moment to acknowledge the horrible destruction of life and livelihoods wrought by this pandemic. That said, in terms of how we characterize the pandemic response, I think it’s important to recognize the incredible partnership that has taken place between business, governments and research organizations. This partnership has resulted in real, effective and safe solutions being generated in a remarkably short timeframe. Ending the pandemic will also depend on the rapid development and at-scale manufacturing of therapies, diagnostics, PPE and vaccines. And despite the awesome challenge that still confronts us all, the business community is already playing a leading role producing and delivering what is needed.

Largely misunderstood and underappreciated during this time is that intellectual property rights have been, and will be, key to enabling an effective response and resolution to the pandemic. First, the oversimplified term “science,” used as shorthand for the scientific method as well as all RD&D, does a disservice to the complexity of the pharmaceutical discovery, development and deployment process. The ecosystem for innovation spans basic scientific research (mostly done by government-supported research organizations), but also applied science, product development and testing, and commercialization (all of which are overwhelmingly carried out by private sector entities). That ecosystem also connects stakeholders from governments, to academia, to start-ups, to equity markets, to multi-national corporations. What binds all of these independent actors together is intellectual property rights.

The key point to understand is that intellectual property rights provide a vehicle to transform new technologies from useful knowledge into finished products that can serve an end-user, such as a treatment or vaccine. New COVID-19 vaccines and therapies were not discovered overnight. Multi-year investments in biopharmaceutical R&D have facilitated the development of not just one, but multiple viable vaccine candidates. Without those legal rights to the results of their work, the innovator has no ability to earn a return on investment, there is no re-investment in R&D, and the pipeline that has given us anti-viral therapies, monoclonal antibodies, and mRNA vaccines to fight this pandemic simply dries up.

Q 2. In pursuit of a treatment for COVID-19, governments have been waiving common Intellectual Property laws, rejecting patent protections, and allowing sales of generic drugs. US based firm, AbbVie suspended its global patent rights for an HIV drug, Kaletra that has been recognized as a potential treatment option for coronavirus and many companies such as Pfizer, BioNTech, Sanofi and GSK have entered into partnerships. This move is concerning for pharmaceutical companies who are now struggling to work under unclear rules. Can this change the research and development landscape in the post-covid era?

While it is true that certain governments and non-governmental actors have been arguing that IP acts as a barrier to the discovery and distribution of treatments and vaccines, they have yet to provide any evidence to back up this assertion. This lacuna can be explained by the fact there there is no such evidence; intellectual property rights do not impede access to medicines, during this pandemic, or at any other time. On the contrary, intellectual property rights are the reason new, breakthrough therapies and vaccines exist in the first place. And it is only because of a clear delineation of rights and through IP licensing that the effective partnerships between enterprises mentioned in your question can take place -- clearly this is a good thing that we should encourage.

In a sector that requires decades of research and testing and billion-dollar investments to produce a product, political risk has a chilling effect on innovation. The goal of every country’s intellectual property system should be to provide sufficient legal certainty to innovators – measured by the transparency, predictability, and reliability of intellectual property rights - that they are willing to make those investments and take those risks in that country’s market.

Governments can have tremendous influence, both positive and negative, in determining where private sector resources are invested. By funding scientific research targeted at specific societal needs, governments can drive new private sector workstreams, especially when they further support investments through strong intellectual property standards. Conversely, governments can drive investment away from critical unmet health needs by creating an onerous political and legal environment for innovators by stigmatizing a legitimate return on investment.

Through that lens, it’s easy to see why undermining IP, not following due process or undermining the rule of law, including through the issuing of compulsory licenses -- when a government allows someone else to produce a patented product or process without the consent of the patent owner – will seriously undermine the incentive (and therefore likelihood) to invest further in that country.

Q 3. Has theft of intellectual property been a challenge for the pharmaceutical industry?

The expression “intellectual property theft” is another one of those terms commonly referred to that warrants unpacking further. As you will appreciate, oftentimes for the biopharmaceutical industry, indeed for all types of private enterprise, what is most helpful is predictable, transparent rules and laws.

The single biggest challenge to biopharmaceutical investment is uncertainty. Innovators face three levels of risk: First, the usual risk that all companies face of poor performance or unfavorable business or economic conditions; second, the risk of doing something new and untested that nine out of ten times will fail; third, and most importantly, biopharmaceutical innovators face the political risk that governments will change the rules arbitrarily or retrospectively, such as by invalidating or forcing the compulsory licensing of legitimate patent rights.

For the most part, “IP theft” does not really apply to patents, which, as long as a transparent and predictable system is in place and enforced by a competent judicial system, a rightsholder’s IP cannot be copied without penalty. In relation to biopharmaceuticals, patent systems should also be complemented by appropriate protections for regulatory test data and trade secrets (commercially valuable private information). In those countries which foster the most effective innovative ecosystems such measures are indeed in place. The absence of either could lead to greater “IP theft” – or another way of looking at it is that if strong IP protections such as these are not in place, this acts as a disincentive for the innovator to invest in a new product or service.

Counterfeit products are another type of “IP theft,” where a trademark is being falsely used by the counterfeiter to market a product or service. In the biopharma industry the example is counterfeit medicines. And undoubtedly this is a serious problem. According to March 2020 data from Organization for Economic Cooperation and Development (OECD), some 72,000 and 169,000 children may die from pneumonia every year after receiving counterfeit drugs, and that fake anti-malarial medication might be responsible for an additional 116,000 deaths. It goes without saying that these untrustworthy products—used unwittingly in the middle of such a crisis—may mean the difference between life and death.

Q 4. What role do you think IPR will play after COVID-19 and will collaborations go a long way in battling pandemics in the future?

The role and importance of intellectual property standards has never been more apparent than during this global pandemic. The technologies that have been generated to fight the pandemic have for the most part been under development for many years and form a small part of a much larger research and development pipeline, as described previously. The role of intellectual property laws in this ecosystem is to enable those investments by transparently and predictably assigning rights to the breakthroughs that result at each respective phase of the innovation ecosystem. Those legal rights allow stakeholders to come to terms on contractual arrangements that enable collaboration by ensuring each party agrees on the value the others are bringing to the project.

Eradicating COVID-19 will depend on the development, production and distribution of biopharmaceutical solutions on a massive scale. Governments play a critical role in the innovation ecosystem by funding wide-ranging scientific research that contributes to our collective knowledge base. Importantly, IP rights provide a temporary exclusive right, not to new knowledge, but to a specific application of that knowledge not previously accomplished. Private sector innovators specialize in applied science: mobilizing the resources to make the focused investments that turn technologies that show potential into usable end products, which in the case of the bio-pharmaceutical sector means medicines or vaccines that are safe, effective, and able to be reproduced at scale. The ability to commercialize – produce, test, manufacture, and distribute - a new medicine depends on high-risk, long-term, capital-intensive investments many times larger than public sector research budgets. The strength of a country’s intellectual property standards is an indication of whether it has a role to play in the innovation ecosystem. Many nations invest in basic scientific research; few support the intellectual property and financing infrastructure that enables private sector commercialization.

People everywhere need access to therapies to address a wide range of healthcare needs. Massive financial resources are required to support advanced R&D, clinical trials, and other breakthroughs emerging from a robust pipeline. The question we need to ask is how do we create the legal, economic, and political conditions to maximize both innovative output and access to innovation? In addition to millions of lives and untold suffering, the COVID-19 pandemic will cost the world trillions of dollars in lost economic output. Whatever the price tag associated with a vaccine, it will cost far less to develop, manufacture, and distribute to everyone in the world, than has already been lost.