Paper Details
Paper Code: AIJACLAV3RP0123
Category: Research Paper
Date of Submission for First Review: March 9, 2023
Date of Publication: December 29, 2023
Citation: Aman Pandey & Hema Chaudhary, “Patent or People? Sustainability of Pharmaceutical’s Patent Rights during Times of Crisis", 3, AIJACLA, 1, 1-10 (2023), <https://www.aequivic.in/post/patent-or-people-sustainability-of-pharmaceutical-s-patent-rights-during-times-of-crisis>
Author Details: Aman Pandey, LLM Student, Gujarat National Law University, Gandhinagar &
Hema Chaudhary, National Forensic Science University (NFSU) Delhi
Abstract
The rationale behind the patent protection is that by conferment of a limited monopoly over the patentee, it allows him to retrieve the incurred expenditure in the Research and Development (hereinafter to be referred as R&D) of his product through exploitation consequently earning profits from production and sale. In return, the inventor has to publicize his knowledge pertaining to the invention so that subsequent research can be undertaken leading to further advancement in the concerned arena. Patent Protection therefore is a balance struck between the society and the patentee on the assumption that there would be inadequate incentive for inventions without patent protection. For Pharmaceuticals sector, the reasoning advanced is that without the patent protection, no financial incentive to fund the costs incurred during the development of the medicines could be provided. Therefore, it is correct to say that patent protection system supplies a significant stimulation mechanism for further research and development in pharma industry. On the other hand, it is not untrue that Patented drugs are usually priced higher than the costs incurred for production to gain substantial monetary profits after paying the marketing costs that often exceed those of research and development. In various developing Nations, high-priced medicines disable their patients to have access to treatment. Thus, a significant debate between Access and profits can be often seen between such developing nations and Pharma giants. Regards to the Covid pandemic, various pharma company had seen towards monetising out of the situations on the other hand some nations, for instance, India and South Africa, extended their intent to ban the IP protection, particularly patent rights, temporarily so that accessibility could be increased worldwide. In the light of this controversy, an attempt will be made through this article to analyse the tensions caused by the access barriers, the tools used to reduce them during the course of pandemic globally and their effectiveness. The article ultimately seeks to suggests the prospective roadmap and mechanisms to deal with patent rights of pharma giants for a quicker and more efficient response to similar future pandemic situations.
Keywords
Covid Pandemic; Patent Protection; Pharmaceutical; Research & Development
Introduction
The progressive expansion of the world economy is the result of many advancements in various fields which is inclusive of the pharmaceutical industry. Today in a democratic Nation, one of the quintessential functions of the State includes preferences to public health facilities while taking account the availability and affordability factor for their citizens. To address these factors, Patent law regime plays a significant role as it streamlines the availability of pharmaceutical inventions for the societal benefit. While the TRIPS Agreement mandates that patents must be accessible for all inventions in every field of technology, the realm of pharmaceuticals has been treated as a unique area in patent laws worldwide. This distinction has given rise to certain challenges not typically encountered in other technological domains.[1] Due to the crucial role pharmaceuticals play in public health, numerous countries have established special regulations specific to this sector. India and other nations initially displayed hesitation in granting product patents for pharmaceuticals, opting to allow only process patents. This cautious approach has significantly contributed to the expansion of India's generic pharmaceuticals industry.[2] India’s step of granting product patent was based on the anticipation of unwanted economic sanctions by the United States and Other Nations which would have had severe ramifications on the Indian Economy to a larger extent. Nevertheless since 2005 the Pharma sector has been blooming substantially by not only furnishing health innovations and employment generation but also a leading global provider in the healthcare sector. India is steadily marching towards achieving its goal of becoming a USD 130 billion market in pharma sector by 2030[3]. But this article is not about the discussion as to growth of Indian Pharma Market at global Platform which is presently well-established fact in the acquaintance of the World rather this article discusses the importance of patent rights conferred upon the pharma giants who were involved in the development of the Covid-19 Vaccines which is perceived by the world as a barrier to access for the economically under-developed Nations. Considering it as a barrier to access, a joint proposal was made by India and South Africa on 2nd October, 2020 before the WTO TRIPS Council to temporarily waive the enforcement of Section 1, 4, 5 and 7 of Part II of the TRIPS Agreement for the purpose of containing, preventing and treating the COVID-19.[4] The waiver, if would have granted, allowed the transfer of all the relevant technology, know-how and Intellectual property with regard to Covid-19 Vaccine to Developing nations across the world. However, the proposal was not officially accepted. The supporters of this waiver were of view that it would increase the access to vaccine to the third world countries in a prompt manner as it would allow the local manufacturers to produce and distribute the vaccine at affordable rates while storing it in accordance to their climatic conditions. Instance of seizing the patent rights quietly by some pharma companies during the early course of pandemic was also regarded as egregious.[5] But the fact which has been consistently disregarded is that it is due to the presence of the very Intellectual Property protection (hereinafter to be referred as IP protection) which made the innovation of the vaccines possible in an expeditious manner. Thus, the policies itself that encouraged the organisation to Expeditiously produce the life-saving vaccines was under scrutiny. This article therefore, advocates the presence of the Patent Rights which has played a significant role in the development of the vaccine by supporting the fact that they didn’t act as a barrier rather they could be regarded as a catalyst which has enabled the investors to invest exorbitant capital for the development of the vaccine technology. The absence of Intellectual Property Rights would have made the sharing of technology unduly risky and would have been counterproductive to overcome the pandemic. Thus, the debate is a very complicated as it involves reconciliation between two significant interests, one being that of Global Public health and the other being the business interest of the pharmaceutical companies.
Legal Background of Existing Patent System
Patent law relates to ‘invention’. As per Halsbury’s Law of England, the word patent is used denoting ‘monopoly right’ right in respect of an invention.[6] The patent rights are statutory in nature as it flows from the statute.[7] In India the patent rights are conferred by patent office by virtue of the Patents Act, 1970[8]. Patent is an exclusive right, more of a monopolistic right which allows the inventor to commercially exploit his invention for a limited duration of time subject to the mandate of the Patent law regime of the concerned jurisdiction. Before granting patent, the conferring authority should have reason to believe that the patent application meets the prerequisites for the grant of the patent i.e., Novelty, Inventive Step[9] and Capable of Industrial Application.[10][11] In the case of Bishwanath Prasad Radhey Shyam v. Hindustan Metal Industries[12] the Supreme Court observed that the core basis upon which the Patent Law subsists is that a Patent can be conferred only for an Invention. The Invention must necessarily possess two major characteristics: New and Useful. In terms of Patent Law, it must possess ‘novelty’ and ‘utility’. It is also a prerequisite for the correctness of a patent that it shall not be mere verification of an already existing innovation that was available in the public domain before the date of filing rather, it should be Inventor’s self-made innovation. With regard to Pharmaceutical inventions, the Hon’ble Supreme Court, in the case of Novartis v. Union of India[13] stated that “new product in chemicals and especially pharmaceuticals may mean something different from a recent previous or one regarded as better than what went before or in addition to another or others of the same kind.” The patent protection is territorial in nature which means a separate patent application is required to filed in each jurisdiction where the patentee seeks his invention to be protected.[14] Patent Cooperation Treaty[15] and the Regional European Patent Convention[16] grants the window for Centralised filing of the patent application for different jurisdictions. Once the patent rights are granted it allows the patentee to exclude all others from making, using, offering for sale, selling or importing his invention[17] unless there is prior authorisation by the Patentee. Thus, Patent creates a statutory monopoly protecting the patentee against any unlicensed user of the patented device[18] and also ensures that the inventor can enjoy the exclusive and potential monetary commercial gain out of their inventions. In regard to infringement proceedings, claimant entitled to seek remedies in the form of Injunction, damages or an account of profits. The court is also empowered to order the seizure, forfeiture and destruction of the infringing materials wherever it deems fit.[19] In context of pharmaceutical drugs, to encourage research and development patent rights are granted to the inventor, however these rights are not absolute in Nature, both the TRIPS Agreement and the domestic legislations empower the government to impose restrictions on Patent rights specifically in case of public health. Certain doubts were subsequently raised regarding the flexibility of restrictions on the provisions of TRIPS specifically in reference to affordable access to drugs. Thus, taking into account such issues, the Doha Declaration was adopted on 14th November 2001, through which an affirmation was made that the WTO members have the right to use the provisions of the TRIPS agreement which provides flexibility to their need. It also allowed the member countries to grant compulsory licenses on grounds as decided by the concerned nation. Thus, a country has the right to determine as to what constitutes an exigency including public health crisis.[20]
When we take into consideration the time period with respect to the pharmaceutical industry, protection could be regarded as too weak. The basic reason for such weakness lies in the fact that the development of pharma products takes a lot of medical trials and capital investment, which consumes a long duration of time. Ultimately when the drug comes out to the market, a substantial number of years are already lost to gain benefit from the product’s commercialization. Thus, when innovation is very expensive and hefty, and commercial gains are not definite, the regular twenty-year patent term[21] is often considered to be insufficient to enable the inventors to regain their investments. Thus, in these situations, it is natural for the pharma sectors to refrain from making any further investments subsequently leading to the non-development of any novel and improvised pharma commodity.[22] The problem is particularly acute in the case of vaccines because they are generally regarded as the less commercially beneficial medicinal product when compared to therapeutic drugs.[23] Hence, as a result, there is comparatively less research into the new vaccine domain, and the research typically begins only after the specific strain responsible for the disease is identified as a potential threat.[24] Crucially, the TRIPS Agreement mandates almost worldwide patent protection for emerging vaccines, as any provisions related to exceptions to patentability within the agreement do not apply to vaccine-related technology.[25] Therefore the Pharma companies can exploit their patent-protected vaccine at such a high price that it may become out of buying capacity of the developing countries.[26] With reference to the Covid-19 inoculation, patent protection can lead to the minimization of patented products.[27] As the new vaccines are subject to patent protection, proprietors of these vaccines have the option of demanding a hefty prices. The Elected government around the globe, with the aim to provide the adequate supply of vaccines to their citizens are willing even to purchase at high prices. Thus, in this situation there needs harmonisation between the patent rights and accessibility which is the only way for the collective benefit of the society at large.
Patent Rights, not a Barrier rather a Catalyst
In the previous portion the legal regime related to patent law was briefly laid down with reference to Indian Patents Act of 1970 along with the factors whereby the pharma sector face problems before the development of a new vaccine as it requires enormous investment of capital and R&D, in this situation snatching away the patent rights is not feasible as it would take away the stimuli to develop the required medicinal facilities to tackle the global health issues. In this portion, the stress has been made in favour of patent rights and it has been explained how the patent rights have helped to encourage the development of vaccine technology. In order to end the Covid-pandemic or any other future pandemic, one of the best ways is the accessibility of the world to the necessary medical treatment in a swift manner. It is in agreement to all that the Global collaboration and exorbitant investment by the First World Nations like USA, Britain, Russia makes a significant difference in the evolution of an effective medicinal technology which would ultimately reach to the citizens. Thus, Universal access of the required medicinal and vaccinal treatment is the subject matter of public health at global platform as it ensues humanitarian imperatives. In this scenario, the notion of nullifying patents may create a false impression of swiftly resolving the challenges faced by the developing world. However, the reality is quite the opposite: the ability to tackle the crisis is actually a result of advanced technology and the intellectual property protections that support its development.[28] When the covid began the biggest challenge faced by the Nations was what arsenals do they possess to harness the crisis. There were a lot of core technologies available prior to the beginning of covid pandemic, it was these technologies and knowledge which were combined at the right moment to tackle the pandemic and this was only possible due to the presence of robust IP system which enabled the firms to develop the products so quickly due to the presence of technologies on which they were labouring on for years which had arisen from risk-taking, ingenuity and patient investment in a reward-based ecosystem. Innovators in pharma sector relied on patent and trade secrets to manage their existing resources for the development of the further advanced research and innovation. Like BioNTech and Pfizer collaborated with each other to manufacture the vaccine which involved the former’s mRNA Technology and the later’s ability to undertake clinical trial at a swift pace, this shows the significance of prior collaborations and technologies which has essentially helped to reach the vaccine solution in a path breaking time. Therefore, refusing the patent rights cannot be an outright solution to tackle these emergency health situations. Let us know look particularly to those hindrances which the conferment of patent rights generally cause in a pandemic like situation consequently limiting the access and causing barrier in the development of vaccines at the required pace for many countries along with requisite steps which were taken to reduce their effects.
I. Limited Production Capacity
The Patent rights conferred upon the patentee allows him to exclusively monopolise his invention for a period of 20 years whereby the manufacture, market, sale, use of his invention without his prior authorisation could be prevented.[29] Through Patent law regime, not only the inventor’s labour is recognised but also it is rewarded as it allows him to recoup the expenditure spent on Research and development efforts and further it acts as a stimuli to undertake novel innovations to deal with the unsolved technical problems. The same has happened in case of the Covid-19 vaccines. The major problem which lies is that the pharma firms who have patented their vaccine are unable to deliver the agreed stock of vaccines within the promised delivery deadlines due to huge demand, the ramifications of this unfulfillment of promise is delaying the vaccination drive and ultimately obstructing the fight against the pandemic.[30]Another consideration which should be seen through global vision is although presently the available vaccines could be used to fight against the pandemic however, the scope of the virus mutating to new forms cannot be denied for which the vaccines have to be reformulated accordingly.[31] All these situations suggest that the mechanisms of Compulsory licensing or patent suspension, only options left for increasing the production and its availability to the society at large.
The major problem lies after the grant of compulsory license is that though the availability of technology and know-how could be made available to the seeking manufacturers, the challenge to have necessary and required infrastructure to ramp up the vaccine production is what indicates that there is no guarantee that the problem of limited vaccine production could be resolved timely even after the grant of the license. The temporary waiver of the patent rights could result in failure for the patentee to recover the expenditure spent in the development of the vaccine. In case of temporary waiver is granted it will make the firms obligated to share their technology with the third parties which would subsequently result in the loss of competition for the pharma sectors. The organisation being aware of this reality took step by undertaking collaboration agreements with other entities for rapid production of vaccines.[32]
II. Decrease in R&D in the Pharmaceutical Industry
The pharmaceutical industries fall under the category of those sectors who spent enormous capital from their resources to undertake new line of research. Waiving the patent rights will create a notion in the minds of pharma industry that they would not gain the fruits of their efforts and consequently the industries would refrain themselves from undertaking different researches which may include diseases causing global health problems. Thus, the denial to protection of patent rights during global health emergency could result as a disincentive for pharma companies subsequently affecting development of other drugs. In this context, it is essential for regulatory agencies and states to collaborate and find common ground on alternative approaches where patent suspension does not impede the progress and exploration of new medications. By doing so, they can establish compensatory mechanisms that encourage innovation and the creation of novel drugs once the pandemic subsides or in preparation for future challenges.[33]
III. Vaccine Nationalism
Vaccine Nationalism is one of the major reasons which has caused hindrance in the equitable distribution of vaccines at global platform to the third world nations. During the development stage itself, developed countries approached to secure the Covid-19 vaccine doses for their citizens through advance agreements which consequently reduced the access to others.[34] It also shows the intent of non-participation by certain Nations in the global discussion for vaccine distribution.[35] The bilateral Contractual relation with the Pharma firms by developed Nation clearly shows the vaccine nationalism which would allow the private firms to spike the prices. The major flaw of this idea is the developed countries on one hand would be piled up with large stocks of vaccine and on the other, the developing Nations would lack access and would have no option left except to purchase at exorbitant prices. Even if the country is able to obtain the doses of vaccine unless it has been reasonably priced, the domestic population of that country which falls within the branch of economic disadvantage would lack accessibility. Moreover, it shows, that vaccines are treated a as private commodity rather as a global public goods. Failure to realise this dimension of vaccines diminishes the socialization of their public health benefits. Thus, to tackle the problem of Vaccine Nationalism, it is important to develop an international framework prior to the outbreak of global health issues that restores vaccine development and distribution while simultaneously prioritizing the allocation of vaccines at affordable prices according to the needs of the population. An investment of 1.4 billion Dollars was made by various countries and philanthropists to support Covid-19 vaccine research and development through the Coalition for Epidemic Preparedness Innovations (CEPI).[36] Gavi also formed the Covid-19 vaccine global Access (COVAX) facility which gave opportunity of making advance commitment orders for doses of the vaccine in consideration for financial assistance.[37] The major steps taken by CEPI and COVAX enabled the pharma industries with an incentive to undertake risky R&D and the countries joining COVAX will receive a share of available doses. Because COVAX undertakes mass orders, the purchase price incurred by the participating states will be lower than price paid by other States who directly negotiate with the manufacturers, thus it promotes vaccine affordability.
Prospective Roadmap for Inclusive Approach in Case of Future Global Crisis
In the previous portion we had examined the problems faced by the developed nations with regard to accessibility and have underlined the resolutions to those problems while appreciating the value of the patent rights. Patent protection therefore could be considered for the beneficial progress of scientific technologies and science, yet the proposition can actually delay it. The patent system confers upon the inventor monopoly allowing them to set extreme hefty prices which subsequently thwarts the distribution of new innovations. To alleviate the effects of high prices, patent law limits the rights by stipulating the duration. The present patent regime adopts a straight-jacket formula by granting similar twenty years protection to all inventions, in any field.[38] The prospective model which could be adopted is based on the duration whereby the patentee can hold his patent rights in proportion to the investment made to create the invention. In simple words, the vaccine manufacturer like Moderna and Pfizer can continually hold the patent rights in regard to their vaccines which won’t necessarily continue for twenty-years term of protection rather the proprietary company can hold the rights to their inventions only for that duration in which they are able to recover the incurred expenditure plus a percentage of profits. This model takes into consideration the pertinent fact of both under as well as over protection of inventions. This model also addresses the considerable fact that there may be some vaccines which would be developed by incurring enormous investments thus, the twenty-years protection granted would not be sufficient to recover the investments made in those vaccines and hence, this model suggests the extension of the prescribed twenty-years duration which would eventually give pharma companies incentive to develop vaccines. Under this model, once the invested funds, along with a reasonable profit margin, are recovered, the patent protection for the vaccine will expire. Subsequently, any other company can enter the market and sell the vaccine at competitive prices. This approach provides the pharmaceutical company with ample incentive to invest in the research and development of vaccines while ensuring the vaccine becomes commercially accessible at competitive rates as soon as feasible. Under the current regime, the First world countries make early purchase of the patented vaccines which consequently results rise in the price of vaccines and no mechanism exists for the period of twenty years so that accessibility can be provided to the developing nations at affordable prices. Under the prospective model, when a developed nation purchases the vaccine by paying a substantial amount for early access, the patentee would receive the necessary capital to recover the investments made during the development phase, along with a generous profit. Once this recovery is achieved, the patent would then expire, allowing developing nations to purchase subsequent products at fair market prices. The determination of the recovery amount could be based on the private investments made by the patentee, without considering any additional public investments. This proposed system aims to establish a more equitable arrangement between the pharmaceutical sector and society as a whole. It ensures a degree of control commensurate with the level of public investments in vaccine research and development. Thus, this model seeks to bring to end to the inherent problem of under and over protection of some inventions and ultimately balances incentives for invention with right of equitable access of global public.
Implementation of the Prospective Model
For the purpose of enforcement of the proposed model, the patentee will be required to disclose the particulars of investments made during or ongoing development of the invention in the patent application. Further he will be required to provide details as to the recovery of the invested capital at periodic renewal of the patent. The Companies though may provide actual and anticipated expenditure to be undertaken for the development of the invention and subsequently they may file the report as to recoupment made. Another proposal suggests that patentees should not be obligated to pay the registration fees when filing the application for the patent grant. Instead, they could exercise discretion and defer the payment to a later time. This feature would particularly benefit smaller firms and start-ups, allowing them to secure a patent for their hard work even before they have sufficient income to cover the patent application fees. Once the patent is granted, and the investment amount is determined, the patent office can calculate the patent term necessary to recoup the investment along with a certain percentage of profit. These additional tasks could be carried out either by the patent office itself or by independent intellectual property valuation agencies.[39] could be conferred upon with this task. The patent office could constitute a pool of agencies for undertaking the evaluation of investments and the applicant could be granted the autonomy to choose any specific agency for determining the value of investment. The applicant could also be allowed to give their estimate evaluation of investment for the proper consideration of the agency. A certain clause could be inserted under the concerned patent law regime whereby the requirement of investments particulars could be made compulsory in the patent application by forming it part of contents of the application. This system is fit to be implemented at global level as well whereby the investment and the recovery both can be measured globally. Thus, according to this regime, once a company has recovered the invested capital to make the invention, the protection rights for that vaccine will terminate across the globe in each nation which will ultimately substantiate the Universal accessibility of vaccine.
Conclusion
The patent protection has always been considered as the major incentive for the pharma sector to undertake R&D for the development of any medicinal technology. Prior availability of the requisite technologies has helped to attenuate the impact of Covid-19 as companies across the world had combined their IP protected technologies to expeditiously invent the vaccine. The importance of IP can be seen from many perspectives, for example, licensing deals between Labs and Private firms supported for the early-stage achievement in the vaccine development. IP is thus, the invisible filament which turn an idea into a product along with increase in productivity and efficiency by providing legal backing for global collaborations. Thus, in times of global health emergency, waiving of patent may not be an appropriate option, the other possibility may also include that the nations advocating for patent may be self-interested as they want in the light of pandemic to obtain the necessary technology which may not be otherwise acquired. The proposed model may play a significant role in harnessing the pandemic situations like covid as it focuses on quick and equitable distribution of vaccine to developing nations.
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[29]the Patents Act 1970, s.53 r/w s.48.
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