Balancing Innovation and Access – IP Rights in the Pharmaceutical Industry during the Pandemic
Updated: Oct 30
By Prajit Aloor
The pharmaceutical industry was at the forefront of the global response to the COVID-19 pandemic that started at the beginning of 2020. The industry’s focus was on developing drugs, vaccines, and other medical products that could mitigate the impact of the pandemic. The large pharma companies partnered with governments across the world to play a critical role in addressing the global health crisis, but intellectual property rights have been a big and controversial issue in the industry.
The pharmaceutical industry, often referred to as an "evergreen" sector, maintains its significance regardless of economic fluctuations. In both prosperous times and economic downturns, while other businesses may teeter on the brink of failure, the demand for medicines and drugs remains constant. This steadfast demand arises from the ongoing possibility of individuals falling ill and requiring treatment, a need that the pharmaceutical industry is well-positioned to address. A prominent example of this resilience was evident during the recent global pandemic, when the world grappled with economic slowdowns and recessionary impacts. Notably, major pharmaceutical companies seized the opportunity to bolster their revenues even amidst the prevailing challenges.
Intellectual Property Rights, or IPR, encompass the legal protections granted to inventors, which may include individuals, corporations, or associations. These rights are established to safeguard their innovations and creations. Furthermore, IPR affords inventors exclusive rights to commercialize their products and introduce them to the market, enabling them to generate income from their intellectual investments. IPR is an extremely valuable asset across various industries, with the pharmaceutical sector particularly reliant on it to protect the extensive investments, time, and dedication devoted to the development of cutting-edge medications. In the realm of pharmaceuticals, patents are granted to innovations, particularly those with the potential to save lives, shielding their proprietary formulations, processes, and more. This serves a dual purpose: fostering a climate of continuous innovation and promoting healthy competition within the economy.
The pharmaceutical industry has a unique business model where the cost of research and development is extremely high, and proponents of legal protection in this industry say it is crucial to provide them with a return on investment, as they project to make profits in the long run rather than making it within the business cycle. Although, there have been voices against legal protection in medicine and propose relaxation of IPR protection, which would discourage them from spending the millions of dollars into research; but some arguments do have some credibility as discussed below.
The COVID-19 pandemic shocked the world with the rapid rate the infection was spreading at and reached a million infected in no time. This disproportionately hurt developing and low-income countries as the COVID-19 vaccines which were developed by large companies were unaffordable and inaccessible to them. Rich countries like the US and Canada invested heavily in vaccine manufacturing firms and signed contracts that would guarantee a ‘first preference’ delivery to them, whereas poorer countries, especially in Africa and Latin America would get it only after delivery of the vaccines to the former were completed. There was a long line at the doorstep of these companies.
To illustrate the said inaccessibility, developed and richer countries had a guaranteed delivery of vaccines that would have enough doses of vaccine to cover each person an average of 6 times in their population. Canada and the UK, especially, led in terms of number of doses purchased per person in their population with 8.7 doses per person and 7.3 doses per person respectively (figures at the end of January 2021). Another research by the Duke Global Health Innovation Center categorized the countries into High Income, Upper Middle, Lower Middle- and Lower-Income countries, and found that high income countries had purchased 4.2 billion doses of vaccine, upper middle with about 1 billion, lower middle with 411 million, and lower income had purchased 270 million vaccines only by the first half of 2021. Vaccines were clearly disproportionately distributed as lower income countries were more vulnerable to such diseases due to their lower quality of healthcare services and their usually larger populations compared to developed countries. Richer countries started to hoard vaccines at this point.
Mary Brophy Marcus, Duke Global Health Innovation Center, 2021.
Efforts for equitable vaccine distribution and Initial Proposal
Knowing the effects of such deals of governments with pharma companies, several countries, led by India and South Africa, had approached the World Trade Organization (WTO) in October 2020 to temporarily waive intellectual property rights related to COVID-19 granted to companies so that vaccine distribution is more equitable and accessible to all. There were now two distinct blocs, with high income countries, especially the governments of the United Kingdom and Switzerland, completely against it. Their main argument was that this supposed suspension of IPR would discourage innovation when it is needed the most. India, South Africa, and other ‘global south’ nations argued that only developed countries would benefit from such protections, as they have the resources to get preference in vaccine delivery – and that’s exactly what happened. They also proposed that the temporary waiver would allow multiple vaccine manufacturers to start production of newly developed vaccine, which would increase supply and ensure that lower income countries get enough doses to protect their populations.
"What this waiver proposal does is it opens space for further collaboration, for the transfer of technology and for more producers to come in to ensure that we have scalability in a much shorter period of time" -Mustaqeem De Gama Counsellor- South African Permanent Mission to the WTO 
 Ann Danayia Usher, “South Africa and India push for COVID-19 patens ban,” The Lancet, Volume 396, Issue 10265, 2020.
The Doha Declaration (2001), which further enforced some aspects of TRIPS (Trade Related Aspects of Intellectual Property Rights) Agreement (1995), had provisions for the suspension of patents in case of an emergency. The India-South Africa bloc made a revised proposal in May 2021, which pushed for a ‘compulsory licensing’ provision that could be agreed upon by the nations to ensure fair distribution of vaccines. Compulsory licensing is the process by which authorization may be granted by a government to a third party to produce a patent-protected product. This was implemented during the height of the HIV/AIDS crisis when the Canadian government made and exported drugs to Rwanda in 2007, to help with the infection. This would essentially reduce prices of vaccines, vaccine producers in other countries will have access to relevant production processes and manufacture them quickly, and help with faster vaccine coverage of populations.
The European Union showed some support to the revised proposal, and adopted a conclusion that showed their “readiness” to the WTO to find solutions such as patent pooling and licensing
After extensive negotiations among the United States, the European Union, India, and South Africa, a compromise was achieved to facilitate equitable production and distribution of COVID-19 vaccines. As part of the agreement, certain key vaccine ingredients would be subjected to a three-year patent waiver. This waiver aimed to grant lower-income countries access to the necessary know-how essential for vaccine manufacturing, addressing their limitations in this area.
However, the agreement presented some limitations. The patent waiver would be accessible solely to WTO member countries that contributed less than 10% of global exports of COVID-19 vaccine doses in 2021. This compromise emerged as the outcome of months of negotiations between the opposing parties, although it was a significant step toward enhancing global access to vaccine technologies and supporting countries with limited capabilities in vaccine production.
The COVID-19 pandemic has underscored the balance that the pharmaceutical industry must strike between safeguarding their intellectual property rights, fostering ongoing innovation, and ensuring fair access to life-saving medicines. Intellectual property rights are crucial in incentivizing substantial investments by companies to develop and produce essential medications. However, during extraordinary circumstances, there arises a need to consider the relaxation of these protections.
In moments of crisis, flexibility in intellectual property rights becomes essential to ensure broader access to crucial medicines and treatments. Nevertheless, navigating this balance between promoting innovation and ensuring wider accessibility is challenging. Therefore, it becomes imperative to establish strong global frameworks that can accommodate such provisions. These frameworks must be designed to facilitate a sustainable approach to handling future public health crises without disadvantaging developing and underdeveloped countries. They must serve as a guiding mechanism for future health crises, promoting collaboration and equitable access to life-saving medicines without hindering progress or placing undue burdens on nations less equipped to handle such crises.
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