A Conflict of Interests
COVID-19 pandemic has led to a substantial loss of human life worldwide and presents an unprecedented challenge to public health, food systems and also the world of labor. The economic and social disturbance caused by the pandemic is fatal. With these, one problem that arises is about the patent waiver and vaccine. There is a big turmoil of interest between the vaccine manufacturers & patent holders and between certain countries and & government which want a patent waiver.
When we use a broader view, we can see a fundamental mismatch between the policy of intellectual property protection and the requirements of effective pandemic response. Although patent law, duly controlled, constitutes one important element of a well-designed innovation system, the way it goes about encouraging technological advancement is singularly ill-suited to the emergency situation of a pandemic or other public health crisis. Securing a TRIPS waiver for COVID-19 vaccines and treatments would thus establish a beneficial model that, in emergencies of this kind, governments should use other, more effective means to incentivize the development of new drugs.
The patent law offers certain bargains: encourage the creation of useful new ideas for the long run by slowing the diffusion of useful new ideas in the short run. The 2nd bargain that imposes costs on society, comes from the exclusive rights, or monopoly, that a patent holder enjoys. Under U.S. patent law, for a duration of 20 years no one else can manufacture or sell the patented product without the permission of the patent holder. This allows the patent holder to block competitors from the market or draw out licensing fees before allowing them to sell and accordingly charge above-market prices to its customers. Patent rights thus slow the process of making new inventions by restricting output and raising prices.
The foisting of these short-term costs can bring net long-term benefits by encouraging others to invent new products as a good way of earning money. For the tradeoff between costs and benefits to come out as positive on the net, patent law must be enacted in a way to ensure that these costs and benefits are balanced. Exclusive rights should encourage innovation but should be given in limit so that innovation is not outweighed by output restrictions on the patented product. In the pharmaceutical industry, certain industries have abused the law by filing patents for insignificant therapeutically irrelevant inventions that allow them to extend their monopolies and keep raising prices long beyond the statutorily recognised 20 years.
Patent law provides a decentralized system for encouraging innovation. It improves pharmaceutical companies’ incentives to develop new drugs while leaving them open to determine which new drugs to make and also leaving them to brace all risks associated. In a pandemic however, it is appropriate to shift to the regime in which the government focuses on one disease. In this regime the government provides a high incentive as compared to incentive provided by the normal patent law. It offers public funding to recover the costs of drug development and also provides advance purchases that leads to a safe and healthy return. It should therefore be clear that the pharmaceutical industry has no admissible basis for challenging a TRIPS waiver.
Since, because of the public health crisis, drug makers now receive benefits of direct government support, they no longer need the default benefits of patent support. Vaccinating the world in any kind of reasonable time would require large-scale technology transfer to pharmaceutical firms in other countries and rapid expansion of their production capacity. And looking beyond the current pandemic to the longer term, we need sufficient global vaccine production capacity that is extensively distributed around the world. Here again, we must understand that the choice isn’t between people on the one hand and profits on the other. Rather, the key to smart and effective pandemic response policy is ensuring that incentives are structured so that drug company profit-seeking and global public health are well aligned means opting out of the default, decentralized patent bargain in favor of generous but well-engrossed direct government support.
The views are that of author’s own and not necessarily the views of IPTSE Academy. This blog is a platform for academic discussions and hence authors have been given flexibility to convey their thought process.