When the coronavirus was first detected, the assumption was that it will start and end with China. However, on the 12th of March 2020, it had been declared a global pandemic. After more than a year into the pandemic, the virus has spread throughout the world, altered humans’ way of life, transformed the way we conducted commerce and transactions, face-to-face meetings have become an inconvenience and the remnants of the impact of the pandemic are widespread and vivid.
The advent of the virus has magnified healthcare inequality worldwide, has brought into discussion the cost developing of vaccines and the price of these vaccines to the consumers. Some pharmaceuticals companies have accelerated the development cycle and have produced vaccines ready for the market. The well-known ones include; BioTech/Pfizer, Modena, and Astra Zeneca. These companies have produced vaccines but not everyone has access to ‘these vaccines.
To expedite the production to mass scale, a tug of war between patent rights and achieving herd immunity globally has ensued.
The United States government has been pushing for the waiving of intellectual property rights, to achieve economies of scale and reach the targeted doses needed for universal herd immunity. To put it into perspective, a patent is a title that gives intellectual property rights, granting the patent holder an exclusive right to make, use sell and import a product. A patent can also be held over a process. The rationale is to allow the patent owner to recoup the costs expended in developing the product or process and eventually make a profit. The term duration in which a patent remains protected is 20 years thereafter the industrial design or formula is open for replication by any other entity or person[1]. Consequently, the patent holder can either prohibit third parties completely from their technology or allow permission(license) with specific and restrictive conditions and charge accordingly.
To achieve herd immunity billions of doses must be manufactured across all pharmaceutical companies. At the time of writing the covid19 pandemics had infected 168million and resulted in 3.84million deaths according to the World Health Organization (WHO) statistics. The disparity and inequality in the distribution of these vaccines pose a challenge to achieving herd immunity, rich countries while comprising only 16% of the world’s population, have already purchased 60% of available vaccine supplies[2].
The pricing mechanism and the economics behind the production and profits to be maximized with these vaccines have resulted in the creation of oligopolistic market cartels.
In initial deals with the U.S. government, Pfizer and BioNTech’s vaccine costs $19.50 per dose, compared with $15 for Moderna’s shot, $16 for Novavax’s program, $10 for Johnson & Johnson vaccine, and $4 for AstraZeneca’s. Pfizer didn’t take any government development funds for its shot, while other players received various amounts of assistance, and Pfizer was the first to reach the market.
Pfizer has said it expects $15 billion from its COVID-19 vaccine this year, but if the company charges higher prices after the pandemic, it could continue to reap significant sales from the product in the years to come, particularly if routine boosters are needed as variants arise[3].
Astra Zeneca is also cashing in, Bloomberg report on Wednesday, 26th May 2021, that the company priced a six-part $7 billion global bond offering, which will be used to pay part of its acquisition of Alexion Pharmaceuticals Inc. The bond issuance will help the company with an acquisition and better its vaccine production[4].
Balancing between the rights to the protection of intellectual property versus public health and the accessibility to new medicines is an issue that both the World Trade Organization (WTO) and WHO have to grapple with. On one hand, the protection of the intellectual property is crucial in encouraging innovation as well as research and development. On the other hand, in times of global catastrophes such as the covid19 pandemic, there is a need for global access to research and development into new drugs in a manner conducive to social and economic welfare. A careful balance between the two needs is found in articles 30 and 31 of the WTO’s agreement on Trade-Related Aspects of Intellectual Property (TRIPS) that provides flexibilities to the patent rights enshrined in articles 28 by way of compulsory licensing[5]. This is a process by which the government licenses companies or individuals other than the patent owner to use rights of the patent – to make, use, sell or import a product under patent – without the permission of the owner.
As a result, the government can overcome access and pricing barriers (hoping that Zambia’s pharmaceutical research and development is updated we can take advantage of such a development). Third parties are required to attempt negotiating a voluntary license with a patent holder before taking the step of requesting a compulsory license. A voluntary can be bypassed where there’s an extreme emergency, however, the emergency compulsory license resulting from this is limited to authorization for mainly domestic use. in practice this is intellectual as many countries do not have the capacity to produce pharmaceutical products domestically. “However, some developed countries have opted out of importing foreign-manufactured and patented medicines where – compulsory license is issued to export for other countries”[6].
This may be detrimental as these countries’ unwillingness to make use of compulsory licenses limits the export market. For example, where the United States opts for compulsory licenses for vaccines produced in India, other countries with domestic manufacturing capabilities are deprived of issuing compulsory licenses for US manufactured and patented medicines as the US would no longer be an eligible importing member. Article 31b was adopted to remedy this – countries lacking manufacturing capability may import specific pharmaceutical products but this costly and cumbersome[7].
This makes it necessary to consider the temporary waiving of intellectual rights by pharmaceutical companies. South Africa and India were the first to call for the vaccine patents to be temporarily waived and have subsequently been joined by some 80 developing countries, along with rights groups. However, some western economies have blocked this move, arguing that intellectual property rights are necessary to incentivize research and innovation and safeguard against low-quality replication.
In conclusion, for the global to fully achieve herd immunity, an altruistic approach needs to be adopted. An approach that views the pandemic from a welfare lens. Pharmaceutical companies must forgo the rallying and soaring of their stock prices and share in the common humanity. Otherwise, if the world allows vacci-nomics and profit maximization to rule, then we will not have an end-in-sight of the covid19 pandemic. Lessons for the developing world are glaring, invest in research and development, take advantage of any waiving of intellectual property rights in the manufacturing of vaccines, allow for technology transfer so that in an event of any future pandemic we can manufacture our vaccines.
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[1] www.wto.org/intellectualproperty
[2] https://www.who.int/emergencies/diseases/novel-coronavirus-2019/situation-reports
[3] https://www.fiercepharma.com/pharma/pfizer-eyes-higher-covid-19-vaccine-prices-after-pandemic-exec-analyst
[4] www.bloomberg.com
[5] Article 7 TRIPS Agreement
[6] www.csis.org/analysis/compulsory-licensing-cure-distributing-cure
[7] Article 7 TRIPS Agreement