India: Overcoming Pandemic Profiteering In Times Of Crisis

Introduction

Today, as the global scientific and research community doubles down on finding a potential drug or vaccine against the novel Coronavirus, the obvious question that arises is of access to affordable drugs and medical equipment. With the high investment required in drug discovery and pharmaceutical research generally, the debate naturally turns to the returns on such investment in times of a public health crisis as the one being faced today. This note seeks to understand if intellectual property (IP) protection will be a barrier to affordable drugs.

IP as a barrier to affordable drugs

The emergency situation around Covid-19 has led to innovations in – especially – medical equipment. Some existing drugs have also been shown to have positive reactions to the virus. These 'discoveries' have often tended to be by accident, and purely by way of a response to the emergency situation. As it turns out, many of these equipment innovations or secondary uses of existing drugs are protected by some form of IP in one or more jurisdictions. In some cases, IP owners have also threatened to pursue legal action against those they identify as infringers. In the normal course of things, such innovations or discoveries would have followed patent procedure and obtained independent protection. The nature of the present emergency situation has led to the innovations and drugs being put on the market sooner than they would otherwise have, and without due diligence on the IP protections surrounding them. The threat of legal action, and the existing web of IP protection around these, leads to the question of whether access to affordable medicine and equipment is possible at all in times of public health crises.

In Italy, a 3D printing start-up Isinnova developed a replacement ventilator valve after an Italian hospital ran out of supplies and was struggling to run its ventilators amidst a surge in patients needing intensive care. The original spare part from the ventilator maker reportedly costing US$11,000, was not available, while the cost of the copy was just US$1. This helped save the lives of 10 Covid-19 patients. However, the original manufacturer later threatened to sue the start-up for patent infringement. (See)

Cepheid, a US company has recently launched rapid molecular diagnostic machines to test Covid-19. The test delivers results in just 45 minutes, using existing testing machines that have been routinely used for tuberculosis (TB), HIV and other diseases. The company declared they will charge US$19.80 per test in developing countries, including in the world's poorest countries where people live on less than two dollars per day. Research on Cepheid's TB test (which uses a similar test cartridge for TB for which the corporation charges US$10 in developing countries) shows that the cost of goods, including manufacturing, overhead, and other expenses, for each cartridge, is as low as US$3, and therefore each test could be sold at a profit for US$5. (See)

Remdesivir, a novel antiviral drug, developed by Gilead Sciences Inc., is considered to be one of the most promising drugs which can be used for treatment against Covid-19. The drug works by inhibiting the virus's ability to copy itself inside cells. Previously, lab and animal studies have demonstrated the drug's effectiveness against SARS and MERS, two other respiratory illnesses brought on by coronavirus infections. Another potential drug against Covid-19 is Favipiravir, which is used to treat RNA viruses, like SARS-CoV-2. The drug has been used by China for treating patients in Shenzhen who had tested positive for Covid-19 and found that patients given this drug tested negative four days later. During a trial in Wuhan, the drug has been reported to shorten the duration of patients' fever from an average of 4.2 days to 2.5 days.

Both these drugs are presently patent protected in India. The patent granted to Remdesivir is bound to expire only in 2035. Favipiravir is a part of five patents in India, only one of whose term has expired. Under Sections 92(3), 100, and 102 of the Patents Act, the Indian government can issue compulsory licenses against these patents and allow for the manufacture of the patented molecule. However, such a move would be against the oral assurance given to the United States regarding not granting any compulsory licenses on medicines during US-India Business Council, 2016. (See)

Even as innovations seem to be barricaded by IP in some form of other, there are older drugs like hydroxychloroquine, with an expired patent that have large generic manufacturing and export.

Ensuring access to Covid-19 drugs

There is a global recognition of the importance to ensure affordable access to drugs and medical equipment in the fight against Covid-19. Some companies are either not enforcing patents, or not seeking patent protection at all. Many governments across the world are issuing compulsory licenses to ensure the drugs are not IP protected. Some international organizations are tapping into their global networks and obtaining assurances from partners for ensuring affordance access, and not abusing IP as a tool to prevent such access.

On April 16, the vaccine major Serum Institute of India announced that it was expected to release a vaccine for Covid-19 latest by 2021. The company said it was not going to patent the vaccine or commercialize it beyond a sustainable level in a public health epidemic. (See)

In March 2020, the US firm AbbVie declared that it would stop enforcing its patent on Kaletra, which is an HIV medicine which is currently being tested for effectiveness in the treatment of COVID-19, anywhere in the world. (See)

Gilead, the developer of Remdesivir, initially applied to US regulators for "orphan status" for the drug. Under US IP law, pharmaceutical companies that develop treatments for diseases that affect fewer than 200,000 people enjoy market exclusivity for seven years. But, seeing the public backlash, Gilead revoked the application for orphan status. (See)

Elsewhere, Roche, world's leading diagnostic kit maker, initially came under fire from political leaders from Netherlands and UK for not releasing the chemical formulae for a reagent, buffer used in its polymerase chain reaction-based test for COVID-19. Later, however, Roche agreed to release the recipe for a liquid solution that Dutch laboratories need to run a coronavirus test. (See)

On March 15, Canada passed a COVID-19 bill that allows the government to make and use patented inventions as needed in fighting the pandemic. Governments in Chile, Ecuador, Germany, and Israel have taken similar steps. Seeing the response of these countries, the Geneva-based Doctors Without Borders announced "no patents or profiteering on drugs, tests or vaccines" for Covid-19. (See)

Carlos Correa, Executive Director of South Centre, in an open letter to the heads of World Health Organization (WHO), World Trade Organization (WTO) and World Intellectual Property Organization (WIPO) said "support developing and other countries, as they may need, to make use of Article 73(b) of the TRIPS Agreement to suspend the enforcement of any intellectual property right (including patents, designs and trade secrets) that may pose an obstacle to the procurement or local manufacturing of the products and devices necessary to protect their populations". (See)

Encouraging research for vaccines and drugs

Governments around the world are taking steps to ensure that private companies do not use Covid-19 for pandemic profiteering. They are doing that by overriding patents and issuing compulsory licenses for COVID-19 related treatments, vaccines, and tools. However, such measures may discourage pharmaceutical businesses from investing in research and development. To overcome this, governments across the world may take the following steps:

Governments can offer strong incentives such as patent buyouts to drug makers. In a buyout, the government purchases the patents on a new drug typically at a price that matches or exceeds what the patent holder otherwise would have earned. Thereafter, the government allows makers of generics to produce and sell low-cost versions. If, for example, clinical trials establish the efficacy of Remdesivir in treating Covid-19, then the federal government should buy the US rights to the drug from Gilead and give generic manufacturers free rein to ramp up production. (See)

Another way for rewarding innovation while ensuring widespread access to new technologies may be through a competition. The government and international organizations may propose a hefty prize for an effective coronavirus vaccine per vaccinated person. That would potentially make a Covid-19 vaccine profitable, therefore encouraging private corporations and researchers to work harder. (See)

Such investments may lead to a temporary financial deficit but to contain Covid-19 now and other pandemics in the future, such long-term investments need to be made. Of all the costs that society will bear because of this virus, the payout to pharmaceutical companies will be miniscule.

Conclusion

In times of crises like this, we desperately need to find answers to the problems that are arising now to be better prepared for the future. For example, should countries use compulsory licensing only as a stop gap measure for this pandemic, as Canada and some other countries are doing, or should they mainstream legislatively for all public health crises in general? What is the nature of incentives needed for companies to get them to develop vaccines or medical equipment for public health problems without compromising on quality or affordability? And so on. These are all open-ended questions, with multiple possible workable solutions. Context will matter, as will resource availability, and leadership. This is a very special opportunity for all stakeholders in the public health sector to make a real difference to the lives of people. We can only hope that they work together in the best interests of humankind.

Originally published 01 May 2020

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