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22 January 2021

Should we worry about patents on drugs/vaccines?

A year after COVID-19 began spreading worldwide, several countries launched vaccination campaigns, with the end of this unprecedented health crisis looming in the horizon. Since its beginning, many pharmaceutical labs engaged in a race against time to be the first to come up with a vaccine.

Just as for drugs, patents can protect vaccines. One can thus fear that such patents, because of the exclusive rights they give their owner, could slow the distribution of vaccines or the development of new therapies; and that, in the end, profits could overshoot public health needs.

With that in mind, one can wonder what the situation really is. What role(s) can patents play in the spread of an innovation?

First, we have to keep in mind that a patent does not guarantee the therapeutic efficiency of the drug or vaccine it protects. Indeed, the examination procedures performed by the main intellectual property offices across the world aim at checking that the invention as described in the application answers the patentability criteria, which are novelty (the technical solution has not been made public beforehand) and inventive step (the technical solution cannot be obvious to a manufacturer).

In France and in Europe, the patentability examination also looks into the industrial applicability of the invention, meaning that its object could be made or used in an industrial setting (article L.611-15 of the French Intellectual Property Code).

However, this examination does not look into the invention efficiency, but only aims at checking whether its production is possible. By doing so, it denies protection to inventions that are clearly unfeasible.

It is by a different procedure that the therapeutic efficiency of a drug or vaccine is checked: marketing authorization. Each country’s administrative authorities are in charge of its grant: the National Agency for Drug and Health product safety in France (ANSM), the European Agency for drugs in Europe (EMA), the Food and Drug Administration in the USA (FDA)…

So it is possible for a patent to be granted for a vaccine because the knowledge on which it is based is indeed new and inventive, but the above-mentioned authorities could also refuse to allow the same vaccine to be put on the market because the clinical trials performed cannot guarantee its quality, safety and efficiency.

Then, if patents cannot guarantee efficiency, what are their roles?

Patents: a tool to boost innovation

Through a patent, the first inventor to apply for it receives an exclusive exploitation right on the invention as applied for. This exclusivity given on the described technical solution is an exception to the general principle of free competition between economic actors.

This enables its owner to get out of the competition in the hope of profiting from the investments they made to develop their invention.

In the pharmaceutical world, the research and development phase is both long and costly (on average, 900 millions of dollars over more than 11 years, according to LEEM). It is then clear that without a patent, a pharmaceutical lab would most likely be unable to get financial returns close to the invested amounts. Indeed, as soon as the drug or vaccine would hit the market, their competitors would easily be able to copy its innovative specificity and to sell the same product, without having to spend the same amounts in development.

The main function of a patent is thus to ensure that the innovation’s profits go directly to the one who started the endeavour and took the financial risk. It helps boosting innovation.

However, this exclusivity so specific to patents is not given to the owner without conditions: in exchange, they have to publicly share their knowledge on the invention.

Patents: a way to spread knowledge

It is mandatory for the patent’s owner to describe their invention “in a clear and complete fashion so that a manufacturer could produce it” (article L612-5 of the French Intellectual Property Code); without this, the patent could be considered as invalid.

Patents play the role of a “reward” to motivate the inventor to share their knowledge on the invention, instead of keeping it a secret. The patent, once published, benefits the entire scientific community, which can then access knowledge that it would otherwise not be able to get elsewhere.

In that way, a patent application filed by a pharmaceutical lab for a drug or vaccine becomes a source of information for all other labs, which then get inspired by it to develop further knowledge that can also potentially be patented. This create a virtuous cycle of spreading knowledge that helps science progress and innovation to develop.

However, even if this knowledge is freely shared, its economic exploitation on the market can only be done with the agreement of the patent owner. Rather than to block the situation, it can also be interesting for the owner to allow for its patent to be exploited by others.

Patents: a collaboration tool

Patents can then become a way for different players to work together. Their goal? Speed the global development of drugs or vaccines by taking advantage of each other’s expertise and resources, instead of working alone, with the risk of not finishing before the others…

Patents are without a doubt at the heart of their collaboration: first, to organise the use by one of the patented knowledge of the other; but also to evaluate how the property and exploitation of the knowledge specific to a drug or vaccine developed together will be shared.

Without patents, it would be difficult for these two agents to conclude such agreements, due to the fear that one would access without compensation the knowledge of the other. Patents are thus a tool to help transfer knowledge by speeding the development process of an innovation.

Patents also help organising the innovation’s circulation on the market, especially when the demand exceeds the production capacity of the patent’s owner. One can be the most innovative and at the same time not be the one with the biggest strike force!

If the patent’s owner does have production and supply tools adapted to the market’s size, they could still authorize the exploitation of their patent by other pharmaceutical labs through licensing (exclusive or non-exclusive) (article L. 613-8 of the French Intellectual Property Code) in exchange for licence fees.

That way, patents also help transforming a competitor into a partner, allowing for an optimal production of the vaccine and to reply to the global demand.

Patents: an almighty tool?

Even if patents are a true tool to boost innovation, to share knowledge and to help collaboration between economic actors, they are also often criticised because they would provide regular revenues for pharmaceutical labs by providing outrageous prices for their vaccines.

However, the patent system possesses several mechanisms, which restrict the owners’ rights.

The first one revolves around the range of the right given by a patent, which is not absolute. Indeed, the exclusivity given by a patent is by design limited to the invention as claimed. Nothing then stands in the way of a competitor should they wish to develop an alternative technical solution, as long as they do not venture into the claims of the other patent.

Moreover, the exclusivity given by a patent is time-limited: when granted, the patent can only be protected for a maximum of 20 years after the application was made, as long as it owner keeps it alive by paying taxes (annual fees). When it comes to the pharmaceutical field, the owner can also ask for an extension of 5 more years. However, after this period, the invention protected by the patent falls into public domain and can then be freely exploited by anyone. In the end, there is no more exclusivity…

The exclusivity of the patent is also limited in space: a patent only bears effect in the territories where it has been granted. Outside of these countries, the invention can freely be produced or sold by other agents. There is no need to wait for the end of the exclusivity…

The second mechanism that limits the patents’ range is more specific to pharmaceutical products: the article L. 613-16 of the Intellectual Property Code indeed enables the Government to decide, in extraordinary circumstances and in the public health benefits, to give a statutory licence on a patent owned by a lab to any other interested agent.

This mechanism should not be mistaken for the compulsory licence, which allows an agent to force the patent’s owner to give them exploitation rights, either because the later does not exploit their own invention (articles L. 613-11 to L. 613-13 of the French Intellectual Property Code), or because the agent needs this authorisation to exploit their own upgrade that depends from the patent (article L. 613-15 of the French Intellectual Property Code).

When it comes to the statutory licence, the conditions for it to take place are strictly regulated:

  • This statutory licence regards only granted patents: it can not apply to applications when the examination is not finished, a process that can take several years;
  • For this licence to be granted, it must be ascertained that there is a real lack or abnormal supply in the market. This could be the case if the patented vaccine, even if supplied in a sufficient quantity, was offered at an outrageous price; or if, despite a very low price, the production volumes were too low compared to the demand.

Such a mechanism can then be a real power against attempts from a lab to impose outrageous prices for their drugs and vaccines or to help reduce a shortage (for example in case of a rupture in supply or definitive end of the production).

Even if this was never put in place in France, the mechanism of statutory licence is, just by its existence, a dissuasion tool… as the patent can be towards other agents by deterring them from copying the patented invention.

Patents represent a tool with multiple roles that everyone can use depending on their goals. This patent system aims at creating a fair balance between private interests of the inventor and the collective interest, between the incentive effect to stimulate the innovation and the moderation to prevent any form of abuse.

Christian MULENET

Cabinet GUIU – JurisPatent

January 2021