The World Trade Organization’s limited and short-term waiver of intellectual property (IP) on COVID-related products, announced on 17 June 2022, prompted a passionate response from the pharmaceutical industry. The industry said the rapid development of COVID-19 vaccines justified the continuing need for IP rights. But the real reason vaccines were produced in less than a year after the onset of the pandemic is the €86.5 billion (US$88.2 billion) governments poured into their development. The industry is taking the lion’s share of the credit for the vaccines while resisting pleas to waive their patents so low- and middle-income countries can manufacture them. Its argument that IP is an incentive for medical innovation ignores the failure of the patent system to enable new treatments for illnesses primarily afflicting poorer parts of the world. IP is vital for the pharmaceutical industry. According to the Geneva-based International Federation of Pharmaceutical Manufacturers and Associations (IFPMA): “Intellectual Property Rights incentivise innovation, research and development and allow the biopharmaceutical industry to improve existing and bring new medicines, vaccines, and treatments to people and in turn help improve and save lives”. But there is a very real commercial reason for the industry to support IP. The Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement gives new medicines (and all other products) 20 years of patent protection from the date the patent application is filed. On average, it takes about 12 years from that point to when the medicine is marketed. That means companies have an eight-year monopoly on their product, during which time no other firm can produce the same drug. The provisions in the TRIPS Agreement were largely the result of the pharmaceutical industry acting in concert with the software and music industries. Pfizer and its then-CEO, Edmund Pratt, played a key role in convincing the US government to make IP a major issue in the talks that eventually led to the World Trade Organization (WTO) and the TRIPS Agreement. Those eight years of monopoly protection translate into tens of billions of dollars for some products. Humira, a biologic used to treat various types of bowel disease and arthritis, earned over US$20 billion for its maker, AbbVie, in 2020. And by filing additional patents, AbbVie has put off the expiration of its monopoly on Humira for 39 years.
Given the potential to make billions per year over many years, it’s not hard to understand why the industry aggressively defends even small incursions into what it sees as its patent rights. In the early 1970s, the small Canadian province of Manitoba (population about one million) passed a law making it mandatory for pharmacists to substitute cheaper generic drugs for those named on prescriptions.
The response from the head of the Pharmaceutical Manufacturers Association of Canada could be seen as a veiled threat: “It is each company’s decision whether the size of their Manitoba market will merit the cost of properly servicing that market. If they can’t meet the prices they could be forced out of business”.
