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COVID-19: Can We Push Pharma Innovation Without Giving Away Pricey Patents?

COVID-19: Can We Push Pharma Innovation Without Giving Away Pricey Patents?

When I teach the economics and management of the biopharmaceutical industry in class, we examine how incentives for innovation usually run opposite to the incentives for providing access to medicines in society. In short, we unpack the access versus innovation tradeoff. We discuss cases of Pfizer and its Viagra-related tribulations in China, Cipla and its generic HIV drugs, Merck donating Mectizan for river blindness in Africa or Bayer provisioning nitrofuran for Chagas disease in Latin America. COVID-19 is making these issues come alive again in how societies will deal with distortions in the market for biopharmaceutical innovation.

It is now amply clear that COVID19 is comparable to the 1918 Spanish flu. Online, there are also comparisons with the Black Death of the 1300s. In the last century, however, the global biopharmaceutical sector has progressed scientifically and everyone is now looking to it for panaceas to arrest the spread of the new coronavirus. As Scott Gottlieb, former commissioner of the US Food and Drug Administration, recently highlighted, drugs and treatments remain increasingly the only way to get our economies back on track given the adverse welfare consequences of physical distancing around the world. Will the industry be able to answer this call?

The latest statistics indicate that R&D efforts vis-à-vis slowing the pandemic seem to be vigorous. We may even have a solution earlier than 12 months, which many are citing as a lower bound for the availability of vaccines. This is also when Bill Gates has announced to be manufacturing-ready despite uncertainty about how vaccines will be approved. The latest data from the Milken Institute, as on April 2, indicates that researchers are exploring some 50 vaccines around the world, two of which are at the clinical-trials level. One is by CanSino Biologics and the Beijing Institute of Biotechnology, and the other is by Moderna and the US National Institute of Allergy and Infectious Diseases. There are also discussions on cross-border alliances, with US President Donald Trump trying to buy German vaccine firm CureVac. The WHO meanwhile reported tracking 18 of these vaccines, eight on a protein subunit and eight on an RNA subunit. Developing-economy firms are also active, with Bharat Biotech from India working on a vaccine together with the University of Wisconsin, Madison.

There are also 31 antibodies under examination, 12 in the clinical trials phase. Sanofi and Regeneron are exploring Kevzara (sarilumab) in phase 2/3 trials. Kevzara had earlier been approved to treat rheumatoid arthritis. Several of these trials are being undertaken by big, standalone biopharmaceutical companies but some are also in partnership with smaller firms (like one between GlaxoSmithKline and Vir Biotechnologies). Few are being undertaken by research labs within various universities; even the Chinese military is conducting studies.

As for antivirals: there are some 16 trials underway, 12 encouragingly in the clinical-trials stage. Antivirals seem to be the most promising candidates to fight the new coronavirus. One promising candidate is Favilavir, branded as Avigan, its patent held by Fujifilm. Avigan was approved earlier in Japan to treat influenza. Also worth mentioning are attempts to repurpose drugs, and of course project failures. Two projects seem to have been discontinued in China, one around recombining ACE2 (the protein that the virus latches on to to enter a cell).

Meanwhile, researchers are exploring at least 32 compounds for antiviral properties. Some notable ones include the now controversial antimalarial drugs chloroquine and hydroxychloroquine. Another drug, Activase, is being deployed for compassionate use in Israeli and American hospitals. Two others are being prepared for expanded access, the more promising one being Remdesivir by Gilead.

Also read: Does a Pandemic Justify Using an Unproven Drug to Beat the Coronavirus?

Remdesivir takes us back to our access versus innovation debate. Will Gilead, the originator company, be willing to donate Remdesivir to fight COVID-19? Doctors Without Borders has pointed out how Gilead wants to expand its global patenting rights on the drug in 70-odd countries, but for now Gilead seems to have relented, agreeing to donate 1.5 million doses to severely ill patients. However, with the Wuhan Institute of Virology in China filing defensive patents for Remdesivir and firms like Cipla in India already staking its ability to reverse engineer antivirals, the choices in front of Gilead are tricky.

The governments of Canada, Chile, Israel, Ecuador and Germany are also citing the threat of (or actually implementing) compulsory licensing to provide access to medicines, vaccines, diagnostic kits and other medical tools for COVID19. The battleground is obviously becoming reminiscent of historical patent tussles in medicines, like with HIV or cancer drugs.

Policy innovations have been proposed here as a solution in the past by economists, none of them clearly turning access versus innovation to a conversation around access and innovation. Michael Kremer, who won the Nobel Prize for economics in 2019 (along with Esther Duflo and Abhijit Banerjee) has proposed using advanced market commitments[footnote]WHO: “An AMC is a legally-binding agreement for an amount of funds to subsidise the purchase, at a given price, of an as yet unavailable vaccine against a specific disease causing high morbidity and mortality in developing countries.”[/footnote] for vaccine innovation. However, research has found that they failed in India during the 2009-2010 H1N1 pandemic due to contract enforcement issues.

David Ridley of Duke University has proposed using priority review vouchers[footnote]Wikipedia: “The priority review voucher program … grants a voucher for priority review to a drug developer as an incentive to develop treatments for drugs that might otherwise not be profitable to develop because of a smaller pool of patients needing treatment.”[/footnote] for innovation in rare paediatric diseases or neglected diseases.

Others, like the Drugs for Neglected Diseases Initiative, have suggested patent pools. In fact, Costa Rica has just announced a patent pool for COVID-19 with the support of Unitaid. But these recommendations remain piecemeal, far from being the go-to generalisable policy template to solve market failures in biopharmaceutical contexts.

Also read: Drugs That Could Be Used to Beat COVID-19 Have Another Barrier – Patents

Societies here may ponder allowing innovators compassionate pricing but whether that will be sustainable across countries both rich and poor is an open question. There is also the risk of parallel imports. Broadly, these are conversations that will determine the world’s future going forward with COVID-19. One hopes for a sense of stakeholder responsibility following the emerging lead by a few innovators, like the US firm Abbvie. Perhaps then we can demonstrate that access and innovation can coexist and need not exclude each other. That could be our generalisable healthcare policy lesson from COVID-19 for future generations.

Chirantan Chatterjee is a visiting fellow at the Hoover Institution, Stanford University, and ICICI Bank Chair Professor in Economics and Business Policy at IIM Ahmedabad, India. His research interests include global health and pharmaceutical economics.

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