Suspending IP Protection: A Bad Idea (That Won't Achieve Its Desired Goals)

By Kevin E. Noonan --

Demagogy is never pretty.  When coupled with a species-threatening pandemic, the propensity for the pundit class is to be susceptible to solutions that sound reasonable only to the uninformed.  To make matters worse, some of those "solutions" are proposed by actors creative in using the crisis to advocate positions that benefit their constituencies under the cover of (and preying on) the humanitarian impulses of global elites comfortable in both their privilege and ignorance.  This is particularly dangerous where positions promoted under the cover of beneficence mask long-felt and deep-seated resentments over encouraging, perhaps heavy-handedly, a global trade regime mandating recognition of intellectual property rights in countries adverse to them and that have been successful in chipping away at them for the past 20 years.

Thus we have calls, specifically by South Africa* and India**, for governments to suspend patent rights during the pandemic, ostensibly for vaccine-related IP but in fact having a much broader scope.  Most in industrialized countries who understand the impact (essentially none) of patents on vaccine production and availability are easily dismissed as speaking from a vested interest (bringing to mind the biblical exhortation against the mote in one's neighbor's eye and the mean in one's own) (see "Sen. Tillis Asks Biden Administration to Oppose WTO Waiver Proposal"; "IP Organizations Support Continued Opposition to Waiver Proposal; Industry Coalition Supports Continued Efforts to Oppose Waiver Proposal"; "BIO and PhRMA Urge Biden Administration to Oppose Proposed WTO TRIPS Waiver"; and "IPO Sends Letter on IP Law and Policy to President-Elect and Vice President-Elect").  But should governments succumb to the siren call of purported humanitarianism to the detriment of a global innovation system that (ironically) provided the innovation ecosystem that produced no fewer than half-dozen effective vaccines against COVID-19 in less than a year, in the face of a threat that even its proponents characterize as "an impediment or the risk of an impediment" to vaccine development, it seems prudent to critically assess whether technology is available for which patents could have the putative preclusive effect procurement and distribution of effective vaccines.

Such an assessment is provided by Derek Lowe in an article published in February entitled "Myths of Vaccine Manufacturing" in Science Translational Medicine.  He identified the following "steps" of the vaccine-making process (and remember, these steps occur only after the vaccine is developed, tested, and receives regulatory approval):

Step One: Produce the appropriate stretch of DNA, containing the sequence that you need to have transcribed into mRNA.  This is generally done in bacterial culture.

Step Two: Produce that mRNA from your DNA template using enzymes in a bioreactor.

Step Three: Produce the lipids that you need for the formulation.  Some of these are pretty common (such as cholesterol), but the key ones are very much not (more on this below).

Step Four: Take your mRNA and your lipids and combine these into lipid nanoparticles (LNPs).  I have just breezed past the single biggest technological hurdle in the whole process, and below you will learn why it's such a beast.

Step Five: Combine the LNPs with the other components of the formulation (phosphate buffers, saline, sucrose and such) and fill those into vials.

Step Six: Get those vials into trays, into packages, into boxes, into crates, and out the door into trucks and airplanes.

The last step has been the subject of other analyses (see, e.g., "Latest COVID Conundrum: Accessibility of Vaccines (When They Are Available)") showing that logistics, having nothing to do with patent protection, is fraught with its own limitations, mostly political and financial.

Evaluating the potential for widespread vaccine production (which is the purported global societal benefit of suspending patent protection), Dr. Lowe moves stepwise (but focuses on Step 4 as the bottleneck step).  For Step 1, he references "Exploring the Supply Chain of the Pfizer/BioNTech and Moderna COVID-19 Vaccines", a blog post by Jonas Neubart.  This post details that "DNA plasmid production on an industrial scale is pretty well worked out" and thus is not a bottleneck in producing mRNA-based vaccines.

Step 2, transcription, is also not an impediment, albeit not as widely practiced as Step 1 ("RNA production is certainly closer to being rate-limiting than Step One, but it's nothing compared to the real bottlenecks that are coming").

Nor, according to the post is Step 3 regarding the lipids used to produce the nanoparticle carrier for viral (SPIKE protein) mRNA.  "These are surely not trivial to make on scale, but they're still small molecules with relatively straightforward structures," he says, and "[i]f you had to, you could surely get some other manufacturers up to speed on the process."

And similarly Steps 5 and 6 are not an issue, because "[e]veryone in this part of the manufacturing business has known for months that a Big Vaccine Push has been coming, and has been cranking up vial manufacturing, bringing all available production lines up to speed, and signing deals all over the place with everyone who has any kind of advanced vaccine effort."

So far Dr. Lowe sets out conventional pharmaceutical manufacturing technology that is well-established enough that patents and technology are not an impediment.  But as he quotes Neubart as saying, "Welcome to the bottleneck!" in Step 4.  Why?  Because this step involves "[t]urning a mixture of mRNA and a set of lipids into a well-defined mix of solid nanoparticles with consistent mRNA encapsulation."  These methods are done in-house by Moderna and (less certainly) by Pfizer in Kalamazoo and BioNTech in Germany.  Microfluidics are suspected to be the technology used, and these require control of a number of process parameters that, unlike patents, are not disclosed to the public.  And as Dr. Lowe posits, these processes likely require "bespoke" machines made just for this purpose, which are not readily available.

Dr. Lowe's article was directed to (and frankly prompted by) assertions that there are "dozens" of pharmaceutical companies ready to produce these vaccines, and that this is not the case.  The evidence evinced by Dr. Lowe is relevant to the question of whether patents create an impediment to COVID vaccine production.  It is apparent that, even if there might be circumstances under which intellectual property negatively affects vaccine availability, suspending patent protection is not an effective answer because the rate-limiting step for COVID vaccine production (at least for the mRNA-based vaccines) involves proprietary machines and methods for making the vaccine that are, more than likely, not covered by patents and never will be.

And that raises the specter of an even more dangerous attack on intellectual property.  Because the technological circumstances set out by Lowe and Neubert involve trade secrets regarding formulation of vaccines are what can be the bottleneck in the process.  But trade secrets are the type of property the rights to which cannot be suspended; disclosure destroys the secret and thus the property.  In the U.S., government seizure of trade secrets might be compensated as a taking (although how effective such compensation would be is in serious question).  But is the U.S. government prepared to compensate not only its own trade secret misappropriation but global dispersion of the "secrets," and just how willing can we expect countries such as India and South Africa (the prime proponents of patent suspension) to provide any compensation whatsoever?  When these facts are considered, the call by these governments (and others) should be understood for what it is:  an attempt to use the pandemic to achieve a goal of status quo ante (prior to the establishment of the GATT/TRIPS/WTO global trade and patent regime), which was imposed upon these and other countries a generation ago.  The COVID pandemic provides the humanitarian excuse for a solution that isn't a solution but that resonates with uninformed (albeit generally well-meaning) politicians, humanitarians, and religious and non-governmental organizations.

Which is not to say that there are no issues regarding availability of drugs in low- and middle-income countries that need to be addressed (see "The Law of Unintended Consequences Arises in Applying TRIPS to Patented Drug Protection in Developing Countries"; "A Modest Proposal Regarding Drug Pricing in Developing Countries"; "Trying to Find a Solution to the Global Drug Pricing Crisis").  But there are ways to achieve the lofty goals that are at the root of this message.  As Merck as done with Johnson & Johnson, partnering between pharmaceutical companies can increase the number of doses of the vaccine necessary for global vaccination.  Groups like Gavi ("a Geneva-based funder of vaccines for low-income countries"), the WHO, and the Coalition for Epidemic Preparedness Innovations (CEPI), "a fund based in Oslo that was created to finance and coordinate vaccines for outbreaks" can be involved in an concerted effort to obtain vaccine supplies for the rest of the world.  Western governments with "excess" vaccine reserves can use the auspices of these groups to send doses to low- and middle-income countries and economies (LMICS) and even some "wealthier" countries having the economic capacity to defray some or all of the costs.  Indeed, today the Biden Administration announced it would make available "excess" vaccine doses to countries in need.

And the motivations for such efforts need not rely exclusively on altruism; as has become evident recently the virus has the capacity to mutate in ways that variants of unknown resistance to current vaccines can arise.  Vaccines, particularly the mRNA-base vaccines, may not be effective against these variants (see "Do mRNA-based COVID Vaccines Have an Achilles Heel?") and thus it is in everyone's interest to extend vaccination globally (regardless of how daunting that challenge may be) to reduce the probability of such variants arising.

SARS-CoV-2 and the COVID pandemic is the greatest global health threat caused by a virus since the influenza pandemic of 1918 (see "The Great Influenza: The Story of the Deadliest Pandemic in History") and, before that, enumerable smallpox outbreaks (see "The Fever of 1721: The Epidemic That Revolutionized Medicine and American Politics").  But the current outcry calls for governments and the rest of us to heed Kipling's admonition regarding the aspiration to "keep your head when all about you/Are losing theirs and blaming it on you."  Let's hope they can do so.

* Ironically (or perhaps a basis for their position on the patent suppression suggestion), in South Africa "the existing patent system . . . plays a key role in stifling – rather than stimulating – innovation"; see "Do mRNA-based COVID Vaccines Have an Achilles Heel?"

** Pathetically, the Indian government has "come[] under fire for forcing states and private buyers to pay more for scarce vaccine even while France and Germany are preparing to send aid (in the form of vaccine doses), according to the Financial Times of London (see "US and Europe to send aid to fight India’s coronavirus surge" (subscription required)).

Comments

[skeptical]

This combined with some (finally) solid feedback from Ron Katznelson (see https://www.ipwatchdog.com/2021/04/19/waiving-ip-rights-during-times-of-covid-a-false-good-idea/id=132399/ ), does set up nicely, as I have a (no rare) slate of traveling coming up and can do some reading and contemplation.

(summaries of those subscription required links would be appreciated - if possible)

[Carl B. Massey, Jr.]

Thank you.

[Greg DeLassus]

I think that the above argument is perfectly defensible, but it can be turned inside out like a sock. The argument contends that suspending patent rights relevant to COVID19 is a bad idea, because it will not actually resolve any of the bottle-necks that frustrate vaccine manufacturing. I agree with the premise, but the conclusion does not necessarily follow from the premise.

Precisely because patents are not the rate limiting step for these vaccines, suspending the patent rights will not actually cause the patent-holders to lose any appreciable amount of market exclusivity. Our industry really is already doing all it can to help, but playing along with the Indian/South African request makes our industry also *look* like it is doing all it can to help (the appearance being almost as important---albeit for different reasons---in this instance as the reality). Meanwhile, none of the market players actually give up anything of any real cost by playing along with the Indian/South African request.

With that in mind, the argument in the original post above comes down to "the call by these governments... should be understood for... an attempt to use the pandemic to achieve a goal of status quo ante (prior to the establishment of the GATT/TRIPS/WTO global trade and patent regime)... ." True, I agree with this conclusion. However, the New York Times (URL below) wrote several years ago about a community of Syrian Jews in Brooklyn who refuse to admit converts to their community. They have only ever made one exception to this rule, and that was when the chief Sephardic rabbi of Israel signed the convert's papers. The Brooklyn community "reasoned that accepting this case as precedent would actually have a deterrent effect: how many other converts could expect the chief rabbi of Israel to go to bat for them?"

Mutatis mutandis, the same reasoning applies here. Right now, there has never been a TRIPS waiver granted. By taking COVID19 as the cause that triggers the exceptional suspension clause, we set a rigorous precedent as to what sort of conditions justify the invocation of this exceptional clause. We would do well to set the bar at this height while the opportunity presents itself, particularly because to do so comes at no real cost.

https://www.nytimes.com/2007/10/14/magazine/14syrians-t.html

[Kevin Noonan]

Greg: I think it more likely that once the horse is out of the barn (or the genie is out of the bottle) it will never be possible to achieve status quo ante. And to the extent that patentees go along for purportedly cosmetic reasons, their acquiescence will be used as an admission to bootstrap this application of the waiver to all therapeutic patents.

I don't know which one of us is correct, but I don't want to find out.

Thanks for the comment.

[Karl P. Dresdner Jr, PhD, US Patent Agent 63,319]

With any viral pandemic emergency, mandate distribution of vaccines by a vaccine producing company on moral grounds with the proviso that the vaccine company is immediately and fully compensated by the recipient country or the World Health Organization to pay to protect vaccine company's costs to make and deliver the vaccine anywhere. Someone has to pay the costs. The quid pro quo solution is an obvious and kind application of the Golden Rule to the world's populations at risk during a pandemic. I believe countries should protect other countries but there must be compensation in some economic form of benefit.

[skeptical]

Dr. Noonan,

I think that the bootstrapping danger is not so much bootstrapping to other patents, but per your article, the bootstrapping to ALL forms of intellectual property, including especially trade secrets which by their nature are effectively destroyed with waiver.

I have been of the position that waiver of PATENTS may well be an item considered to be within the fact that governments (Sovereigns) HAVE INCLUDED waiver provisions (and to view ANY 'horse out of the barn' as a de facto reason against waiver would make waiver clauses a nullity - and one would have to wonder why present at all).

Mr. Dresdner,

I do NOT think that the issue for discussion is merely remuneration to a rights holder for THEIR production of product (a positive item) per their ability to foreclose others from making (a negative item - per the nature of patent rights).

Rather, it is a providing TO OTHERS of the full ability to make (in and of themselves) the item.

It is this FURTHER aspect that catches my eye in the immediate article, as Dr. Noonan points out that in order to meet THIS (elevated) point, there may well need be MORE THAN mere patent rights (negative rights) implicated.

[Greg DeLassus]

“[M]andate distribution of vaccines by a vaccine producing company on moral grounds with the proviso that the vaccine company is immediately and fully compensated by the recipient country or the World Health Organization to pay to protect vaccine company's costs…”

I can agree in theory that compulsory licensing is better than uncompensated suspension of IP rights, but in this context the distinction is purely academic. As Dr. Noonan explains above, IP rights are not the obstacle to more vaccine. The machines are the rate-limit, and one cannot conjure more of these machines into existence with TRIPS waiver or compulsory license regimes.

[Derek Freyberg]

And one other issue not unrelated to IP rights: who is responsible (who pays, essentially) when a vaccine from one of these compulsory licensees of whatever rights fails (does not immunize) or causes injury or death?
It's one thing to hold Moderna, just to pick a name, liable for injury caused by their vaccine; and indeed they would be in the US, either through the Vaccine Injury Compensation Program or just plain old tort liability. But it's hardly reasonable to hold them liable for injury caused by vaccine made by BathTub ChemWorks and Vaccines in a different country, especially if Moderna's IP has been compulsorily transferred to BathTub.

[Paul F Morgan]

The latest issue of the influential "Economist" magazine has a full page discussion of this issue.

[skeptical]

Thank you Mr. Morgan,

https://www.economist.com/finance-and-economics/2021/04/22/how-to-think-about-vaccines-and-patents-in-a-pandemic