Big Pharma notched a regrettable victory in the early days of the COVID-19 response when it successfully blocked an enforceable reasonable-pricing clause from inclusion in the first $8.3 billion emergency spending bill. Although the bill contains a provision requiring “fair and reasonable pricing” for federal acquisitions and another authorizing the Secretary of Health and Human Services to take steps to ensure that coronavirus vaccine, treatments, and tests “will be affordable in the domestic market,” those provisions lack any meaningful enforcement mechanism. Moreover, drug companies inserted text that prevents the government from using lack of affordability as a reason to delay development of a medicine. As reported in Politico on March 5,
Industry lobbyists successfully blocked attempts this week to include language in the $8.3 billion emergency coronavirus spending bill that would have threatened intellectual property rights for any vaccines and treatments the government decides are priced unfairly. … The pharmaceutical industry not only killed the intellectual property provision in the coronavirus package, but it got language added into the bill that prevents the government from delaying a medicine’s development over concerns about its affordability.[1]
Despite the legislation promising industry $3.1 billion to promote coronavirus research and development and to expand manufacturing capacity and another $300 million to pay for federal procurement, drug companies wanted the right to price gouge without restraint — and they got it.
What a difference two weeks have made.
Since then, Big Pharma and big medical technology companies have suffered one defeat after another as activists and progressive politicians have publicly challenged companies for their monopolistic behaviors. Most of these victories, outlined in Box 1 below, occurred in a matter of days—not weeks, months, or years. The most important lesson to learn from this wave of lock-step capitulation is that pharmaceutical and medical device companies are in a defensive rout, and thus that this is a precipitous time for even bolder campaigns to ensure widespread and affordable access to new COVID-19 technologies worldwide.
Box 1 – Companies Forced to Relinquish Exclusive Rights
| A compulsory license issued by Israel compelled AbbVie to announce it would not assert any of its patents on lopinavir/ritonavir globally for any use or formulation (pediatric or adult), including potential approved use to treat COVID-19. In a similar step, Mylan waived its exclusive right in the U.S. to sell and distribute generic lopinavir/ritonavir. Gilead relinquished its orphan drug designation on remdesivir once activists and several members of Congress expressed outrage about Gilead having gamed the orphan drug legislation to gain 7-years of total market exclusivity, expedited and reduced-fee registration, and extra R&D tax credits on a medicine that might prove effective for millions, not the < 200,000 patients that the legislation was designed for. Under pressure, Roche backpedaled and agreed to provide supplies of analysis buffer and its secret recipe for coronavirus testing to other Dutch laboratories. |
Having reaped a well-earned reputation for price gouging over the past several years both for extortionate launch prices and double-digit annual increases, multinational pharmaceutical companies are especially vulnerable to charges that their aggressive assertion of intellectual property rights will prevent tests, medicines, and vaccines from reaching front-line health workers and the millions of people who might ultimately be infected with COVID-19.
However, Big Pharma will not stand by passively. Already, industry apologists are arguing that any constraints on pricing or intellectual property rights will kill incentive to invest in risky coronavirus research. (If this is true, it shows just how morally bankrupt this industry is in the face of the greater threat to public health in a century.) But, just as some industry spokespeople are spouting the same stale line about research incentives, other industry actors are seeing COVID-19 as an opportunity to burnish the industry’s sagging reputation. With great fanfare, fourteen of the largest drug companies, the Bill & Melinda Gates Foundation, and Wellcome Trust announced a collaborative consortium to accelerate the development, manufacture, and delivery of vaccines, diagnostics, and treatments for COVID-19.[2] Although the only concrete action thus far appears to be the sharing of chemical libraries, we can expect a fair amount of positive publicity about industry’s openness to shared science and equitable access to new technologies. Industry will also tout the positive access moves described above in Box 1 as self-guided decisions made in the public interest.
Although we are unlikely to see any industry statements of support for compulsory licensing, there has also been a flurry of compulsory licensing activity in the past two weeks (see Box 2), and even the pro-business Financial Times has editorialized in favor of using compulsory licenses if needed to access COVID-19 products: “Another vital trade policy issue will arise in the near future: the licensing of drugs and vaccines effective against the virus. The world has an overwhelming interest in ensuring these will be universally and cheaply available. Fortunately, trade rules allow compulsory licensing. If necessary, it must be used.”[3]
Box 2 – Compulsory Licenses
| Israel issued a compulsory license when AbbVie could not supply adequate quantities of lopinavir/ritonavir, an existing antiretroviral being tested to treat COVID-19. Chile and Ecuador have taken preliminary parliamentary steps to allow compulsory licenses on COVID-19 medicines and medical technologies. Canada and Germany have amended national legislation to make it easier to issue government use licenses for COVID-19 medicines and medical technologies without having to first negotiate for voluntary licenses with patent holders. The Spanish government has temporarily nationalized its health care industry and national health supply chain to ensure access to COVID-19 technologies and has further given the government power to take over pharmaceutical manufacturing facilities to make essential medicines. |
There is also widespread support for a proposal by Costa Rica that the WHO coordinate the establishment and operation of a COVID-19 technology pool.[4] This Pool would amass the broadest possible array of COVID-19 relevant intellectual property rights and data rights both to promote efficient, open-science research for new vaccines, medicines, diagnostics, and devices and to ensure universal, equitable access to such products across the globe.[5] This campaign has echoes in the European Union, where 30 European Parliamentarians and 61 civil society groups petitioned to European Commission to guarantee open licensing for COVID-19 products financed through EU grants.[6] Likewise, there are campaigns to lower the price of new COVID-19 testing cartridges sold by Cepheid from $20/cartridge to $5/cartridge[7] and for Gilead to renounce all of its patent and data exclusivity rights on remdesivir globally.[8]
Big Pharma is running scared, but we have to make them run faster. The only way to do this is to accelerate our demands against individual companies, for the COVID-19 Technology Pool, and for adoption and use of compulsory licensing measures at the same time that we point out the need for even more fundamental changes to how the world treats essential medical supplies. We now see that leaving the innovation and supply of priority medicines and medical technologies to monopoly-based industry is the path to viral perdition. Instead of treating vital vaccines, medicines, diagnostics, and medical devices like the global public goods that they are, governments and industry treat them like ordinary commercial goods – like the latest skateboard.
Government-granted monopolies to biopharmaceutical and medical devices companies are the most irresponsible barriers to erect in the middle of a global pandemic threatening millions of lives. These intellectual property monopolies not only impede open science needed to accelerate discovery of new medical technologies and therapies, but they also limit production to single suppliers that can in no sense meet urgent global demand, that might price gouge, and that will prioritize supply to rich and powerful countries. In the short run, we urgently need to pool IP rights on COVID-19-related medical technologies to allow mobilization of our best scientific efforts and to use all available global manufacturing capacity to speed newly approved medical responses across the globe. In the long run, we need a system that prioritizes research on neglected and emergent threats and that guarantees affordable access for all.
[1] Sarah Carlin-Smith, How the Drug Industry Got Its Way on Coronavirus, Politico (March 5, 2020), https://www.politico.com/news/2020/03/05/coronavirus-drug-industry-prices-122412.
[2] Bill & Melinda Gates Foundation, Life Sciences Companies Commit Expertise and Assets to the Fight Against COVID-19 Pandemic Alongside Bill & Melinda Gates Foundation (March 25, 2020), https://www.gatesfoundation.org/Media-Center/Press-Releases/2020/03/Life-Science-Companies-Commit-to-the-Fight-Against-COVID-19-Pandemic-alongside-Gates-Foundation.
[3] Coronavirus Must Not Destroy an Open World Economy, Financial Times (March 29, 2020), https://www.ft.com/content/4a3bf282-701c-11ea-9bca-bf503995cd6f
[4] Open letter to the World Health Organization (WHO) and its Member States on the proposal by Costa Rica to create a global pool for rights in the data, knowledge and technologies useful in the prevention, detection and treatment of the coronavirus/COVID-19 pandemic, Knowledge Ecology Int’l (March 27, 2020), https://www.keionline.org/32599; With Access to Life-Saving COVID-19 Medicines and Diagnostics at Risk, Health GAP Joins the Call for Creation of Emergency Technology IP Pool Benefiting All Countries, Health GAP (March 27, 2020), https://healthgap.org/press/with-access-to-life-saving-covid-19-medicines-and-diagnostics-at-risk-health-gap-joins-the-call-for-creation-of-emergency-technology-ip-pool-benefiting-all-countries/; see Press Release: MSF Calls for No Patents or Profiteering on COVID-19 Drugs, Tests, and Vaccines in Pandemic, Medicins Sans Frontieres (March 27, 2020), https://msfaccess.org/msf-calls-no-patents-or-profiteering-covid-19-drugs-tests-and-vaccines-pandemic.
[5] Brook K. Baker, Rationale for Supporting Costa Rica’s Proposal for Emergency COVID-19 Technology IP Pool for all Countries, Health GAP (March 25, 2020) https://healthgap.org/rationale-for-supporting-costa-ricas-proposal-for-emergency-covid-19-technology-ip-pool-for-all-countries/.
[6] Grace Ren, European Parliament Members Urge Open Licensing for COVID-19 Products Financed Through EU Grants, Health Policy Watch (March 27, 2020), https://www.healthpolicy-watch.org/european-parliament-members-urge-open-licensing-for-covid-19-products-financed-through-eu-grants/.
[7] Treatment Action Group Statement on the High Price of Cepheid’s Xpert Test for COVID-19, Treatment Action Group (March 27, 2020), https://www.treatmentactiongroup.org/statement/treatment-action-group-statement-on-the-high-price-of-cepheids-xpert-test-for-covid-19/; MSF, supra note iv.
[8] Open Letter – Civil Society Urges Gilead to Take Immediate Action to Ensure Access to Potential COVID-19 Treatment (March 30, 2020), https://msfaccess.org/open-letter-civil-society-urges-gilead-take-immediate-action-ensure-access-potential-covid-19.
