CHP blogazine

Breaking pharmaceutical patents will guarantee that no vaccines are available for the next pandemic

Posted on February 10, 2021

Breaking pharmaceutical patents will guarantee that no vaccines are available for the next pandemic

Brett Skinner, PhD | February 10, 2021 | 

Last week the government of Canada announced it would dip into COVAX, an international program established by the World Health Organization (WHO) and funded by wealthy countries, which is intended to procure COVID-19 vaccines for low and middle income countries. That Canada, a G7 country, needed to rely on the WHO, was widely seen as another sign of the government’s botched response to the pandemic, which has promised, but so far failed to deliver adequate supplies of vaccines for Canadians.

On Super Bowl Sunday’s episode of CTV’s Question Period, host Evan Solomon interviewed Stephen Lewis, former United Nations' special envoy for HIV/AIDS in Africa who called the decision a “profound mistake”. Solomon then asked Lewis whether pharmaceutical patents should be suspended to allow less developed countries to domestically produce the vaccines. Lewis said yes, because vaccines manufacturers are profiting off of drug discoveries that are mostly funded with public money.

Lewis was not correct. Pharmaceutical research and development (R&D) is funded from private and public sources. Governments support the discovery of new pharmaceuticals through funding for basic scientific research by public institutes and universities. At this early stage, scientists identify potential chemical or biological candidates that might be useful for treating a particular health condition. Pharmaceutical companies also fund drug discovery as sponsors, as partners, or by purchasing the intellectual property rights to the most promising candidates, thereby compensating publicly funded research organizations for the cost of the basic science.

But discovery is only the beginning of a long and much more expensive process which involves multiple phases of clinical testing to confirm drug safety and efficacy. The later stages of R&D are almost entirely funded by industry, not by government.

The most recent data from the developed countries of the Organisation for Economic Cooperation and Development (OECD) show that in 2016, governments collectively spent US $53 billion for all health-related R&D including pharmaceuticals. While the pharmaceutical industry spent US $101 billion on R&D across OECD countries.

Lewis’ hostility against the pharmaceuticals industry is misguided and counter-productive to public health because breaking vaccines patents will destroy the reward for taking on the risk of investing in clinical testing for potential new drugs, many of which fail to become useful medicines.

The most recent study of clinical trial success rates was conducted by a group of authors from the Massachusetts Institute of Technology using data from 406,038 trials and over 21,000 compounds. Their results were published in the journal Biostatistics in 2018. The overall probability of success for all drugs and vaccines was only 13.8 percent, ranging from 3.4 percent for oncology drugs to 33.4 percent for vaccines.

High failure rates are a major driver of the cost of drug development. The most recent estimate was published in the Journal of Health Economics in 2016 by researchers from Tufts University in Boston. Their analysis found that the risk-adjusted capital cost of developing a new prescription medicine from phase 1 clinical trials to regulatory approval by the Food and Drug Administration (FDA) was between $2.6 billion to $2.9 billion, stated in 2013 USD. After accounting for general inflation, the cost would be $2.9 billion to $3.2 billion in 2020 USD. And the whole process takes more than a decade.

Suspending pharmaceutical patents will unfairly transfer profits from the investors who funded the R&D, to generic companies who have invested nothing. It will undermine the risk-reward calculation that encourages people to invest in pharmaceutical research and development. Capital will flow out of the pharmaceutical business into non-pharmaceutical industries that produce higher or safer returns. Governments cannot reasonably rely on taxpayers to fill the gap and fund the risky business of pharmaceutical development.

Breaking patents is not a feasible strategy for ensuring access to current vaccines. It will only sacrifice the development of future vaccines. It is also based on a false assumption that all low and middle income countries have domestic capacity to manufacture generic versions of the vaccines. Most of these countries lack the basic infrastructure needed to store, distribute, and administer vaccines.

Instead of suspending patents, wealthy countries can make advanced market commitments to subsidize the cost of vaccines for people in low and middle income countries. This is what the WHO COVAX program is intended to achieve.

At the same time, the federal government should follow Israel’s example and immediately negotiate a price that will incentivize patent holders to license vaccines production at facilities already operated by other multinational innovative pharmaceutical companies in Canada. This would utilize spare capacity to manufacture vaccines in larger volumes more quickly.

Brett Skinner, PhD, is the CEO of the Canadian Health Policy Institute

Subscribe image

CHP blogazine