Will big pharma abandon the race for profit?

Ben Chu, The Independent

Imagine how potentially profitable a coronavirus vaccine could be. Seven and a half billion people across the world, with perhaps a majority in need of vaccination. Governments desperate to reopen their economies. Imagine a legal monopoly enjoyed by a private company on the production of that drug and the ability to set whatever price it sees fit.

It’s a pharmaceutical executive’s gilded dream.

Will it happen? Could a vaccine become the biggest source of private profit in pharmaceutical history? Almost certainly not. But as the global “race” from researchers – both public and private – around the world to develop a vaccine for SARS-CoV-2 intensifies it’s worth exploring why; and thinking about the wider implications.

In normal times pharmaceutical companies invest in the research and development (R&D) of new drugs. If one of those projects is successful the law generally grants them a monopoly on its production, via a time-limited patent, through which they can theoretically recoup the money they spent on R&D and make a profit on top.

If a new drug turns out to be a “blockbuster” those profits can be very large indeed. Pfizer’s cholesterol-lowering Lipitor generated sales of around $150bn before its patent expired in 2011. The costs of production were negligible.

But these are not – as none of us will need reminding – normal times.

In emergencies, governments also have the power to allow companies that do not own the intellectual property to a medicine to manufacture and sell versions of it for domestic distribution. Such “compulsory licences” are permitted under the major international trade treaties and are recognised by the World Trade Organisation under certain conditions.

If a pharma company developed a SARS-CoV-2 vaccine and tried to flog it around the world in the manner of Viagra, it would very soon find itself assailed by compulsory licences, predicts Enrico Bonadio, an expert in intellectual property law at London’s City University.

We are already getting a taste of that by watching what’s happening to those drugs that we find may ameliorate the symptoms of COVID-19. Kaletra is a combination of two antiviral drugs, normally usually used to treat HIV, for which the American pharma company AbbVie has a patent. Some doctors believe Kaletra helps patients cope with coronavirus. Israel issued a compulsory licence for its production last month. The governments of Germany and Canada have also made moves in this direction for future coronavirus treatments.

In recent decades compulsory licencing has generally been used by developing nations such as South Africa and India to lower the price of medicines such as antiretrovirals for treating HIV/AIDS. These have led to legal battles, with western drugs companies playing hardball in court and trying to bring political pressure on foreign governments to back off.

But so far this pandemic has hit richer countries just as hard, in many ways harder, than poorer ones. And that has implications for those multinational pharma companies headquartered in the developing world.

“The image of these companies might be tarnished forever if they use their usual tactics of threatening to pull R&D from a country or to stop investment,” explains Bonadio.

He thinks pharma companies could, collectively, do themselves a major public relations favour by committing now to make any vaccine and medicine for coronavirus universally available at not-for-profit retail prices.

A campaign has begun to get pharma (and other) firms to sign up to an “Open Covid pledge”, where they would voluntarily relinquish their intellectual property rights in relationship to the fight against Covid-19 until the pandemic is over.

And there are, in fact, signs that some pharma companies are jumping before they are pushed. AbbVie, which has a reputation for an aggressive attitude to intellectual property, said it would unilaterally stop enforcing its Kaletra patents worldwide after the Israeli government’s move.

The UK pharma giant GlaxoSmithKline is teaming up with France’s Sanofi to research a SARS-CoV-2 vaccine. GSK’s chief executive Emma Walmsley insisted to the BBC this week that the company would not make any profit from its vaccine if it succeeds in developing one.

Will this damage incentives for future drugs research, potentially making us all worse off in the long run? It seems unlikely. Evidence was accumulating even before this disease outbreak that the intellectual property regime around drugs was inefficient in stimulating research – and that it gave outsize financial rewards to pharmaceutical firms that rely on an increasing amount of publicly funded basic research.

Perhaps one legacy of the COVID-19 pandemic will be a welcome rebalancing of private profit and public benefit when it comes to all life-saving, or life-extending, medicines.