BioNTech settles millions’ royalty issue

Pharma majors like BioNTech in Germany and Pfizer in the United States have made profits in billions of dollars in selling COVID vaccines which had ravaged the world in 2020 and 2021. In producing the vaccines in what seemed like at lightning speed, the fact was overlooked that BioNTech had used patents from earlier scientific research which became part of the final product that the COVID vaccine was.

So, the US’ National Institutes of Health (NIH) in March this year and the University of Pennsylvania in August had filed suits against BioNTech for underpaying the royalties due to them on the sale of vaccines. BioNTech has come to a settlement with both NIH and the University of Pennsylvania, by which the German pharma firm had agreed to pay $791.5 million to the NIH and $467 million to the University of Pennsylvania.

The University of Pennsylavnia had claimed in its suit that BioNCon had used the messenger-RNA or m-RNa developed by the university researchers Katalin Kariko and Drew Weissman, who had won the Nobel Prize for Physiology or Medicine in 2023. BioNCom had however said that the payment was not in lieu of any liability on its part. The firm seems to imply that this is a more goodwill settlement.

The fact that both NIH and the University of Pennsylvania had filed suits in the courts shows that BioNCon owed them the payments. University of Pennsylvania has claimed that the royalties are to be paid on the global sales of the vaccines because its patented elements are valid in many of the countries where the vaccines are being sold.

This is an interesting case which highlights a larger issue in the field of patents and the claims made by the pharmaceutical companies when they patent their products and claim royalties from other drug-makers, especially in developing countries. This has forced the pharmaceutical companies in the developing countries to make the products through a method called reverse engineering to avoid the costly payments of royalties because the payment of royalties makes the drugs costlier.

The argument of the pharmaceutical companies in the developed world has been that they spend billions of dollars in research and development (R&D) in developing new life-saving drugs, and they have to insist on royalty payments to sustain their research.

It now turns out that the private pharmaceutical companies in the Western world borrow from already available research in the universities and other research centres in making their drugs, and they pay these sources royalties. So the myth that private drug companies in the West are investing in their own R&D is only partially true. And the royalties paid to the NIH or the University of Pennsylvania goes back to the taxpayer in a way because these two institutions are funded by the government.

 Much of the original research then happens in government-backed institutions, and the private drug-makers are more interested in making commercial use of the research. In science, research has to yield results before it can be commercialised. And private companies have no interest in pure research.

Basic science research, which is the base of all technological innovations including new drugs and AI, is done in public institutions and not in the R&D wings of the private pharmaceutical companies. The private drug companies benefit most from the research done in the public institutions and earn huge profits through sale of drugs.

So, it is necessary that the public institutions should patent their research breakthroughs, and the private drug companies which make use of them should pay the rightful royalties due to the universities and research institutions.

The research products are complex entities and there are many patents involved in a single product. That is why, BioNTech has to pay royalties not for a single patented product but for many patented products of a complex drug.