Should Big Pharma Give Up COVID-19 Vaccine Patent Rights? – Ep. 32 [Podcast]

Transcript

Raymond Guarnieri:

Should Big Pharma give up their patent rights to the new COVID-19 vaccines for the sake of mankind? Billionaire tech giant turned philanthropist, Bill Gates, says no, but Joe Biden says maybe. We’re here today with Ben Hoopes, patent counsel at HP, to discuss the topic. This is Stuff You Should Know About IP.

Raymond Guarnieri:

Today’s episode of Stuff You Should Know About IP is brought to you by the Patent Lawyer Magazine. If you want to stay up to date with everything that’s going on in the world of IP and patents, go to www.patentlawyermagazine.com. Each issue is free to read for up to eight weeks. That’s www.patentlawyermagazine.com, for global news in the world of patents. All right, Tom, Ben, what’s going on with this story?

Thomas Colson:

Yeah, Ray, this is a great discussion. And the reason it’s a great discussion is because so few people really even know what’s going on, and I don’t even mean on this topic. Let’s go back to the basics of intellectual property. No one really even knows what it is. And then if you go to the next step, which is how much does it cost to develop a vaccine in a year during a pandemic, I mean, these are some huge costs. And people often say, “Wow, it only costs you 20 cents to produce a pill. Why do you sell it for 100 dollars? Why don’t you just give it away?” Because people don’t understand how much this stuff costs.

Thomas Colson:

So I’m thrilled that Ben’s with us, because, Ben, I really want to give people a flavor for what’s going on today. And before we start this thing, and the question is… The real high-level question is should the government, the U.S. government… And governments around the world, by the way, because there’s intellectual property rights in each nation, right? Every country has their own intellectual property system, so all these governments want to waive intellectual property enforcement rights in connection with Pfizer and Moderna in particular and their vaccines. So the question I’m asking you to start off with, Ben, is first of all, am I framing this right?

Ben Hoopes:

Yeah, I think you have set this up properly, and what we are seeing as a proposal coming through the World Trade Organization from a couple of countries, who would like to see some of these IP rights relaxed.

Thomas Colson:

Yeah, and when you say relaxed, you mean I have a patent on my vaccine and I’m Pfizer or Moderna, someone else makes the vaccine with my patents rights that are claimed rights, and when you say relaxed, that means I can’t enforce it, which means they can infringe my patent and there’s nothing I can do about it.

Ben Hoopes:

That’s right, and it extends to more than just patents. The ask is for copyrights, industrial designs, and even trade secrets to be relaxed as well.

Thomas Colson:

Which, by the way, is pretty interesting, because I’m guessing, Ben, that it’s not just a question of okay, patents are available now, go ahead and do your thing. This is some highly sophisticated stuff, right? You can’t just read a cookbook in a patent and do it. It’s going to require some tech transfer, some brain transfer, right?

Ben Hoopes:

Yeah, that’s exactly right, and that’s a really interesting point. I think there is agreement across the board, across the spectrum of points of view, that just relaxing the patents is not going to be enough. And I’ve seen one commentator refer to this as just giving someone Julia Child’s cookbook isn’t going to be enough. We need to give the tools, we need to give the know-how. So there is going to need to be a tech transfer, a mind transfer.

Thomas Colson:

So the ask is more than relaxing the patents. The ask is forcing Moderna and Pfizer employees to work with manufacturers throughout the world. And oh, by the way, in all likelihood these manufacturers do not have the standards that Pfizer and Moderna have, so they’re essentially going to have to go into the places, redevelop their whole manufacturing process, and go to market. It’s almost like going to market fresh, right?

Ben Hoopes:

Oh, yeah.

Thomas Colson:

Well, that brings me to another question. I read… Okay, so there’s seven and a half billion people on the planet or so, right? And a bunch of those are anti-vaxxers who won’t take it anyway, so let’s say there’s six and a half billion people, right? So of those people, I understand Pfizer can get 2.5 billion vaccines done this year, 3 billion next year. Moderna can get 800 million done this year, 3 billion next year. Now, you’re in a big company. HP is not in the vaccine business, but it’s a big company. If they can get that many vaccines out by the end of 2022, does it make any sense to get started fresh with a bunch of inexperienced manufacturers in various parts of the world? And when I say inexperienced, I mean in this vaccine.

Ben Hoopes:

That’s a really interesting point. Getting people up to speed is obviously going to take a lot of effort. And one of the things that we haven’t discussed yet is the supply chain, the availability of materials of tools. We are operating in a time in which our supply chains are already constrained and under significant pressure. And so what happens, if we have these inexperienced companies also vying for the same limited resources, I think that the outcome could actually cause more problems than it’s hoping that it would solve by opening this up.

Thomas Colson:

That’s an interesting situation. You ask yourself what’s better? Give Pfizer and Moderna more money so they can go faster by utilizing their existing supply chain, their existing people? Or inhibit their supply chain so other people are trying to pull their resources so they can make less? And distract them by sending some of their big brains over to these other places to compete, essentially. So you’re saying because of supply chain issues and brain drain issues, it might actually slow down the delivery of vaccines throughout the world with this approach.

Ben Hoopes:

Yeah, exactly.

Thomas Colson:

Now, I know you’re not in production, you’re a patent lawyer, which, by the way, is a big thing. But you’re at HP. Supply chain. Tell us a little bit about what you mean when you say supply chain.

Ben Hoopes:

So that’s an interesting question. We have our raw materials, our resources, that we need to get in order to make something. So for the drugs, there are components to all of these vaccines that need to be acquired. And by the way, when we are discussing this mRNA vaccine delivery, this is a supply chain that is really nascent. It’s brand new, and so we don’t have the benefit of an established supply chain. So there are those materials, those raw resources, that need to be acquired.

Thomas Colson:

There might be only a small handful of places you can get those from.

Ben Hoopes:

Exactly.

Thomas Colson:

And Pfizer and Moderna are already getting them all.

Ben Hoopes:

Right, right. According to… I believe it was the Pfizer CEO. He mentioned that basically all of these resources are currently spoken for.

Thomas Colson:

So even if they relaxed the patent… It sounds to me like create relaxing, as you put it, but what I understand is essentially temporarily give away patent rights, eliminate enforcement rights, it could cause mayhem.

Ben Hoopes:

Yeah, that’s my understanding.

Thomas Colson:

And then the numbers that we’re talking about. Pfizer claims they can get 2 and a half billion out this year. Moderna says 800 million this year. Pfizer 3 billion next year, Moderna 3 billion next year. If we open these patents up and create this mayhem, it might actually reduce their numbers.

Ben Hoopes:

I think that’s the assumption, yeah.

Thomas Colson:

Because they don’t have access to the same resources that they need, and like you said, they’re already spoken for.

Ben Hoopes:

Right.

Thomas Colson:

They’re already manufacturing at full speed.

Ben Hoopes:

Right, and another thing to keep in mind is Pfizer and Moderna, these are only two of the companies that are vying for a vaccine. There are a number of other companies as well that are still in trial phases. And if we assume that they do make it through, they are also going to have an established vaccine with approval and for which they are going to want to get resources as well.

Thomas Colson:

Okay, so let’s ignore the facts for a moment… Excuse me… That mayhem could result from this, and it could actually slow down delivery of vaccines throughout the world. It could have the exact opposite impact that they wanted to have. But forget that for the moment. Let’s say it could work somehow. There’s unlimited resources, and these manufacturers could get up to speed like that. For the moment, let’s just toy with that.

Thomas Colson:

I’m wondering… I heard this morning, I was talking to this doctor on the way out of my swim practice, about this question. And he said, “Oh my God, they should definitely waive the patent rights because the government funded that entire thing.” That was this ER doc’s statement. The government of the U.S. funded that entire thing for Pfizer and Moderna. Can you respond to that?

Ben Hoopes:

You know, that’s a really interesting point, and that is one of the key facts that is brought up by a lot of people in favor of having the patent rights waived.

Thomas Colson:

The government owns it. They paid for it, they own it.

Ben Hoopes:

Exactly.

Thomas Colson:

In effect. Not actually, but in effect.

Ben Hoopes:

Yeah. So my understanding is that Pfizer had turned down government subsidies to develop the vaccine, and the money that they did take from the government was actually part of a purchase agreement. So they received money for an advanced purchase for doses.

Thomas Colson:

So it’s a pre-purchase.

Ben Hoopes:

It’s a pre-purchase, exactly. Moderna did receive money, and the number that I saw is about $6 billion, but that covers development, testing, manufacturing, and then also a pre-purchase. And what’s interesting is as you work these numbers out, the price per dose actually ends up being about the same for both Pfizer and Moderna, even building in all of that government grant money.

Thomas Colson:

Okay, so this is an important point, because the discovery of drugs in a normal situation, when you don’t have to race to save the world, is really, really expensive. In fact, I had a friend that worked for Pfizer years ago in discovery. He was in the discovery group. He would say that they fail at like 9 out of 10 or some obscene amount of efforts, and they spend billions. So when they finally succeed at one, in order to be a business, in order to be a company, they have to pay for their losers with their winners. So it’s not the case that oh, it only costs you 20 cents to manufacture, but you’re selling it for 100 dollars. It actually costs you billions to develop it. Once you finished developing and you’re manufacturing, there are still costs, but most of the costs are hidden in research and development.

Thomas Colson:

So when the guy says to me, “Well, the government paid for it anyway,” number one, that’s not the case. Pfizer paid for it. So Pfizer did their own discovery. Number two, Moderna took money, but part of that was pre-purchased. And let’s not forget, there’s this mRNA. Right? That’s the technology that’s being used for this vaccine. They have been developing mRNA for years before this pandemic, and they’ve never brought a product to market before. This is Moderna’s first product in the marketplace.

Thomas Colson:

So imagine this. You’re Moderna. You’ve been getting funded. People are paying into Moderna for years and years and years. You’re developing this mRNA and you’re going to board meetings and they’re like, “Dude, where are the products?” And you’re like, “Hey, just bear with me. Bear with me, we’re getting there. This mRNA is going to be a big thing.” Years of this is going on. CEO’s are losing their hair, and I know, because I’m a CEO that lost his hair. You are too, Ben.

Thomas Colson:

But anyway, imagine this is going on. Then finally, Eureka, there’s a pandemic and we’re going to solve it. We’re going to be super heroes with our mRNA. And they do, against all odds. I mean, who could have ever expected that a company like Moderna, this little company in Boston, could develop a vaccine to a pandemic in 12 months? It’s unheard of, right? So they do this. They do this, and they use technology that they’ve been developing forever without government funding. Then the government comes in and says, “We’re going to waive your rights to enforce your patent.” Essentially, we’re going to give it away. It seems unfair, right?

Ben Hoopes:

Yeah. Yeah, definitely. You know, one of the things that’s pointed out is that there has been government funding. I think some of the mRNA research, the initial research, came from the National Institute of Health Research. So I think you raise a really interesting point. It does seem unfair.

Ben Hoopes:

And another thing that you didn’t mention is that we have actually multiple companies working together. So in the case of Pfizer, they are working with BioNTech, a German company, to help develop this. They had been working I think since 2018 for an mRNA influenza vaccine or something along those lines that hasn’t even come out yet. But they realized hey, we could use this technology for a COVID-19 virus. And so it’s really interesting to see how they were able to use that prior work.

Ben Hoopes:

But when we are talking about potentially waiving rights, it raises issues that you run into when you’re talking about joint development agreements and who owns what when you have these different companies coming to the table. So we’ve got BioNTech that has the mRNA expertise. We’ve got Pfizer that has the general vaccine commercialization, production, FDA approval expertise.

Thomas Colson:

Right, and BioNTech is German.

Ben Hoopes:

And they’re German.

Thomas Colson:

They’re not in the U.S., so we’re waiving German rights. Right?

Ben Hoopes:

Right.

Thomas Colson:

So here’s another interesting thing. I’m talking to my friend who is a… He owns a bunch of houses that he rents out. And he’s always complaining about there’s this moratorium in New York State, and a federal moratorium on landlords. They can’t kick out their tenants, because we’ve decided as a society that we don’t want people out on the streets. And his argument is a good one, which is, “Okay, I’m cool with that. But why is that burden on me? Why should I be the one that can’t make my mortgage payments? Let’s spread it across all the taxpayers if this is something we’ve agreed to.”

Thomas Colson:

And then some people have argued it to the Fifth Amendment, government taking. And the Fifth Amendment, by the way, says private property shall not be taken for public use without just compensation. That’s what the Fifth Amendment says. It’s used in eminent domain, like I got to build a highway here because we need a highway here and your house is here. So we’re going to take your house, but we got to pay you for it because private property shall not be taken for public use without just compensation.

Thomas Colson:

So then you go over to this and you say Pfizer turned down government funding. So they’re investing its private property, and it’s being taken for the public use. So then the question comes down to is it a Fifth Amendment issue? Is this a government taking? And Pfizer’s like, “That’s cool. We want to save the world. Great. But why should that burden be on us?” Shouldn’t we spread that across all the taxpayers and have a tax on it, have a COVID-19 Pfizer tax, so everybody kicks in $10 and they all give it to Pfizer, and then Pfizer doesn’t enforce their patents for three years? What do you think about that?

Ben Hoopes:

Yeah, that’s an interesting idea. It’s an interesting solution. I know that these companies… And when we talk about Big Pharma in general, there have been issues. They haven’t always done things that have had good optics, haven’t looked good.

Thomas Colson:

Oh, you’re right. You are so right.

Ben Hoopes:

Haven’t passed the headline test.

Thomas Colson:

I love that, good optics. I love it.

Ben Hoopes:

Yeah, but I mean, at the same time we see Astra… Hopefully I’m saying it right. AstraZeneca, who is… This is a British-Swedish company that is just going to sell during the pandemic their vaccine at cost. And so we see these opportunities for the company to step up and do things that put them in a good light. I think the Pfizer vaccine, if I understand the pricing correctly, what they are proposing is they are going to charge more in developed countries. In the middle income countries, I think is how they’ve put it, the cost of the vaccines will be about half price. And then in poorer countries like in Africa, they are going to charge at cost.

Ben Hoopes:

But what we’re seeing there is… I think what you were getting to… A private approach to the spreading out of the risk, where countries like us in the United States, European countries, who can afford to pay a little bit more for these vaccines, we are helping to finance the vaccine rollout in poorer countries.

Thomas Colson:

Right. And by the way, there’s an interesting contrast there. AstraZeneca, UK-Swedish company, says they will sell it at cost because they want to be superheroes. And that’s noble, right? But that’s their decision. It’s like my buddy who owns these houses: “I’ve decided I’m going to not charge my tenants rent. That’s my decision. I’m making a contribution.” Right? So Pfizer, it’s another thing. Is government taking? Ray, I want you to chime in on the story. You sent me a picture, and I think it was Volvo, from 1959, because that’s a cool story that’s relatable.

Raymond Guarnieri:

Yeah, and I got to admit, I did not verify this story, but…

Thomas Colson:

Okay, so we will hold out to the world, do not depend upon this story in your decision-making. Ray didn’t verify it, but it’s a great story whether it’s true or false.

Raymond Guarnieri:

I do think it’s true. But basically the story was that when Volvo invented the three point seatbelt in vehicles in 1959, they made the patent… Essentially, they had a patent, but they chose not to enforce it. Or they said that they wouldn’t enforce it because that it had more value as a life-saving tool than it did as something that they could profit from. Which when you think about it, makes sense, because you can’t sell cars to people who don’t have legs anymore, or worse, who are dead, so you can’t really compete in the marketplace. And I seem to recall reading that there was a lot of pressure on the automotive industry at that time as well because of safety concerns, so maybe it was, again, a way to manage optics, but either way, the point stands, so I thought that was really interesting.

Thomas Colson:

They chose it, right? They chose it. And that’s the big distinction here. AstraZeneca chose it. Volvo chose it. Pfizer, to the extent that they’re trying to get their optics right, chose it. But that’s the difference between a government… And I’m not saying this is a government taking, I’m just saying it smells like a government taking. I’m not a government taking expert, but it smells like it. But there’s a big difference between the government mandating, you, landlord, or you, Pfizer, you must bear this burden because we, the country, have decided we want to do this as a nation, and a company stepping up and doing it themselves. Big difference.

Thomas Colson:

So I have one other question for you, because we’re running late on time, but I want to get one more flavor here, and that is how do you feel about a slippery slope from this? And you know what I mean, Ben. There’s a lot of other diseases out there that should be cured, right? Is it just for the pandemic? Is it well, you know, we did that. That’s now precedent. We’re going to do it for some other stuff. We’re going to do it for other cures. What do you think, Ben?

Ben Hoopes:

You raise a good point. To the extent that there is a potential waiver in patent rights, it definitely does set a precedent for future health crises for other situations. And perhaps in these hypothetical contexts, the particular crisis is isolated to a specific country. But the question really becomes once you have given up a little bit, it becomes that much easier the next time to say yes, okay, we’ll waive those rights. But one thing… And I want to go back to what you were saying. One thing that we want to point out is that I have a very hard time imagining any company enforcing their patent rights in a situation like this. I mean, it would just look terrible.

Thomas Colson:

You are so right. Talk about optics. That would be the worst. Pfizer sues manufacturer in India who’s trying to save India. You are so right, Ben.

Raymond Guarnieri:

That was a question that I had, because at the end of the day, if the resources are limited, if the technological or the advancement of other manufacturers in different parts of the world is not up to speed enough for them to even really be able to compete anyway, why do the companies care? Why do these big vaccine companies care even? I mean, maybe they could just do nothing. Is that an option? Even if they had to give up their enforcement patent rights, would anyone even really be able to commit to the point where it would threaten their control over the market?

Thomas Colson:

Or the other thing I got to thinking is if there’s all this excess manufacturing capacity and it’s that easy to do, why wouldn’t Pfizer and Moderna just engage them? You know? I mean, of course they want to sell more, right? Oh, we would love… If we had more manufacturing capability, we could do another billion doses, but we don’t have it so we’re not going to do it. Of course they do it, right? Because it’s not this simple. Anyway, this has been a great chat, Ben. Any other follow-up comments before we close off?

Ben Hoopes:

Yeah. You know, I think one thing that’s really interesting as well, is that there’s really… We have something in the law, in civil procedure, we’re talking about whether or not there’s a case or controversy. So in order to be able to bring a lawsuit to court, there needs to be a dispute about something. You can’t bring a lawsuit because you think that maybe at some point in the future your neighbor may do this or your neighbor may do that here. Here there’s no case or controversy.

Ben Hoopes:

And Dennis Crouch at Patently-O and on the Patent Docs blog, they actually looked at what the numbers look like for COVID vaccine patents, and there are only four issued patents related to COVID-19. And of those four patents that have been issued, none of them are assigned to Moderna, none of them are assigned to Pfizer.

Thomas Colson:

Oh my God, that is so funny.

Ben Hoopes:

There’s only one that is assigned, and it is assigned to Novavax and it does have a vaccine and development, but it’s not on the market. They’ve even pushed out their request for emergency use authorization until Q3 of this year, so they’re not close to getting a vaccine out right now.

Thomas Colson:

They’re not even ready.

Ben Hoopes:

Right.

Thomas Colson:

So the only patent that’s capable of being infringed, no one would infringe, because it’s not even ready yet.

Ben Hoopes:

It’s not on the market.

Thomas Colson:

And it might never be ready, right?

Ben Hoopes:

Right.

Thomas Colson:

That’s a great point, Ben, to finish off with. There’s really no case in controversy anyway. Even if there’s a waiver, there’s no patents.

Ben Hoopes:

Right.

Thomas Colson:

Right? That’s a good one. We should have started off with that.

Raymond Guarnieri:

I know, I’m thinking what are we even talking about here?

Thomas Colson:

That’s a good one.

Raymond Guarnieri:

It’s the optics of it and this way it’s perceived in the general public. I think that that made for a really great discussion, so Ben, thank you so much for joining us.

Thomas Colson:

And thank you for not bringing that up at the beginning, because we probably wouldn’t have talked about all this.

Raymond Guarnieri:

I know, because we probably would have had to pick a different topic. But hopefully you guys aren’t feeling miffed out there in the audience and that you thought it was an interesting discussion. Again, Ben, thanks so much for joining us.

Ben Hoopes:

Thank you.

Raymond Guarnieri:

If you enjoyed the podcast, please like, comment, subscribe, share it with your colleagues in your IP department or, you know, your mother-in-law, whoever you think might be interested. And join us next time. This is Stuff You Should Know About IP.