Patents save lives

World Intellectual Property Day is an occasion to celebrate intellectual property rights and acknowledge how much we owe to this legal framework. Most of the things we use on a daily basis, including works of art, consumer goods, and technologies, are born out of this legal framework.

In simple terms, intellectual property provides artists with copyrights, inventors with patents, and entrepreneurs with trademarks. By picking up a book, a bottle of water, or your phone, you come into direct contact with intellectual property. It's beyond dispute that innovation thrives when creators are protected from unfair copying. The rationale behind the invention of intellectual property is that without any protection, there would be little incentive for innovators to pursue their efforts. Before the deployment of patent legislation that provided a legal framework, innovators would either give up altogether, or had to rely on a combination of secrecy and deception to protect their work from being stolen or copied by others. Leonardo da Vinci, for example, is known for writing his notes with a mirror and using ciphers to prevent others from stealing his ideas.

Patent rights, in particular, provide inventors with the incentive to turn science into technologies. This has produced multiple waves of innovation that drove the explosive scientific and technological progress we've witnessed since the mid-19th century. Regarding medicines, Dr. Margaret Chan, former Director General of the World Health Organization, said, "The role of patents in encouraging innovation and promoting public health is clear. The challenge is to balance the rights of inventors with the needs of society." And that’s exactly what the patent system does: By granting innovators the right to prevent others from unfair copying, the patent system not only gives them the legal platform to pursue their research with some hope of financial return, but it also forces them to compete through innovation thus generating a virtuous cycle: the right to exclude others closes the door to mere copying, but the limited duration of this right means that inventors can’t rest on their laurels, as it forces them to continue to invest in R&D to stay in business.

The source of global public goods

Rather than "monopolizing" an invention, the patent system gives innovators a time-limited exclusivity in exchange for the rapid publication of their invention by patent offices (replacing the need, often hopeless, to keep their inventions secret). This publication puts other inventors on notice about the state of the art in a particular field. This prevents duplicative work and allows inventors to focus on innovating further. At the end of the patent life, the invention enters the public domain once and for all.

This quid pro quo of time-limited protection in exchange for publication makes the patent system the largest and most sustained source of global public goods for healthcare. While the protection provided by patents is time-limited, the healthcare and societal benefits last forever. During the pandemic, the treatment of choice for hospitalized patients suffering from a severe case of COVID-19 has been dexamethasone, a drug developed by MSD in the 1950’s. At the time, it was a therapeutic breakthrough against inflammation, 25x more potent than hydrocortisone. 70 years later, dexamethasone was called a “life-saving drug”, decades after its patent had lapsed.

The role of patents in supporting the development of medicines cannot be understated. Until someone invests in the trial-and-error process of turning a scientific insight into a medicine, we are left with scientific papers at best. It is thanks to patent protection that researchers can raise the capital required to investigate the therapeutic potential of chemical and biological compounds. This high-risk and high-cost endeavour requires years of discovery, chemical refinements, and clinical trials. Lacking patent protection, who would engage in the pursuit of therapeutics, knowing that 9 out of 10 candidate drugs fail during the  human testing phases. However, the results from years of R&D are as hard and expensive as they are easy to copy once the research has been done.

Even generic companies benefit from IP rights: without innovative medicines developed thanks to patent rights, they wouldn’t have anything to copy.

The proof is in the pudding

Nobody has a monopoly on drug development, which is non-mandatory and non-exclusive, i.e., anybody, including governments, can decide to engage in pharmaceutical R&D. It can be done without patent protection, but the critical question is one of funding sources to sustain R&D efforts on a decade-long basis.

Throughout the history of modern pharmaceuticals, most if not all innovative medicines ever invented were produced in countries providing patent protection. The claim that there are better models to develop drugs have so far fail to demonstrate their worth beyond one-time shots in the best case. Any alternative model – which would be by default 100% publicly funded – needs to be judged against the 945 fully new active substances (drugs and vaccines) launched by the private sector between 1993 to 2021 – an average of 28 new compounds per year over almost 30 years.

A template for success

Pharmaceutical innovation is a relatively recent development. Europe is where it all started thanks to an effective partnership between academia and innovative firms. In the 1990's, the US took over Europe as the leading source of new medicines and has increased its lead ever since. Today, we can witness the emergence of China as a source of new treatments, after it made the strategic decision to join this global effort at the end of the previous century. In addition to investing in science and healthcare - two critical components of the drug development trifecta – China implemented an IP right framework on par with the US and Europe, which proved to be a critical building block for their pharmaceutical sector to really take off. 

Setting aside competitiveness and industrial considerations, we should rejoice when more human brains are put to task to develop medicines that save and improve lives.

Less is less

Experience borne out rare disease has shown the value of tailored IP rights to incentivize R&D in priority areas. The COVID-19 pandemic has made it very clear that the world needs to be better prepared for global threats posed by infectious diseases. Antimicrobial resistance (AMR) is one of these threats. Being the first to launch penicillin during WWII, MSD has a long history in fighting infectious diseases. We remain one of the few large pharmaceutical companies fully invested in this critical therapeutic area. The EU pharmaceutical review provides the opportunity to introduce a new IP right to promote R&D in novel antimicrobials, which has been on a steep decline.

We call on EU legislators to support the creation of transferable exclusivity vouchers (TEVs) to reward successful R&D efforts by a company bringing a new, priority antimicrobial product to the market. Because of the specific hurdles attached to the limited use by clinicians of novel antimicrobials and the depressed price levels offered by payers, the simple extension of intellectual property rights granted on this new product would not provide an effective reward mechanism. To overcome this hurdle, it is proposed to allow the innovating company to transfer such exclusivity extension to any other product within its portfolio or even auction this transferable voucher to other companies with appropriate conditions and limitations.

Transferable exclusivity vouchers could take the form of a supplementary protection certificate or regulatory data protection extension. The transferability feature would provide a direct and timely financial reward to the developer of a priority pathogen antibiotic and serve as a powerful incentive tailored to the unique features of antibiotic development and use.  

As the Commission was rumoured to propose a transferable exclusivity voucher, health authorities from certain countries and advocacy groups have voiced their opposition to any voucher scheme. As well put by MEP Peter Liese at the Politico event of 25 April 2023, “The transferable exclusivity voucher idea has been criticized. But anybody who’s against should make a better proposal. And I didn't see any so far. So let's work on the voucher.”

When considering priority actions in the fight against anti-microbial resistance, we should remember that there are no market failures, but failures to understand how markets work.

Author: Boris Aza?s, Director Public Policy Europe Canada, MSD