Pharma erupts as Biden administration backs waiver of vaccine patent rights

By | May 7, 2021

The Biden administration’s call to waive patent rights for coronavirus vaccines sparked vociferous opposition from drugmakers and pharma industry groups, which quickly claimed the move will discourage future drug research and do little to increase supply. 

Activists, who have pressured the administration for months on the issue, argue a waiver is needed to begin removing hurdles standing in the way of manufacturing vaccines in Asia, Africa and South America. 

“The waiver is the first significant step,” said Tahir Amin, co-founder of I-MAK, a group that advocates for pharmaceutical patent reform. “It creates a risk-free environment for other manufacturers to at least attempt to reverse engineer vaccines.” 

In the short term, however, a patent waiver may not do much to speed the availability of vaccines developed by U.S and European companies to people in developing countries. Manufacturing vaccines that, like Moderna’s and Pfizer’s, use messenger RNA, is a relatively new and complex process. There may not be sufficient production capacity elsewhere to boost supply even if intellectual property protections are temporarily lifted. 

We believe this will not help supply more mRNA vaccines to the world any faster in 2021 and in 2022, which is the most critical time of the pandemic,” said Moderna CEO Stéphane Bancel on a conference call Thursday. “There is no idle mRNA manufacturing in the world.”

The announcement from U.S. Trade Representative Katherine Tai on Wednesday marks a notable shift in U.S. trade policy, which has historically supported strong protection and enforcement of patent rights. In her statement, Tai said the U.S. would participate in negotiations at the World Trade Organization on a waiver, although she cautioned discussions could take time. 

A waiver would effectively permit manufacturers to use patent-protected technologies to make their own versions of already-authorized vaccines without the threat of legal action. The U.S. support comes as new COVID-19 cases have climbed to new heights globally, and an uncontrolled wave of infections has devastated India.

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The situation is much more dire than in the U.S. and some developed countries like the U.K., which have already vaccinated large portions of their population. Even Europe, which has lagged for months in obtaining sufficient vaccine supply, is beginning to ramp up its immunization efforts. 

“The administration believes strongly in intellectual property protections, but in the service of ending this pandemic, supports the waiver of those protections for COVID-19 vaccines,” Tai said in her statement. 

The idea of a wavier was initially proposed by India and South Africa, which have pushed the WTO for months to ease patent protections under the Agreement on Trade-Related Aspects of Intellectual Property Rights, or TRIPS. 

Intellectual property, or IP, is vital to drugmakers, which rely on patents to enforce monopolies around their products for set periods of time. The TRIPS agreement, which was signed in 1994, requires members of the WTO to protect IP rights of all other members to a certain level.

Unsurprisingly, given the industry’s long-standing opposition to any weakening of patent protections, the U.S.’ change in position caused an immediate uproar among drugmakers. PhRMA and BIO, both powerful U.S. trade groups, even claimed a waiver would harm existing efforts by companies to scale up their manufacturing. 

This decision will sow confusion between public and private partners, further weaken already strained supply chains and foster the proliferation of counterfeit vaccines,” said PhRMA president and CEO Stephen Ubl in a statement. 

Shares in many vaccine developers, including Pfizer, Moderna, Novavax and CureVac, fell Thursday on the news. 

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A fear among drugmakers, and their investors, is that loosening patent protection for coronavirus vaccines could open the door for governments to take similar action in the future, or for other types of medicines. 

But I-MAK’s Amin argues the “slippery slope” argument is unlikely to materialize. “I don’t think this is going to be a runaway train,” he said in an interview. “I think the industry and the global north countries have far too much sway over this issue and they won’t let it slide,” he added, referring to wealthier countries in North America and Europe. 

Umer Raffat, an analyst at Evercore ISI, agrees. “Barring a public health emergency, I don’t see this happening on a routine basis,” he wrote in a note to clients. 

The U.S. has only announced its support for a waiver. The actual text, and agreement with other WTO members, will still need to be negotiated. Ursula von der Leyen, head of the European Commission, said Thursday the European Union is willing to discuss the issue. Germany, however, voiced concerns a waiver would complicate production, according to Bloomberg

Notably, Tai’s statement indicated support for a waiver on vaccines, not COVID-19 treatments or diagnostic tests as previously proposed by India and South Africa. 

“What matters now is the words that are chosen, the punctuation and the ands and the ors,” said Amin. “The devil is in the details.”

Should a waiver be agreed to, attention would likely shift to enabling the technology transfer that would be necessary for manufacturers to produce authorized vaccines. Vaccine manufacturing is much more complex than producing a small molecule drug, and requires significant work to scale up to a level that can supply significant numbers of people. 

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“Tech transfers take a long time even in collaborations, and even longer when third parties are trying to copy a process de novo,” said Scott Gottlieb, a former Food and Drug Administration commissioner and now a board member of Pfizer, on Twitter. “Waiving TRIPs was a long sought political goal of many. But does it solve present crisis?” 

Gottlieb, and others, note that existing manufacturers are already working mightily to ramp up their production. On Tuesday, Pfizer said it expects to be able to supply 2.5 billion doses of its vaccine this year and 3 billion next year. The pharma forecasts revenue from vaccine sales will total $ 26 billion this year, more than half of what its entire business earned last year.

Moderna, meanwhile, says it can produce between 800 million and 1 billion doses this year and a similar 3 billion figure in 2022, depending on the mix of primary vaccination doses and booster doses. On Thursday, the biotech said it had signed advance purchase agreements for this year worth $ 19.2 billion.

Both companies, as well others like Johnson and Johnson and Novavax, are negotiating bilateral supply deals with governments over the coming years, with some now beginning to be announced. 

A proposed waiver, though, could encourage drugmakers to more aggressively negotiate supply to international frameworks like the World Health Organization’s COVAX facility, or to sign tech transfer deals on their own. 

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