By Jeffrey Depp
In December 2021, member states of the World Health Organization (WHO) at a Special Session of the World Health Assembly created an intergovernmental negotiating body (INB) to draft and negotiate a WHO convention, agreement, or other international instrument on pandemic prevention, preparedness, and response (“Pandemic Agreement”). The INB, whose members spanned the globe, currently intends to submit its draft to the seventy-seventh World Health Assembly in May 2024. For its part, the U.S. has expressed support for developing an international instrument to more rapidly and equitably protect and prepare for future pandemic health threats.
However, by undermining intellectual property (IP) protections, the draft Pandemic Agreement has the potential to harm the very market-based ecosystem for biopharmaceutical innovation that is needed to make the world ready for the next pandemic.
Features of the Draft Pandemic Agreement
In particular, Articles 9 through 12 of the Pandemic Agreement compels nations to:
While the increased availability of life-saving personal protective equipment (PPEs) vaccines, diagnostics, and treatments (collectively “countermeasures”) in advance of a pandemic is a laudable objective, the WHO’s proposals will damage the very innovation commons that generates the lifesaving vaccines and therapies that the next pandemic will require.
Role of Patents in the Innovation System
Innovation does not fall out of the sky. It is the product of intense networks of cooperation that bring together scientists and researchers, small and large companies, workforce training organizations and manufacturing centers, as well as marketing and distribution systems. Secure intellectual property ensures the cohesiveness of this system. Patents secure, to inventors, the exclusive rights to their inventions, making it possible for them to collaborate effectively in the knowledge that their invention will not be stolen. Strong intellectual property systems also incentivize entrepreneurs to bring new goods and services to the marketplace based on those inventions by using the time-limited exclusive rights to earn a sufficient return on their investment.
Giving away intellectual property and waiving royalties—as the Pandemic Agreement proposes—breaks the very fabric of the innovation system. This is the same innovation system that the world will rely on to produce timely countermeasures for the next pandemic or health emergency.
In any event, it is not clear that the proposed remedy is based on an accurate diagnosis of the problem. Indeed, a key lesson from the recent COVID-19 pandemic is that while the innovation system worked in producing countermeasures in record time, a major problem lay in the fact that the physical infrastructure needed to move the vaccines and other supplies to poor and remote areas was inadequate. Worryingly, many low and middle-income nations lack the necessary facilities to research and manufacture countermeasures, adequate transportation systems and storage locations, and enough trained healthcare professionals to perform a large-scale testing and vaccination program.
Lessons from the TRIPS Waiver
These logistical failings were again demonstrated in 2022 when the WTO waived certain patent obligations on COVID vaccines under the Trade-Related Aspects of Intellectual Property (TRIPS) Agreement, the so-called “TRIPS Waiver” (the “Waiver”). The Waiver failed to increase the distribution of vaccines in underdeveloped countries that did not—and still do not—possess the resources to build out their storage and distribution infrastructure, inform their citizens of the risks and benefits of the disease and its countermeasures, and hire qualified health care professionals.
In fact, no WTO Member has actually made use of this Waiver to date. Moreover, the financial markets reacted adversely to the elimination of IP rights. Companies making COVID-related medications and diagnostics saw their stock prices decline by 73 percent more than companies focused on different therapeutic areas. The pace of initial public offerings of biotech companies also slowed, and small and medium-sized enterprises, which account for 75 percent of the global clinical COVID-related projects now in the pipeline, reduced their overall development plans.
These actions reflect a broad disinvestment in the innovation system in response to a weakening of intellectual property. This “chilling effect” can move upstream, leading researchers at universities and firms to shift away from conducting the foundational research necessary to develop such therapeutics. Researchers, especially in the life sciences, prefer their work to lead to something that can be a benefit to society. And, as with investors, there is never a shortage of interesting scientific challenges to which researchers can devote their time and intellectual labor where a societal benefit will be more likely.
Securing the Innovation Ecosystem
With this experience in mind, it is likely that the proposed draft Pandemic Agreement will be ineffective at best and counterproductive at worst. It does not address the logistical issues that frustrated the delivery of countermeasures for COVID-19. Moreover, by weakening the intellectual property rights that connect the innovation system, the draft proposals will likely lead to less private sector investment for developing new therapeutics or repurposing existing ones that could be crucial for preventing or halting a future pandemic.
Indeed, the compelled sharing of information, data, know-how, and the inability to enforce their patent rights creates erodes trust needed for cooperation and creates new uncertainties as to whether entrepreneurs should make the financial investments needed to bring these therapeutics and other countermeasures to the marketplace.
The WHO should instead consider a voluntary approach that would allow firms to develop new partnerships that work to strengthen the innovation ecosystem by leveraging distributed knowledge in ways centrally planned top-down approaches cannot. During the pandemic, American pharmaceutical companies manufacturing diagnostics and therapeutics entered into more than 400 voluntary licensing agreements with partners on every continent. Specifically, Pfizer and Merck licensed their patents to the United Nations-backed Medicines Patent Pool, enabling generic producers across the globe to manufacture their antivirals. Pfizer and Moderna also voluntarily agreed not to enforce patent rights to their vaccines during the height of the pandemic, with Moderna even going so far as to promise to “never enforce its patents for COVID-19 vaccines against manufacturers in or for” low- and middle-income countries.
As drafted, Articles 9-12 of the Pandemic Agreement will harm the very innovation ecosystem that bring new countermeasures to market. Strengthening the protection of intellectual property, confidential information (scientific and business), proprietary manufacturing and other know-how, and the underlying data are essential to a polycentric and market-based approach to pandemic preparedness—one needed to bring timely solutions to advance human health, economic growth, and security.
Jeffrey Depp is a policy consultant for the CSIS Renewing American Innovation Project.
This piece was originally published on May 28th, 2024 with the Renewing American Innovation (RAI) Project at the Center for Strategic and International Studies (CSIS).
