Deep Dive Episode 177 – Patents and Pandemics: Innovation Policy and the Patent Waiver Petition at the WTO

India and South Africa have submitted a petition to the World Trade Organization seeking a waiver of all intellectual property rights under international treaties on drugs, vaccines, or other responses to the COVID-19 pandemic. This waiver petition has provoked an intense policy debate over the role of intellectual property in healthcare innovation.

On the one hand, advocates for the waiver argue that patents have been a blockade for patient access and created higher prices, especially in developing countries. On the other hand, opponents of the waiver maintain that there is no evidence that patents are blocking drug development or distribution for the COVID-19 pandemic. The opponents also maintain that patents made possible over the past several decades the R&D investments, the creation of technical know-how, and the commercial agreements that have been the launching pad for the unprecedented development of several vaccines and other medical treatments in less than a year.

This live podcast features experts in innovation policy on both sides of the issue debating the role of patents in medical care and how the United States should respond to the waiver petition.

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Transcript

Although this transcript is largely accurate, in some cases it could be incomplete or inaccurate due to inaudible passages or transcription errors.

[Music and narration]

 

Introduction:  Welcome to the Regulatory Transparency Project’s Fourth Branch podcast series. All expressions of opinion are those of the speaker. 

 

Jack Derwin:  Hello and welcome to The Federalist Society’s Fourth Branch Podcast for the Regulatory Transparency Project. My name is Jack Derwin, and I am Assistant Director of RTP. As always, please note that all expressions of opinion on today’s event are those of the guest speakers joining us. 

 

To learn more about our speakers and their work, you can visit RegProject.org to view their full bios. After opening remarks and discussion between our panelists, if time allows, we will go to audience Q&A, so please enter any questions into the Q&A or chat function and we’ll address them as time allows.

 

Today we’re pleased to host a conversation titled “Patents and Pandemics: Innovation Policy and the Patent Waiver Petition at the WTO.” To discuss this topic, we’re pleased to feature Richard Blaylock, Brian O’Shaughnessy, Hans Sauer, and our moderator, Judge Paul Michel. To start us off, Richard will open up with a brief presentation.

 

Richard Blaylock:  Well, thank you, Jack. This is Richard Blaylock, and I’m pleased to be with you all here to discuss this important topic. Just to reiterate the disclaimer, the comments I offer today are my own and do not reflect either the views of my firm or any of its clients.

 

I’d like to open with just a brief orientation on what the waiver proposal is, and then also illuminate what I think is a critical misconception that’s popularly repeated in the press and even the political discussion of the waiver. 

First off, the waiver proposal. The member countries of the World Trade Organization under the TRIPS agreement have all made certain commitments to each other to maintain intellectual property regimes for the general protection and enforcement of individual’s intellectual property rights. And those regimes need to meet certain minimum standards under these TRIPS agreements. Now, it’s important to understand that there is still a lot of latitude that each country enjoys in the details of how they implement their own IP laws, but at bottom, there still needs to be some core protection in order to preserve the trading regime. 

 

The proposal that’s on the table, and it’s been put forth by India and South Africa specifically to the WTO, would be to waive the requirement to maintain any form of these intellectual property regime rights in an individual country to the extent that those protections broadly are relevant to the COVID-19 pandemic or its response and would last for as long as the pandemic is proceeding, at least for a few years. 

 

Now for the popular misconception, and this is not just a question of patents. Even the title for today’s conversation points toward patents, but really, this concerns IP rights more broadly. And other non-patent rights are probably more at the core of this than is widely understood. 

 

Presently, countries may, without even resorting to a waiver, under the current TRIPS regime may pursue policies of compulsory patent licensing which would allow a country to force a patent holder to enable other participants in the market to practice their patents if they felt that it was necessary in order to satisfy market demand for goods. Certainly, there’s no question that there’s genuine market demand for COVID-19 vaccines. If patents were the sole barrier, there are, without this waiver, avenues for achieving this. 

 

So what is this misconception? The waiver seeks to waive IP protection not just for patents but also for copyrights and trade secrets. And it may strike one as confusing at first because you think why copyrights? Clearly, no novels, music videos, films are essential to this response. Trade secrets also, you may wonder where that comes into play.

 

And it works like this. Independent of the pandemic, to register a vaccine or a therapeutic for approval in any given country requires a country-specific, detailed disclosure. A very substantial regulatory filing is needed in order to satisfy the country with much of the details related to the vaccine’s characteristics, its composition, and its manufacture. This is something that in the predigital days would fill boxes and boxes of information. It is filled with company trade secrets. It is not made a public record, and it is competitively very, very valuable, both with respect to the individual vaccine but also to the broader technology platform the company is using. 

 

The waiver would allow a member state to take that regulatory portfolio that is necessarily submitted in order to provide a vaccine in a county in the first place, and then, in violation of copyright and trade secret protection, provide it to local champions in that country to enable them to manufacture the same or similar vaccine. And so this amounts to a form of mandatory tech transfer, not just relief from patent protection.

 

And it is the mandatory tech transfer piece that is, I believe, really the underlying goal of this policy. One can debate whether or not a mandatory tech transfer in the face of pandemic is good or bad policy, but I would submit that the misdirection regarding the discussion where it’s focused on patents and a not uncommon antipathy towards patents in certain quarters as cover for what I suspect may be a more unpopular proposal to simply require the vaccine manufacturers of the world to simply hand over the details and formulas for manufacturing. 

 

And so I think we’d like to broaden the discussion and make sure that we are talking about not just patents but what the implications are for this tech transfer. And I think with that, I’d pause and, Jack, I think we’ll give our other panelists an opportunity to chime in before we move on.

 

Jack Derwin:  Absolutely. Thank you so much for those opening statements. Brian, I guess we’ll turn it over to you.

 

Brian O’Shaughnessy:  Yeah. Thanks, Jack. My two minute commentary in response to Richard’s remarks is spot on. I agree with everything that Richard said. I think that it is the hidden aspect of this whole debate that is being overlooked is the issue of trade secrets and even copyrights. Trade secrets, of course, suffer the principal defect of the genie in the bottle, and once the genie gets out of the bottle, it’s impossible to get him back in. So once those trade secrets are out, they’re gone. There is no resurrection of the intellectual property right that a trade secret has once the pandemic is over.

 

And there is the analogy of the iceberg or the icing on the cake, but either way, when one looks at one’s intellectual property portfolio, trade secrets are the bulk of that portfolio. And to the iceberg analogy, what you see above the water is, of course, only 10 percent of the iceberg, and what’s below the water is 90 percent. And by analogy, what’s above the water is your patent portfolio, and what’s below the water is your trade secrets and know-how portfolio.

 

And so the risk that I think many companies fear and many organizations fear is that this will be a form of IP theft that will just be sanctioned by governments. And there is no putting the genie back in the bottle once the pandemic is addressed and, hopefully, overcome. 

 

So I guess I’ll stop there and let Hans make some comments. 

 

Hans Sauer:  Well, first of all, thanks for having me. Having watched this since last year, I thought what was very interesting about the debate over the scope of the proposed waiver was how the narrative changed over time, and I think it clearly has. So about, I would say, a year last March, in March and April of last year, IP critical groups mainly were concerned that innovators would use their patents to block others from developing or researching COVID countermeasures. So I think this debate started, at least in the public, as a debate about patent rights which followed well-rehearsed older narratives about how patents are generally presumed to be an obstacle to public health solutions.

 

That is an older narrative. I think that came in handy in the early days of the debate for those who were from the beginning very skeptical about the role of IP. So in the beginning, it was about patents and fears that innovators would use their patents to block research and development of COVID cures. 

 

And I think when that manifestly failed to materialize in the fall of last year, the criticisms changed, and the calls moved away from patents to calls for transparency because vaccines were approaching emergency use authorization. Products were beginning to be licensed to  manufacturers both in the global north as well as in the developing world to qualified manufacturers. So calls changed to calls for transparency, fears about profiteering, general distrust that vaccine makers would ever work in the public interest. 

 

And the licensing agreements that had been struck on a relative free basis to expand access in manufacturing in the developing world were recast as exclusionary behavior where the licenses were really just entered into to, quote, “block access in non-licensed territories to maintain artificial scarcity” and the like. So I think it’s a good example of what a powerful level of spin can be put on efforts that the manufacturers understood to be well-intentioned. They really meant to increase manufacturing capacity for the entire world, including the developing world.

 

And in the latest iteration, I would say, to follow on what Brian and Richard said, in the latest iteration, it appears that IP critics and proponents of the waiver themselves have basically moved past patents, and they’re now saying that vaccine manufacturers — and I’m only talking about vaccine manufacturers in the United States and Europe and in developed countries. I’m not talking about the Russian vaccines or the Chinese ones. Nobody’s demanding access to those, at least among the waiver proponents.

 

But this group of vaccine manufacturers that are making the vaccines that are deployed in the U.S. and in Europe are basically per se blocking access to vaccines unless they are willing to agree to the unconditional transfer of their manufacturing knowhow of their cell lines, of their media, biological materials, blueprints, data, etc., everything that’s necessary to make the advanced vaccines that we’re using, that these be transferred on demand to anyone who asks. And companies that aren’t willing to do this, those are the ones that are described as standing in the way and blocking, if you will, access to COVID solutions.

 

So that, I think, is how I’ve seen the debate about the scope of the waiver develop. And it’s very important for present purposes to understand that this is a new dimension of the debate over IP rights and public health. It used to be about removing patent obstacles. Now, it is to enforcing affirmative transfer of technology knowhow and manufacturing knowhow without conditions to other manufacturers and countries.

 

Jack Derwin:  Thank you all so much.

 

Hon. Paul Michel:  Thank you, Hans. This is Judge Michel interrupting and arriving a little bit late. Before we start the next round, I just want to highlight that all three of today’s panelists are experts in chemistry, having obtained degrees in that field as well as in law, and have great practical experience. Richard Blaylock advising all sorts of clients with specialties in licensing, collaboration, partnership. He’s a partner at Pillsbury in San Diego, Yale Law School, Yale undergrad. 

 

Brian O’Shaughnessy likewise trained in chemistry. He’s a partner at Dinsmore & Shohl, a graduate of Rochester Institute of Technology, former president of the Licensing Executives Society of the United States and Canada and also the international cousin. He’s testified in Congress on some of these issues. He’s registered to practice before the PTO as well as the district courts. 

 

And Dr. Hans Sauer, from whom you’ve just heard, has a PhD in chemistry and extensive experience in two pharmaceutical firms as well as now with the Biotech Innovation Organization known as BIO. So a truly expert panel. So now we’ll start the second round with the lead-off speaker being Brian O’Shaughnessy. Brian?

 

Brian O’Shaughnessy:  Well, thank you, Judge. And thank you, Hans, for that historical perspective. I wanted to touch upon that myself and sort of call our minds back to those early days in the pandemic when we heard a lot from organizations who were advocating that the pharmaceutical industry as a whole should take a pledge not to utilize its IP.

 

And of course, those pledges were very broadly written, and they were very unspecific as to the scope and the term of those pledges not to utilize one’s IP. I think from our standpoint and speaking somewhat in my experience on behalf of the Licensing Executives Society, we debated internally about such pledges, and whether or not they made sense, and whether there was some way to moderate the pledges that made sense that companies who invest the billions of dollars in development and research and then, of course, production and distribution would be able to capitalize on their investment.

 

And through the course of that discussion and that debate, it, of course, came up and came to the fore that the problem with those pledges is the premise. The premise is that IP is a problem. It is not a problem. It is a facilitator. So the idea that somehow we’re going to pledge not to use IP has the formula entirely backwards. The fact of the matter is that through organized, dependable, reliable, predictable, and transparent IP rights, it makes it more possible for companies to collaborate and to work together.

 

There is a very, very complicated supply chain in the distribution of these vaccines, as we all know, depending upon which vaccine we’re talking about. Those supply chain issues are particularly onerous and involve tremendous extremes in terms of temperature control of the vaccine itself. And so by having organizations have the ability to utilize their IP to structure organized duties and responsibilities in that supply chain, it makes it possible for us to more broadly produce these technologies and to more effectively develop them into effective vaccines. 

 

The other thing I would say is just that from the early pledges — and thankfully, that sort of faded from the horizon over time. But as that was fading, then in October of last year is when this proposal for the TRIPS waiver came out and was presented to the WTO. And similarly, again, there is, I think, a misperception. There is a faulty premise. There is the notion that somehow IP is a problem.

 

And I would say most importantly, there is throughout the initial petition and many of the supporting writings from NGOs and other organizations what I call the myth of the monopolist. And repeatedly throughout these petitions and supportive papers, we see the notion that, well, there’s going to be one pharmaceutical company that’s going to generate one vaccine, and it would be criminal to have one pharmaceutical company have the ability to control the global distribution and set prices, and it’ll be a parade of horribles.

 

And of course, the truth of the matter is that that has been belied by experience. We now have in the U.S. alone, as I understand it, three different FDA approved vaccines, all having a different constellation of capabilities, characteristics, and supply chain issues, and each having strengths and weaknesses. And having three different vaccines, I think, has dramatically improved our ability to combat this disease and to learn more about it and to learn more about the vaccine process.

 

And so by virtue of having those sorts of IP regimes, we’ve had the ability and the incentives in place for numerous pharmaceutical companies to work together in a collaborative fashion and to produce three substantially different vaccines, but all incredibly effective. And of course, that doesn’t even take into account the vaccines that are being utilized in some other countries. So I would say that the notion that somehow IP is a barrier is just completely unsupported.

 

And then I have taken the liberty of reading through several organizations and their supporting literature in favor of this waiver. And again, aside from the parade of horribles, there is this notion of the myth of the monopolist. And there is also a remarkable absence of any evidence of abuses. And there is, of course, the prediction that there will be abuses, but again, of course, those abuses have not materialized.

 

And in fact, I would say that the reality is that these companies are working together in a highly responsible, socially responsible fashion to get these vaccines distributed. And so for organizations, some of which are quasi-scientific organizations, I’ve been very surprised at the fact that there really is no support, there is no evidence that somehow these regimes are going to be problematic or that there is going to be abusive behavior. 

 

And finally, I would say that as to the issue of abusive behavior and the potential or the threat  of abusive behavior, it strikes me as naïve in the least in the notion that somehow we should tear down the entire system for fear that there might be abuses. The proper way to address abuses would be to wait for the abuses to manifest themselves, and in fact prove that they are abuses, and then do something about them. But the idea that we should essentially tear down or suspend the entire IP system globally on the fear that somebody might abuse it strikes me as an overreaction in the very least. And I guess I’ll just stop there.

 

Hon. Paul Michel:  Thank you, Brian, very thoughtful additional remarks. I want to turn next back to Richard Blaylock, perhaps with the suggestion that among other things, he might want to address the extent to which clarity about ownership because of IP rights has facilitated cooperation among companies that are normally competitors of one another.

 

So for example, BioNTech is paired with Pfizer, and there are other pairings of companies that normally don’t cooperate, and they are cooperating. And some commentary suggests it’s because of the clarity of rights that otherwise they wouldn’t feel free to make those kind of collaborative arrangements. And as an expert in collaboration, perhaps you can explain that further.

 

Richard Blaylock:  Thank you, Judge Michel. So yes, first off, I agree that those who say that IP is a problem is overly simplistic, and it’s also true that IP is not just a pure good. IP is a species of government regulation of the economy. It doesn’t exist independent of government. Intellectual property rights are created by government, and those regimes that exist are, as you suggest, Judge Michel, a useful scaffold for setting the rules of engagement for different commercial entities to come together and cooperate.

 

Any sort of collaborative endeavor by companies requires a contractual understanding of what their rights and obligations will be, how they will deal with uncertainty as things move forward, and the existing structure and the ability to rely upon a structure of an intellectual property regime provides much of that framework that is needed and allows people to rely upon that rather than having to build everything from scratch if that were not already in place. So it is very much useful.

 

And so what I come back around when I see people complaining about intellectual property here, and when you recognize that it is a form of economic regulation, and government regulation can always be tuned to serve a problem, I think the right pivot here is to ask, well, what is the problem being solved? And the problem being solved is access to testing technology, to vaccine technology, to therapeutic technology useful to response to the pandemic. 

 

And what would be most appropriate is for participants in the debate to concentrate—and I don’t mean the debate here, but I mean broadly, globally—focus on how to best achieve those goals. And much of that success has come through cooperation at the NGO level, at the company level, at the country level in ways that Judge Michel has mentioned and others. And it is not through simply taking away the structures on which people rely in order to have confidence in what the consequences will be of their actions and those that they are working with.

 

Hon. Paul Michel:  So Hans, do you want to add to that? And I’m wondering too whether there’s a danger to patients in underdeveloped countries if there’s a free-for-all with compulsory disgorgement of all IP.

 

Hans Sauer:  Thank you. I think this fits very well with something we should all be conscious of. Patients, I think, should be at the focus of this debate. As we speak, we are close to having administered around 1.1 billion COVID vaccinations in more than 180 countries around the world in less than 5 months, with three vaccines approved in the United States with about six or seven being authorized for use worldwide. So coming to this from nothing a year ago is, objectively speaking, a great achievement. It is, so far, a success, and it has many fathers. And it should be applauded and not heckled.

 

On the other hand, this is clearly not a time to celebrate. India is experiencing a very bad surge of its own COVID crisis, and similar flareups can happen around the world. I believe that the proponents of the waiver, and they’re not the only ones to say this, are correct in saying that vaccinating as many people as possible around the world is in everyone’s interest because none of us will be safe until everyone is safe. The longer the virus circulates globally, the greater the risk that new variants will emerge that will undercut the efforts and successes that countries have had with their own vaccination programs.

 

I think we also need to be mindful, and certainly the vaccine manufacturing companies are mindful about the unequal pace at which vaccines have become available around the world. And this is an uncomfortable subject for us that we should all engage in because we live in a relatively vaccine rich country. We are on track to vaccinate healthy middle-aged and younger people in the United States, and we’re doing so pursuant to policies where we will do that. We will offer the vaccine to everyone who wants it. And we’re only weeks away from a vaccine surplus in the United States.

 

And we’re doing all that while high-risk patients in the developing world continue to be without access. It is not a comfortable thing to contemplate, but it is part of a global equity debate that motivates the waiver. So I think that those who proposed the waiver for the most part do so with good intentions, and they also do so with a firm but, in my opinion, misguided belief that IP is a huge obstacle that must be removed.

 

We are on track, or I think the global vaccine manufacturers who are involved in making these various vaccines, are on track to providing about 9.5 billion doses by the end of 2021. So 9.5 billion doses is enough to vaccinate nominally the entire vulnerable and high-risk population of the world and make a huge dent into everybody else. But that still leaves a shortfall of 2 to 3 billion doses that are projected to be needed for the year.

 

But nobody said this would be easy. Everybody understood from the earliest days of the pandemic that demand for vaccines would be immediate, would be enormous, and would be impossible to meet in the short term. Brian said earlier that there are a lot of bottlenecks in vaccine manufacturing supplies. Both specialty supplies and run-of-the-mill supplies are short. For example, just things like plastic bags, bioreactor bags for single use, or even radioactive cobalt for sterilizing biomanufacturing equipment are in short supply. But this is no fault of the patent or IP system. It is just a reality of immediate demand for products that exceeds manufacturing capacity anywhere around the world. 

 

Our concern mainly, both for patients in the developing world and everywhere, is that if we adopt misguided policies that would require currently up and running manufacturers who are doing their most to expand existing manufacturing capacity, if we require those manufacturers to say, “We want you to run around the globe and transfer your technology on demand to everyone who asks. Stop expanding your own manufacturing technology. Go and do this other thing where you transfer technologies to other manufacturers who are doing this for the first time and who have never produced a vaccine before,” we just don’t think that’s the right step to take during a pandemic when time is of the essence.

 

The same with global supplies and scarce inputs and raw materials for vaccines. We don’t think it is the most helpful step to divert those supplies to new manufacturers who are making vaccines for the first time and who will be doing so at lower efficiency, at least initially. That would decrease global vaccine output, not increase it in the short term.

 

In the long term, of course, we do need to talk about global capacity building, but while we’re fighting this pandemic, so long as time is of the essence, we need to look at other measures. And I think I can applaud the administration, actually, for beginning to seriously think more along lines of what can we do to maximize current manufacturing capacity rather than endorsing free-for-all IP waivers to anyone who asks? 

 

Hon. Paul Michel:  Thank you, Hans. And I want to turn back to Richard with, among other thoughts, the news that I believe I noted in this morning’s Wall Street Journal that I believe it’s Moderna has plans to triple its output in the coming year. So that would be an example of the ramp-up efforts by the existing makers to meet this bottomless demand. And I’m very curious as to whether Richard agrees with Hans that helping the present makers expand rather than trying to proliferate makers all over the world in every country is a more efficacious strategy.

 

Richard Blaylock:  I do agree with Hans on this point. And I think the reason why is it is extraordinary that we have in this short amount of time produced as many vaccines, both in terms of distinct vaccines but also the quantity. And it is not a trivial matter to stand up a new vaccine manufacturing facility. It’s clear from the news in several ways.

 

First off, there is a facility—I won’t name it—back east that has gained some notoriety for having had some manufacturing issues which has caused spoilage of millions and millions of doses of the Johnson & Johnson vaccine. And all manufacturers have trouble from time to time. It’s not to pick on them, but it’s to point out that even those that have been in the business for a while and that have worked hard and had access to plenty of capital do stumble. And so it is wrong to assume that a brand new manufacturer would come to this and be able to do so flawlessly.

 

I think, picking on the Moderna or the Pfizer vaccines, these are a generally new platform. They’re not brand new. There was some animal health genetic vaccines that existed before. These are the first human genetic vaccines available, and they have different characteristics, different manufacturing requirements, different supply chain considerations, and so it’s very easy for there to be problems in quality control. And when you look at the law of large numbers that even rare problems that arise from quality control are going to translate into real human impact, given the volume of output that you expect from any producer here.

 

And then, lastly, just this winter, there was a lot of public news stories about complaints about people jumping the line, getting vaccines before, perhaps, they were supposed to do so. Now you don’t hear that because all comers can receive them. It is a testament to the dramatic change in supply that ramp-up can continue. And so we are not in the stage where anyone else is going to catch up with the existing suppliers.

 

So there are very real problems to be solved. There’s planning for the next pandemic. There’s planning for the variation of COVID-19 in the future and how you pivot to deal with that. And it is always appropriate to look at intellectual property laws and ask how can or should they be preserved, exactly, or changed?

 

But there is a very real human problem to be solved with respect to vaccine access, but this is not the solution. And from the beginning, this crisis has caused folks to recognize the opportunity to tout a preferred policy solution to offer as a solution to this pandemic. And the risk is going forward with a proposal such as this which will neither solve the real problem of vaccine access nor make the world intellectual property regime better. 

 

Hon. Paul Michel:  Thank you, Richard. Brian, one thought that has been voiced is that the petitioners before the WTO are India and South Africa. And of course, they’re supported by dozens of mostly small, poor countries. But if there was a waiver that forced massive tech transfer globally to anyone and everyone, who would be the prime beneficiaries of that? It sounds like it couldn’t be the little countries that really don’t have the wherewithal to become producers in a relevant timeframe themselves. Maybe it’s India and South Africa, although India already seems to have a pretty robust vaccine industry. So I’m curious whether there’s a hidden beneficiary in the fog of this debate. 

 

Brian O’Shaughnessy:  Yeah, thank you, Judge. I think that is absolutely the case. And as one of our listeners, Kevin Noonan, chimed in earlier with a comment saying that although the idea that IP is the barrier is a faulty premise and maybe somewhat benign and ill-informed, it is nonetheless, I think, much the objective of other organizations and governments to promote this notion of a waiver for purposes of benefitting their own economies and their own countries with knowledge, information, trade secrets, confidential information that can be used that they wouldn’t otherwise be able to access.

 

And it goes way beyond COVID, and it just goes to the issue of the sanctity of IP generally, and their desire to gain IP, whether it’s through cyber theft or state-sponsored IP theft. So I think that there is very much a movement afoot by countries that are historically disrespecting intellectual property laws in order to gain an unfair advantage, if you will. So I think that is very much part of the calculus here, and part of the energy behind the waiver.

 

But again, I guess I’d also like to focus on the notion that you mentioned earlier, Judge, and that is that even if we were to go along with some sort of compulsory disgorgement of IP rights within individual jurisdictions, that, of course, doesn’t necessarily address the issue of solving this problem. And as Hans rightly noted, it’s not just production capacity, but it’s talent, skill, knowhow, and all of those things that just aren’t found in many jurisdictions. And we know where that knowhow resides. We know where that production capacity is. And so we should, I think, be investing in supporting the enlargement of that capacity.

 

Fortunately, the Biden administration announced yesterday that they were leaning away from the notion of the waiver and instead thinking that perhaps the focus should be on helping the companies that have the capabilities and the capacity to enlarge that capacity so that we can better produce and more efficiently produce, more reliably and safely produce these vaccines for the rest of the world. It only makes sense to go to those jurisdictions and those places where that talent, skill, and capacity already resides.

 

Furthermore, I would say that the notion that compulsory disgorgement so that individual countries can produce vaccines within their own borders doesn’t solve the problem. Aside from the talent, skill, and capacity issue, it doesn’t solve the problem because market forces presumably will still be at play. So unless those countries are going to take the still further step of nationalizing all of their vaccine production capacity, it’s not going to do them any good because, as one commentator noted in support of the waiver, there is apparently a company in South Africa that has the capacity and has been licensed to produce a vaccine, COVID vaccine, for one of the major pharmaceutical companies but that the vast majority of those vaccines have been shipped out of the country.

 

Well, so that raises the issue then, somehow, the abrogation of IP rights going to prevent that from happening. And I would say no, it’s not. It’s still going to be market forces. That company is still going to do what it can, and probably sell to the highest bidder, if you will. And unless the country were to impose still further laws and restrictions on exportation of the vaccine or actual nationalization of the industry, that’s not going to solve their problem.

 

So once again, this is painting with a very, very broad brush in a fashion that really does not get at the issue. And the issue really is how can we utilize and exploit the talent, the capacity, the peculiar materials, and the agents, and production facilities that we already have in place to maximize that production? 

 

And then finally, again, I would go back to, I guess, Hans’s approach earlier of looking at this through the larger lens of history. And that is when this pandemic first struck, there was a great deal of informed commentary saying how are we going to address this issue, and we don’t even know whether or not we’re going to be able to produce a vaccine. We don’t know whether we’ll get one, and we don’t know whether we’ll get one in a timely fashion, because bear in mind that the 1918 flu pandemic never got a vaccine.

 

There were several lesser epidemics over the course of the ensuing century that likewise were never treated, addressed, through vaccines. The virus came and went, the epidemic came and went, and vaccines were never produced. Here, again to Hans’s point, in just lightning time, we have developed a vaccine and produced billions of doses and inoculated many, many, many millions of people. So this is truly a testament to the innovation ecosystem that we have in place, and that has been made possible through sophisticated global agreements involving the protection and preservation of intellectual property rights. 

 

Hon. Paul Michel:  Yes, thank you, Brian. Hans, let me turn back to you with the thought toward the future. We’ve concentrated so much on inoculating the rest of the globe for the current pandemic, but many experts suggest there will be future pandemics of perhaps equal proportions, unknown when they will arrive. Obviously, getting ready is important. We weren’t very well prepared for this pandemic. We need to try to be better prepared for the next. 

 

So this raises the question, I suppose, of incentives for private industry to invest in expensive research and ultimately the development of new therapeutics, new vaccines, and other treatments. So what will happen to the incentives for those companies, including your thousand members of BIO, if there’s a forced global disgorgement?

 

Hans Sauer:  Yes, okay. Before I say that, I just want a quick follow up to something Brian said, and it is a little bit of a feel good cap. Brian, you mentioned that market forces would still be in play, and the example is Aspen Pharmacare in South Africa, which was licensed by J&J to do a fill and finish of the J&J vaccine. And it true that under the license, a little less than 90 percent or so of the output will not be reserved for South Africa, and that was complained about loudly.

 

But it so happens that of the up to 300 million does of fill and finish capacity that they’ve contracted for, those vaccines will go to elsewhere in Africa. So it’s true. Maybe South Africans complained that not enough will be reserved for them, but it’s going elsewhere on the continent because these people need vaccine too. 

 

On the topic of incentives, I think it’s absolutely right that it is not too early to start thinking about the next pandemic. With this one, as bad as it was, we were lucky that it wasn’t worse. This virus could have had a case fatality rate of 15, 20, or 30 percent. There were other related viruses that had smaller outbreaks. You all may remember the Middle Eastern MERS virus, which had a much higher case fatality rate. It scared the living daylights out of virologists and public health specialists. And that fortunately didn’t become a pandemic, at any rate. So we want to keep that in context. The next pandemic will come, hopefully not in our lifetimes, but it may.

 

It is true that pandemic preparedness as a business proposition to attract the investment of private equity capital and generally private capital has always been a difficult proposition because you don’t know will there be a market? When will there be a market? Why would you set up manufacturing capacity for products that you may not yet know whether they will be useful, whether they will be needed, or for products that may yet need to be developed, and you don’t know whether your facility is going to be suitable for manufacturing them? 

 

All that, I think, makes it difficult for industry and the private sector alone to take in hand, if you will, the task of being prepared for the next pandemic. This can’t be done without coordination with the government and with public health departments and with others in the public and semi-public sector. 

 

Going forward, I would expect there will be lots of blue ribbon commissions with heavy participation of U.S. industrial capacity to learn the lessons from this pandemic. One big task will be to create structures that will facilitate the recruitment of private capital to this effort to make it attractive, if you will, to invest in pandemic preparedness. Hopefully, by using platform technologies that we now know will be suitable, we may find ways, at least in the first instance, to create capacity for multiple use platforms that are going to be useful as we can predict, that are going to be useful not just for pandemic preparedness but also for other medical applications.

 

I think the mRNA vaccine technology that we’ve seen deployed for the first time in the COVID vaccines now is an excellent example that we can all learn from as something that had applications both for fighting a pandemic as well as for may other uses. We must all remember that mRNA vaccines are basically repurposed technology. This was meant to be a drug development platform for metabolic diseases, rare diseases, cancer applications.

 

So we’re going to be well off investing in technology like this which will help us not just tackle medical needs that we will have all the time, but which can also be adapted to respond quickly to the next pandemic when it comes. That will require, I think, the smart brains of the scientists much more than the brains of the politicians. The politicians can help by creating structures, funding, and incentives, but I think science will drive the solution. So we need to get out of the way of the science and out of the way of — and we need to facilitate the free dissemination of science and the capital to back it up.

 

Hon. Paul Michel:  Thank you, Hans. Richard, turning back to you, so many people of great intellect and fame, including Nobel Prize economist Joseph Stiglitz in a recent op-ed piece, argued in favor of the waiver. And at least to my reading, it was based on the assumption that IP was the problem and was blockading distribution. As one who frequently counsels people who are not experts in IP matters but are more in the business realm, you have a lot of experience at helping people to understand the role and benefits and limits and so forth of IP. From that perspective, can you help our audience understand how so many otherwise smart people could have gotten the nature of the problem so wrong here?

 

Richard Blaylock:  Well, thank you, Judge. I think IP is not the problem here. That is not to say that — I think the reason why people get this wrong is it’s not to say that IP is never a problem. There are lots of circumstances where, in the particulars, IP is a problem. In very different circumstances, there is public condemnation of so-called patent trolls that are non-practicing entities that exploit certain — the ability to get broad patents, broader than anything that perhaps they should have and try to extract rents from the economy. So there are certainly many circumstances where people feel that patents are a problem.

 

I’ll offer you a counterfactual here, something that did not happen, but is a way to understand how people might be conceiving of problems. Imagine — the virus emerged in people’s awareness in China. Its biological origin we don’t know. It comes aware in the natural world. But people’s awareness emerged in China. Chinese scientists have the first crack at this. Had they sought to maintain secrecy of the genetic sequence of the virus, and sought to patent it early, and sought to the maximum ability exploit that early proprietary position, you would have seen at least a slowed if not hobbled worldwide scientific effort to begin work on therapeutics and vaccines. So it is not inconceivable that intellectual property rights can be misapplied or misused.

 

I think where the flaw is here that people take that general recognition that sometimes IP as a form of government regulation picks the wrong preferred policy outcome. And then extend that here to a situation which was scary, truly horrific in its prospects, highly uncertain all the way through, and one where there was concern of great potential harm, and concluded that they wanted nothing to get in the way of progress.

 

As it happens, without the waiver, tremendous progress has been made, and so we’ve run the experiment. And the existing IP regime didn’t prevent the billions of vaccines being produced and being made available with many more billions to come quickly. And it has been ably pointed out by Hans and Brian that the pacing has much more to do with other aspects of the human enterprise in terms of manufacturing capacities, supply chains, knowhow, talent to actually operate the facilities, other aspects of infrastructure. And so I think that is the — but I think that broad sense that sometimes IP is a problem has landed here, unfortunately, inappropriately in this case.

 

Hon. Paul Michel:  Very helpful. Thank you.

 

Brian O’Shaughnessy:  Judge, if I may offer a slight rebuttal?

 

Hon. Paul Michel:  Sure, but we’ll have to keep it kind of brief and then some final brief remarks from Hans will close out our stipulated hour. But go ahead, Brian.

 

Brian O’Shaughnessy:  Sure. Very briefly, I guess I would just offer a slight variation on Richard’s commentary. I don’t see that IP is the problem in most instances, even those few where it’s abused. I would say that’s a matter of abuse of the IP system, and the IP system is generally configured to address those abuses, and that perhaps we failed to do so effectively. But it’s not the IP system necessarily, I would say. It is the people who are abusing it in ways that it’s not intended that cause the problem.

 

Hon. Paul Michel:  Hans, any final words from you?

 

Hans Sauer:  Well, I want to thank you for having me. If we focus only on the scope that this debate has here in the United States, because a lot of countries are having similar conversations, and they all have their own variations depending on where that conversation is had. But as we focus only on the United States, again, I would remind everyone that we’re in relatively good shape compared to many other countries around the world. We are only weeks away from a vaccine surplus.

 

The president said in his address to Congress just the other night that his hope is that the United States can be and become the vaccine arsenal of the world. I think that reflects a recognition that unleashing the innovative potential that we’ve invested in for so long in the United States on this virus has borne good dividends so far. It holds more promise for the future. I think they’re sending the exactly right signal about being optimistic about the post-pandemic phase and the role that the United States can play as a leader in global public health. And I’ve no doubt that both industrial capacity in the United States as well as its scientific base will be recruited to contribute to being better prepared when this happens next as we come out of this pandemic. 

 

Hon. Paul Michel:  Well, Hans, thank you, and Brian, and Richard. Thank you all, all experts in health science and chemistry and vaccines and related matters. And I want to also recognize the hidden role of Professor Adam Mossoff, who was instrumental in the selection of these three truly expert explainers. I think the audience has been treated to a very rich, detailed, and quite helpful exposition of all these things that lurk right beneath the surface of the narratives bandied about in public on this waiver issue.

 

And as one who believes that the facts matter more than rhetoric, I think this panel has made a great contribution. It’s been a pleasure to try to help steer it. And I want to thank the Regulatory Transparency Project of The Federalist Society for organizing and sponsoring this event, and Jack Derwin for helping to make it come to reality. So thank you all for a very good presentation.

 

Richard Blaylock:  Thank you, Judge.

 

Brian O’Shaughnessy:  Thank you.

 

Hans Sauer:  Thank you.

 

Jack Derwin:  And a huge thank you to you as well, Judge Michel. Of course, it would not have been possible without our more than capable moderator. And thanks to our live audience for tuning in today. If you’re interested in learning more about RTP and all the work we do, visit us at RegProject.org or follow us at FedSocRTP on all the social medial platforms. With that, we are adjourned. 

[Music]

 

Conclusion:  On behalf of The Federalist Society’s Regulatory Transparency Project, thanks for tuning in to the Fourth Branch podcast. To catch every new episode when it’s released, you can subscribe on Apple Podcasts, Google Play, and Spreaker. For the latest from RTP, please visit our website at RegProject.org.

 

[Music]

 

This has been a FedSoc audio production.

Richard Blaylock

Partner

Pillsbury Winthrop Shaw Pittman LLP


Brian O’Shaughnessy

Partner, Dinsmore & Shohl LLP and

Past President, Licensing Executives Society, USA & Canada


Hans Sauer

Deputy General Counsel and Vice President for Intellectual Property

Biotechnology Industry Organization


Paul Michel

Chief Judge (ret.)

U.S. Court of Appeals for the Federal Circuit


Intellectual Property

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