By Richard Owens, May 6, 2020
COVID-19 is causing odd behaviour on the part of some firms. Drug companies with remedies to sell, or who hope for a remedy or vaccine, are making conciliatory gestures of great generosity in the markets for their products. Gilead Sciences Inc. has one of the most promising treatments, Remdesivir. It petitioned the U.S. Food and Drug Administration to retract the “orphan drug” designation benefiting Remdesivir and in any event has waived the exclusive rights, tax deductions and regulatory benefits that attend that designation, which allows preferential treatment of drugs for rare diseases. It also has said it will provide its entire 1.5 million dose supply at no cost to patients with the most severe symptoms. AbbVie, responding to Israel’s compulsory licensing of its product, Kaletra, to treat COVID-19, has pledged not to defend its patent rights to the product anywhere. Johnson & Johnson has pledged to make any vaccine it discovers available on a not-for-profit basis. Medtronic has provided competitors with the rights and plans to make its ventilators.
Firms are supposed to maximize shareholder value. Nothing more. It is difficult to see how these firms’ decisions do that, at least in the short term. The cause for their apparently paradoxical behaviour may be rooted in the politics of defending the intellectual property system we rely on for drug discovery in societies that are increasingly hostile to private enterprise.
Hostility is evident in the compulsory licensing measures many countries have implemented, often specifically in response to the pandemic. In Bill C-13, Canada put in place a very limited provision under the Patent Act to allow government to issue a compulsory licence to a pharmaceutical company’s patents and empower a third-party supplier to make the drug to respond to a public health emergency. Many countries have done the same, to varying extremes and degrees of enthusiasm. Commentators and politicians in Canada, the U.S. and abroad are seizing on the pandemic to agitate for a return to the continual threat of compulsory licensing to control drug prices. But because pharmaceutical companies are expressing willingness to share manufacturing capacity, there may be little need to exercise this power to confiscate rights by compulsory licence.