Globally, the development, manufacture and deployment of the various COVID-19 vaccines have been “front-and-centre” in the news. Questions related to production, supply and distribution are very much on everyone’s minds as the world seeks to “get back to normal”. The fact is, globally, the manufacturers of these vaccines have not been able to produce enough doses of the vaccines to meet the global demand. People ask why but do not realize that the answer may be found in the law of intellectual property.
If manufacturers cannot meet demand, a logical question could be, why not increase manufacture by having third parties assist with the manufacturing of the much-needed vaccines. The truth is it is not that simple. Drug companies safeguard their formulas and methods of production, which are patents, as these are important intellectual property. The drug companies that have manufactured the various COVID-19 vaccines, own the patents and therefore the right to use and exploit the patents. Once you own a patent, you have the exclusive right to exploit the patent.
Drug companies tend to invest significant sums of money on the research and development of drugs and vaccines. These drugs and vaccines are thereafter subject to clinical trials. After the clinical trials, the results must be submitted to the various regulators for approval in each jurisdiction that the manufacturers wish to sell their drugs and vaccines before use by the general public. Simultaneously, once formulae and the methods of production have been settled, the drug companies submit patent applications to various Intellectual Property Offices to ensure that no third party can use, without their authorization, their formulae and methods of production. Usually, the companies will submit patent applications in many jurisdictions to ensure as wide protection as is possible. In submitting patents, the drug companies pay legal fees and government fees in addition to the amounts they spend on research and development. These costs can add up. It is no wonder then that the drug companies safeguard their investments aggressively.
Once a patent is registered, only the registered proprietor of the patent can utilise the patent. In Jamaica, under the old Patent Act, a patent is protected for fourteen years, with the possibility of a further extension of seven years, if good cause can be shown. Under the new Patents and Designs Act, which is not yet in effect, a patent will be protected for twenty years from the applicable filing date. However, under the new regime, each proprietor of a patent must pay over annual fees to maintain the patent. If the fees remain unpaid after ninety days of the due date, the patent shall cease to have effect. In most other jurisdictions, annual fees are required to maintain patents. In essence, it is a drug company paying for the right to be the exclusive manufacturer and distributor of certain drugs and vaccines. Jurisdictions grant this exclusive period to drug companies, so that the companies can recoup or earn as much profit as they can in relation to their investment.
Some drug companies can extend protection on a patent, by filing new patents in relation to different processes and techniques used to manufacture that original patent. One such example is AbbVie and its Humira drug, which is used for the treatment for inflammatory disease and is often deemed as the world’s best-selling drug, and which had its protection extended in the United States until 2023 up from 2016.
After the expiration of a patent, other drug companies can manufacture products that either contain the same chemical composition or active ingredients of the original patented drug or vaccine. Usually after the expiration of a patent, drugs and/or vaccines become more widely available at much more affordable prices.
With the money and effort spent on safeguarding patents, it is no wonder that drug companies may not be keen to have third parties assist with the manufacturing of its drugs and vaccines. With the global demand for COVID-19 vaccines, the potential earnings of the developers could be considerable. Depending on the various commercial arrangements, by having a third party assist with the manufacturing the margin of profit earned on a patent could be lowered significantly. One recent example of competing drug companies teaming up to speed up production, to ensure global vaccination is Merck assisting Johnson & Johnson with the manufacturing of Johnson & Johnson’s COVID-19 vaccine.
Patents are valuable assets and, despite the significant investment that is required to develop and protect a patent, many companies will invest huge sums of money in these, as the returns can be great.
Helen Liu is an Associate at Myers, Fletcher & Gordon, and is a member of the firm’s Commercial Department. Helen may be contacted via Helen.email@example.com or www.myersfletcher.com. This article is for general information purposes only and does not constitute legal advice.