Patents During a Pandemic
Should patent law function differently during a pandemic? Let’s place aside for now the question of whether research efforts during the pandemic should be entitled to new patents, and focus instead on the argument that previously existing patents should be unenforceable or weaker during a pandemic to improve society’s ability to mobilize against the virus.
Sendhil Mullainathan and Richard Thaler make this argument, citing a case in which producers of 3-D-printed valves needed to replace ventilator parts received a threat of a lawsuit. Meanwhile, an attempt by Labrador Diagnostics LLC to enforce two patents in its portfolio against a maker of COVID-19 testing kits received widespread criticism, and the patent holder ultimately backed down. Separately, Israel has approved importation of a generic alternative to an HIV drug thought possibly helpful against COVID-19, even though the drug remains under patent in Israel until 2024.
The question with greater stakes is what happens if a patented treatment proves to be effective against COVID-19. The maker of remdesivir received orphan drug status for the drug (and thus exclusivity and other benefits) on the ground that it met the statutory definition of a rare disease, based on the number of people currently suffering from COVID-19 in the United States. After criticism, Gilead declined the “rare disease” status. Remdesivir remains under patent, and Gilead will presumably defend its patent rights more aggressively. But will Gilead be allowed to do so? One might think that if the treatment proves successful, Gilead would be among the most valuable companies in the world. Surely, one might think, it would be able to earn a trillion dollars, a fraction of what is at stake in dollars and lives in the United States alone. But Gilead’s market capitalization has risen only around $10 billion since the beginning of December. Perhaps this reflects skepticism about the drug’s prospects, but not that much skepticism. It surely also reflects skepticism that Gilead will be able to price it aggressively. Analysts seem to anticipate a price target of only around $260, a bargain if the drug is really a life-saver.
The argument for allowing robust patent protection is mostly the same as the argument for patent protection generally: Patents encourage innovation. If the rule is that patents are unenforceable when they are most needed, then there will be reduced incentives to create inventions that may be especially needed in some future emergency. When an inventor is considering developing a ventilator part, a diagnostic test, or a treatment, we would like the inventor to consider the full social benefits of the invention, not just the social benefits to be accrued in ordinary times.
Here are some counterarguments, in my view none sufficiently powerful:
Unforeseeability. If the demand for an invention is entirely unforeseeable, then inventors will not have taken that demand into account in deciding whether to invent in the first place. Thus, patent revenues are a windfall, and society would be better off not enforcing the patent rights. A pandemic, one might argue, is unforeseeable. But we know that pandemics are not unforeseeable. Even though remdesivir failed against ebola, Gilead knew that it might work against some later cor
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