Patent rights are vital to the life sciences sector.
The Impact of Covid-19 on Life Science Patents
By Ellie Webb
Friday, July 23, 2021
This article was first published in Insurance Day.
Patent rights are vital to the life sciences sector. By granting a period of legal monopoly over protected inventions, patents provide a crucial incentive for companies to invest in risky and costly research and development (R&D) programmes for new drugs and treatments. The system works because patents can be extremely valuable; Pfizer generated $100bn from its blockbuster cholesterol drug Lipitor , as its patent gave it exclusive rights over manufacturing and distribution of the much sought-after treatment.
With lucrative potential gains at stake, battles over access, ownership and control often ensue, especially when a discovery is transformative and attracts heightened levels of interest, investment and competition. For example, a complex international patent dispute concerning CRISPR gene editing technology began over five years ago, still with no end in sight. This technology has the potential to revolutionise treatment for many with life-threatening diseases and carries extraordinary commercial value.
Yet this pales by comparison with worldwide demand for effective treatments against Covid-19. Investment from the public and private sectors has been unparalleled, with the US government last year reportedly spending $5.1bn on Covid-19 medical research  within four months, far exceeding annual funding for other fields.
The impact of this intense global focus on the future patent landscape for Covid-19 technologies will, in all likelihood, be significant and sustained.
What part are patents playing now?
Global calls for a Covid-19 vaccine patent waiver have hit the headlines recently, but the immediate needs presented by the virus have already encouraged collaboration over competition.
The pharmaceutical giant AbbVie – one of the first to announce it wouldn’t enforce its potentially relevant patents – stated in March 2020 that its patented drug Kaletra could be freely used in Covid-19 research . Others have since followed suit. Major vaccine developer Moderna confirmed in October 2020 that while the pandemic continues it will not enforce its Covid-19-related patents against those using the technology to create vaccines . Similarly, the Oxford University /AstraZeneca vaccine is subject to royalty-free and non-exclusive licencing until the pandemic is over, as determined by the WHO5.
Many believe this atypical approach is vital to securing treatments for Covid-19. However, it has also been pointed out that the stability of the situation is underpinned by the world’s current “emergency status”. The AstraZeneca agreement, for example, is clear that commercial licencing of the vaccine and related IP is permissible after the pandemic .
While the current situation has not eradicated patent infringement risk, it has created a complex set of dynamics expected to amplify related issues in future.
What will happen once Covid-19 is no longer an ‘emergency’?
Post pandemic, life science IP litigation will likely increase with renewed vigour, as operations return to normal and companies attempt to ‘reclaim’ assets that may have been shared during the virus’ peak.
Many may look to obtain ownership over innovations that have been discovered to help recoup lost R&D costs. This intricate process is likely to be exacerbated in the wake of heightened international collaboration. As patents have national rights, the potential exists for a chequered global landscape to emerge, as select parties are granted monopolies across different territories. Complex legal issues around licensing and infringement could hamper companies with worldwide ambitions.
Extreme competition is likely to go well beyond the initial vaccination and treatment programmes currently underway. This is because the market for Covid-19 medicines is expected to be enormous and enduring, with significant private demand all but certain and stockpiling a possible common strategy. A recent legal case suggests investors are well-aware of this potential, driving up the stock value of a small biotech firm by 120% after one of its patents, which proved important to Covid-19 vaccine technology, was found to be valid by the courts .
The promise of future profits will remain a powerful incentive for companies to claim and protect patents for decades to come. For example, 26 years after smallpox was eradicated, patent infringement litigation was instigated over a $1.9bn contract to supply vaccines to the US government .
Arguably, the most pressing unknowns at this point are how long it will take for business as usual to resume, and how can companies protect themselves against the threat of litigation.
What does this mean for Risk Managers?
This complex situation is an emerging risk that should be on the radar for any organisation within the life science sector. Fortunately, it is possible to prepare:
- Review any contracts that manage patent rights to ensure that relevant clauses are clear and mitigate the risk of a dispute with a third party, client, or even employee. All outward contractual indemnity obligations should also be recorded, so appropriate financial arrangements can be quantified and put in place.
- Map, prioritise and protect intangible assets so that it is easy to determine what, if impaired or lost, would be most detrimental. This enables smart decisions around protection and resource allocation.
- Transfer the risk with an intellectual property policy from Tokio Marine Kiln. This can provide financial peace of mind to satisfy executives and attract investors, who want to know their funds will support innovation, not legal fees.
 Luiggi, C. 2011. “Lipitor Patent Expires.” The Scientist.
 Merelli, A. July 2020. “Tracking the $5.1bn the US has spent on Covid-19 medical research” Quartz.
 The Financial Times. March 2020. “AbbVie drops patent rights for Kaletra antiviral treatment”.
 Moderna. October 2020. “Statement by Moderna on Intellectual Property Matters during the COVID-19 Pandemic.”
 McDonagh , L. September 2020. “Could university patents stand in the way of universal global access to a COVID-19 vaccine?” London School of Economics.
 Plieth, J. July 2020. “The Covid-19 vaccine battle just got interesting.” Evaluate Vantage.
 Fortson, D. 2009 “Acambis fights patent lawsuit over 19bn smallpox contract”. The Independent.
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