Should China institute a compulsory license for patented drug to combat the coronavirus?

A patent is a set of exclusive rights granted to the inventor of an invention, by a government. The public policy behind patent law is, in exchange for teaching the public how to make and use the invention, an inventor is granted a monopoly for a limited period of time on the invention. Patents are not automatically granted. To be granted a patent an inventor must file a patent application with the relevant government office that reviews and grants patents. The United States Patent and Trademark Office is the agency in the United States that grants patents and many other nations have their own patent offices. A patent office will only approve a patent application if the inventor can demonstrate that the patent is novel, not obvious and useful. If someone besides a patent owner makes, uses or sells a patented invention that can be considered patent infringement.

Pharmaceuticals are an incredibly important aspect of patent law. Pharmaceuticals today held prevent and treat diseases which decimated humans in the past. Polio, Small pox, Measles and other diseases have been almost eliminated from the world through the use of pharmaceuticals. The human value of pharmaceuticals are immeasurable. The economic value of pharmaceuticals are something that is constantly measured. The global market for pharmaceuticals was estimated to be $1.2 trillion in 2018. That market is expected to reach $1.5 trillion by 2023. Pharmaceutical patents are an important part of the pharmaceutical market because patents allow a company to protect its investments. Developing a new drug takes years of research and development, many experiments will fail before a new drug is discovered, however each failure is one step closer to success. Pharmaceutical companies use patents to protect their successful drugs so that they can recoup the research cost of drugs that were unsuccessful. The price of a drug not only includes the production cost to make the drug, but all the research that lead to the development of the drug.

In the case of drugs that are truly novel and lifesaving, sometimes the people that need the drugs the most cannot afford them. In that case, governments can step in to protect their people. The ability of a government to compel patent licensing is part of international treaty. The WTO Agreement on Trade-related Intellectual Property Rights (TRIPS), states that governments do not need to negotiate with patent holders prior to issuing a compulsory licence in cases of national emergency, extreme urgency, government use (though they must provide them with a royalty fee by way of compensation) or to remedy an anti-competitive practice. Moreover, the Doha Declaration on the TRIPS Agreement and Public Health, adopted by the WTO on 14 November 2001, reaffirmed the right of Members to issue compulsory licenses and the “freedom to determine the grounds upon which such licences are granted.”

Several nations have exercised this right in the interest of their people. In 2006 Thailand issued a compulsory license for a patented drug, efavirenz, owned by Merck. Brazil issued a compulsory license for the same drug in 2007. Before issuing the compulsory license Brazil attempted to negotiate with the patent holder for 2 years. The original per dose price was US$1.57, the patent holder offered a discount of US$1.10 per dose, by issuing a compulsory license Brazil was able to import generic versions of the drug for US$0.45. The International Federation of Pharmaceutical Manufacturers & Associations, whose members include Merck and 25 other international pharmaceutical companies, responded with a statement criticizing compulsory licensing as “a confrontational approach.”

2019-nCoV, referred to as the coronavirus, is a recently discovered disease that is raising global concerns. As of January 30, 2020, a total of 9976 cases had been reported in at least 21 countries. A potential cure for the disease has been discovered. Gilead’s Remdesivir has been shown to treat the coronavirus in specific cases and more detailed studies are being performed. The Wuhan Institute of Virology filed a patent application on January 21, 2020 and the Institute plans to file internationally via the Patent Cooperation Treaty. However, Gilead already has a patent application, CN108348526A “Methods for treating arenaviridae and coronaviridae virus infections”, pending in China.

The Gilead application notes the family of viruses to which 2019-nCoV belongs but not 2019-nCoV specifically, so it is possible that both patents could be granted. The Wuhan Institute’s patent could block Gilead from selling Remdesivir to treat the coronavirus but Gilead’s patent would prevent others from selling Remdesivir also. If both patents are granted, hopefully the parties could come to an agreement which would allow people to get the medicine they need.

If an agreement cannot be reached, then the Chinese government may choose to issue a compulsory license to allow generic manufacturing of Remdesivir. The “Measures for Compulsory Licensing of Patent Implementation” implemented in 2012 grants China’s State Intellectual Property Office (SIPO) the ability to grant compulsory licenses for producing generic versions of branded drugs. To date China has not exercised this power, however combating 2019-nCoV is important enough that a compulsory license may be warranted.

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