An overview of IPR in pharma industry: How have its implications changed post-pandemic?

More than any other technological area, drugs and pharmaceuticals match the description of globalisation and need to have a strong IP system most closely. Knowing that the cost of introducing a new drug into the market may cost a company approximately $1,000 million along with all the associated risks at the developmental stage, no company will like to risk its IP becoming a public property without adequate returns. Competition in the global pharma industry is driven by scientific knowledge rather than manufacturing know-how and a company’s success will be largely dependent on its R&D efforts. Here, IPR plays an important role and protecting R&D in the drug industry is indeed important. The Indian pharma industry has witnessed tremendous growth in the past decades, in terms of market capturing and contribution to the Gross Domestic Product (GDP) of our country.

India’s domestic pharma market is likely to reach $65 billion by 2024 and further expand to $120-$130 billion by 2030 . Despite such growth, one of the key issues in this industry is the management of innovative risks while one strives to gain a competitive advantage over rival organisations. It is undeniable that Intellectual Property (IP) is indispensable as an incentive that stimulates innovation, and, as a result, technological progress. At the same time, IP carries a problematic record of protecting the interests of developed countries and powerful corporations at the expense of poor and undeveloped countries. International pressure on pharma companies to voluntarily forfeit IP privileges, at least temporarily, has been consistent and overwhelming.

Organisations worldwide have signed an open letter to the World Intellectual Property Organisation (WIPO) asking the group and its constituents to support research and development on coronavirus, and to be flexible with IP rights during this period. As a testament to the informal power of the public voice, Gilead, the pharma company that has garnered attention for its coronavirus drug trials with test-drug remdesivir, made a surprising announcement to renounce the orphan drug status granted to the experimental treatment. This designation, which the US Food and Drug Administration (FDA) allocates to drugs targetting rare diseases, would have guaranteed Gilead tax breaks and several years of protection against competition from generic drug production. In addition to the undeniable fact that coronavirus is, by no means, a rare disease, the resulting backlash from the public health sector likely pressured Gilead to reject the FDA designation.

In most cases, however, public opinion, and even a united international front, lacks the power of enforcement in reality. When push comes to shove—for access to medical necessities during a pandemic no less—individual government action is the most effective. Caught in the middle of a public health crisis, Israel turned to compulsory licensing, a legal measure allowed by the World Trade Organization (WTO) whereby a country can circumvent IP laws to produce generic versions of patented medication only when facing a public health emergency. Once the Israeli government used compulsory licensing against AbbVie’s patent on an anti-viral drug that was at the time believed to be effective against the coronavirus, AbbVie moved to end patent enforcement on that drug in all countries. Coronavirus does not discriminate against wealthy and impoverished countries: the pandemic is taking a financial toll on all countries. Germany, China and Chile, among others, followed suit, seeking legal measures to circumvent pharma patents. Given the problematic implications of IP on drug pricing, and, therefore, accessibility, it is clear why countries in crisis are opting for unilateral action against IP. The direct attack on IP by breaking patents, however, is at most a short-term solution. The chief executive of Roche, a Swiss multinational healthcare company, has warned that mass disregard for IP laws will disincentivise drug development due to the lack of investment, a perspective that the pharma industry as a whole, shares. Extreme measures can be tolerated during extreme circumstances, but, after the crisis, the IP landscape, and how governments navigate it, must change.

It is obvious that management of IP and IPR is a multi-dimensional task and calls for many different actions and strategies which need to be aligned with national laws and international treaties and practices. Pharma industry currently has an evolving IP strategy. Since there exists the increased possibility that some IPR are invalid, anti-trust law, therefore, needs to step in to ensure that invalid rights are not being unlawfully asserted to establish and maintain illegitimate, albeit limited, monopolies within the pharma industry.