Pharma Prices and Patents Under Attack

As pressure mounts on Capitol Hill to enact legislation designed to reduce federal outlays for prescription drugs, the drive for “vaccine equity” around the world is bolstering efforts to limit patent protections on innovative medicines and vaccines to combat the global pandemic. In a surprise move, the Biden administration recently announced support for waiving international protections on intellectual property under the World Trade Organization (WTO) to expand access to anti-COVID vaccines. US trade representative Katherine Tai indicated plans to negotiate a limited waiver by WTO on IP protections for certain products to help end the worldwide pandemic and block the emergence of new viral variants

Biopharma leaders countered that even with patent waivers, the new vaccines will be difficult for foreign manufacturers to produce quickly and safely. Instead, US and European manufacturers seek to maintain IP protections by ramping up vaccine donations and supplies of production materials for India and other countries with capable vaccine production facilities to increase local production. Moderna recently promised to send 500 million doses of its COVID vaccine to COVAX, the vaccine supply program for the World Health Organization, while Pfizer earlier donated $70 million in medicines to India to help treat the surge in coronavirus infections and deaths. Moderna had previously said that it would not enforce IP protections for its mRNA-based vaccine, but that has not led to new production overseas. And AstraZeneca and Johnson & Johnson had earlier licensed their vaccines to foreign manufacturers.

Industry’s main message is that patents drive biomedical innovation, which has been responsible this past year for the success in developing new COVID vaccines and drugs. Loss of IP protections would open the door for drug developers in China and elsewhere to tap confidential information held by Western firms and would do little to advance vaccine production in developing nations.

Seeking price controls

Meanwhile, Congressional leaders ramped up efforts to enact legislation designed to drive down drug costs at home. The resulting savings would help finance the Biden administration’s effort to expand the economy and social and educational benefits. The leading drug pricing proposals are not new, as seen in comments aired at recent hearings before House Energy & Commerce and House Labor & Education subcommittees. Reformers claimed that costly therapies limit patient access to life-saving treatments and should be controlled by authorizing price negotiations for drugs reimbursed by Medicare Part D drug plans, along with limits on annual drug price hikes, caps on out-of-pocket costs for patients, added price transparency, and revisions in drug reimbursement for treatments delivered in clinics under Medicare Part B.

Industry analysts maintain that the free market for medicines in the US benefits all by supporting hefty investment in high-risk biomedical R&D. They also argue that actual drug prices are tricky to assess; patient out-of-pocket costs are driven more by hospitals and insurance practices; and greatly expanding competition from Chinese and other subsidized manufacturers is challenging innovation in the US and Europe.

While the Democrats work to gain Congressional approval of even limited drug price reforms, the debate is continuing over the shape of a WTO resolution waiving IP protections for COVID vaccines. In itself, such an agreement is unlikely to erode sales for existing products. The larger danger is that it could set a precedent for similar action on treatments for other critical diseases and further encourage political attacks on pharma operations and profits.

Jill Wechsler is Pharm Exec’s Washington Correspondent. She can be reached at jillwechsler7@gmail.com.