A bit over forty years ago, in the waning days of his presidency, Jimmy Carter signed the 1980 Bayh-Dole Act launching a transformation in the pursuit and purpose of science in the United States. Before 1980, federally funded science was largely focused on meeting the Cold War defense needs of a nation in a science and technology race with the Soviet Union.
The 1980 Act, named after the two sponsoring Senators, Birch Bayh of Indiana and Bob Dole of Kansas, initiated in earnest the recognition that the advancement of science was also vital for global economic competitiveness.
The act allowed university generated Intellectual Property (IP) with federal grants to be owned and licensed by universities for commercial purposes. Before, the federal government retained ownership of IP. The result was a transformation in how universities researchers viewed the research and the IP they generated, leading to start-up companies and supporting a revolution in biotech and other emerging areas of science.
Although many research-intensive universities already had technology transfer offices, these now proliferated. Universities generated policies on IP ownership, including a policy in which any profits resulting from patents and licenses are shared between the researcher, the department or school they belong to, and the university.
A pandemic cannot be defeated if in only one portion of the world the virus is contained.
The 1980 Bayh-Dole Act was a major catalyst for expanding America’s innovation system.
Yet the success of the Bayh-Dole Act, and the discoveries it helped generate, also contributed to an increasingly complicated world of IP ownership. It significantly bolstered an existing national research ecosystem now mirrored throughout much of the world, with each nation intent on enhancing their own economic competitiveness.
Can we draw a line of causation between the new innovation environment created by the Bayh-Dole Act and the development of a COVID-19 vaccine? Many argue you can. But more relevant questions are who should benefit from publicly funded science discoveries, and what controls should governments have regarding the pricing of vaccines and other drugs that directly benefit from those discoveries?
The Vaccine Race
The remarkable short period of just a year from discovery of the COVID virus to not one but a group of different vaccines was the result of decades of publicly funded biomedical research.
For example, the Pfizer and Moderna vaccines are both based on what is called mRNA research: The messenger RNA (or mRNA) encodes a key protein of SARS-CoV-2, the scientific name for the strain of coronavirus that causes COVID-19; once the mRNA gets inside our cells, our bodies produce this protein that then acts as the antigen that triggers an immune response. “The basic research on DNA vaccines began at least 25 years ago, and RNA vaccines have benefited from 10 to 15 years of strong research,” said immunologist Akiko Iwasaki at the Yale School of Medicine.
Researchers at the National Institute of Allergy and Infectious Diseases (NIAID) in Bethesda, Maryland, working with university counterparts, found ways to use RNA sequencing to attack earlier coronavirus strains, including MERS and SARS. Using this technology, Moderna also collaborated with Harvard and the University of Pennsylvania on its vaccine.
The AstraZeneca vaccine, made in partnership with the University of Oxford, does not use mRNA. “Instead, a viral vector (or carrier) holds extra genetic material that codes for the SARS-CoV-2 spike protein. This, too, benefited from years of research to select the vector,” explains an article in Nature. The Johnson and Johnson vaccine is based on similar technology. Both appear to be similar in effectiveness to the Pfizer and Moderna vaccines, and both do not require the level of deep refrigeration of the mRNA that complicates distribution of the Pfizer and Moderna vaccines. They are also much cheaper to produce and priced, thus far, lower.
And emerging COVID therapies are also based on publicly financed research at university and government labs. Since 2014, Gilead has partnered with various universities, led by the University of Alabama, for research into remdesivir , an antiviral medicine approved as a COVID treatment.
In addition, the search for a vaccine in the U.S. included an initial federal investment of around $10 billion as part of the “U.S. Operation Warp Speed” vaccine program, an unprecedented government stimulus package to pharma companies. Presumably to avoid possible federal control of IP and pricing, Pfizer choose not to take any federal money. But those companies that did were then able to quickly scale-up costly clinical trials and mass produce promising vaccines, whether they worked or not. Funding from Bill Gates’ foundation and other philanthropies also helped supercharge research.
Many of the big pharmaceutical companies that ventured to develop therapies and a vaccine, like the Pfizer/BioNtech collaboration and Moderna, have promised to initially provide the vaccine “at costs,” but will then seek unspecified profits once the pandemic has ebbed – a determination on the course of the virus that has yet to be defined.
Who Owns What IP?
In the rush to secure vaccine supplies, the U.S. government and the EU made multibillion-dollar contracts that protect pharmaceutical companies from liability, patent ownership, and leeway on delivery dates and pricing. The terms of most of these contracts are not open for public view, seemingly at the insistence of private sector drug makers, but perhaps also political leaders who may not want to deal with the debate they would generate.
Thus far, drug makers are also not sharing information on the actual cost of manufacturing vaccine doses. However, there is some indicators that the Pfizer deals with the U.S. and other countries is among the most lucrative. “Pfizer expects to sell $15 billion worth of Covid-19 vaccines in 2021,” notes an industry newsletter. “That would make it the second-highest revenue-generating drug anytime, anywhere, according to industry reports.”
Public Citizen Litigation Group, a public interest law firm co-founded by Ralph Nader, claims that the federal government should have at least partial rights to Moderna and other coronavirus vaccine patents: “It’s a classic example of taxpayers paying twice for medicines.”
The Bayh-Dole Act not only provided an incentive for government funded research to be brought eventually to the market, including pharmaceuticals; it also gives the government “march-in” rights.
Under such rights, the government can require that the owner of the subject invention grant to the federal government “a nonexclusive, partially exclusive, or exclusive license in any field of use to a responsible applicant or applicants,” if the patent holder has not taken “effective steps to achieve practical application” or “to alleviate health or safety needs.”
In the U.S., should the federal government invoke its march-in rights to control future prices for COVID vaccines that may need to be administered in varied forms for years as the virus mutates?
For now, the focus of the U.S. federal government under the new Biden administration is to ramp up vaccine production and distribution, which has lagged behind promises of the Trump administration. The same can be said of the other major economic powers, including the EU. The price is a secondary concern, for now.
By late November 2020, some 10 billion doses of the various vaccines that had or promised efficacy were pre-ordered. Over half of the pre-orders, and now distribution, is to the 27 members of the European Union, along with Canada, the U.S., the UK, Australia, and Japan.
Meanwhile, there have been significant delays in the delivery of vaccine doses, in part caused by production challenges. The international competition for doses is causing significant international tension.
EU leaders are complaining that delays in the promised doses of the AstraZeneca/Oxford vaccine to Europe are unjustifiable, and that the UK government is forcing the drug maker to give priority to its citizens.
Having multiple effective vaccines will help mitigate the COVID virus and its mutations and help to contain prices. But the largely undisclosed deals made by governments to secure supplies has apparently already secured profits for drug makers.
It also evident that demands of the U.S., the UK, and EU to secure doses, and the price they are willing to pay, leaves dwindling short-term supplies of vaccines for low- and middle-income countries.
In December 2020, the governments of India and South Africa asked COVID vaccine producing companies, via the World Trade Association (WTO), to suspend their IP rights to ensure the production of the vaccine in less wealthy countries. “What this waiver proposal does is it opens space for further collaboration, for the transfer of technology, and for more producers to come in to ensure that we have scalability in a much shorter period of time,” stated a representative of the South African Permanent Mission to the WTO.
The U.S., UK, Canada, and the EU rejected the proposal with the argument that it would stifle further innovation in biomedicine. Under an “emergency license,” India and Brazil have become a major producer of the AstraZeneca vaccine, but with no public information on the financial agreement. (India is also developing its own Covaxin vaccine based on adenoiral vectors.) There remains a movement to suspend international IP laws to facilitate vaccine production and distribution.
The scale of the challenge to vaccinate some 80 percent of the world’s population is immense. As of this writing, only about two billion doses of COVID-19 vaccines have been promised for the 190 low and middle-income countries that signed onto a World Health Organization-led partnership called COVAX. Some of the contracts with the U.S. and EU restrict sending vaccines to other parts of the world. So-called “vaccine nationalism” is emerging as a major international controversy.
By early February, COVAX had contractually secured only some 330 million doses of the Oxford/AstraZeneca and Pfizer/BioNTech vaccines for 145 countries that, it is estimated, would cover an average only 3.3 percent of each country’s population by June 2021 – unless more vaccines are distributed. The Biden administration announced at a meeting mid-February meeting of the G7 that the U.S. will contribute a total of $4 billion to COVAX, and urging other nations to increase their contributions.
Defeating a Pandemic
The long-term prospects may be better, as the number of effective vaccines grows, production ramps up, and worldwide distribution becomes more effective. But the lag gives the virus time to spread in much of the world and for new variants of the virus to emerge. Administration of COVID vaccines will not be a one-time event, but likely an on-going, multi-year endeavor with boosters and required modifications.
A pandemic cannot be defeated if in only one portion of the world the virus is contained.
Bayh-Dole helped launch a revolution in science and technological innovation built on the foundation of national science ecosystems that made universities, government, and the private sector partners and that incentivized patenting and licensing. In many areas of technological development and commercial application, this system has been extremely successful.
But as noted, it remains unclear how well this system serves the larger public good especially in the midst of a global health crisis. In the aftermath of the COVID pandemic, one might assume that the issue of the strengths and weaknesses of the IP world set out by the Bayh-Dole Act will be debated and focused on two questions: who profited from the pandemic and at what global public expense?
John Aubrey Douglass