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The Economic Theory of Patent Protection and Pandemic Influenza Vaccines

Do Patents Really Incentivize Innovation in the Field?

Published online by Cambridge University Press:  06 January 2021

Mark Eccleston-Turner*
Affiliation:
Birmingham City University's School of Law

Abstract

The creation of new vaccines is one of the key challenges in the battle against global infectious diseases. Therefore, creating the optimal conditions for innovation in vaccines is one of the most important roles law may undertake in this battle. In relation to pharmaceuticals, the economic theory of patent protection is commonly cited by industry and in the academic literature to justify the patenting of life-saving medicines and vaccines. The economic theory of patent protection holds that innovation occurs due to patents protecting the research and development investment made by the innovator. Proponents of this theory claim that without patents such innovation in medicines and vaccines would occur at a significantly reduced rate. This Article considers the applicability of the economic theory of patent protection to pandemic influenza vaccines. This Article examines a number of factors relevant to patent law, theory, and innovation including: the patent landscape for pandemic influenza vaccines; the market dominance enjoyed by manufacturers; the actual risk posed by imitators making generic vaccines if patent protection were not in place; and, the licensing and regulatory provisions for creating generic vaccines.

According to the economic theory of patent protection, a patent incentivizes innovation by providing an innovator with a temporary monopoly regarding their innovation, and by protecting them from the threat posed by imitators who wish to make a cheap replica of the product. However, even without a patent, pandemic influenza vaccine manufacturers are in this position. Due to economies of scale and the complicated regulatory and licensing frameworks relevant to bringing a pandemic influenza vaccine to market, manufacturers are at little to no risk from generic imitators. Moreover, there is a very strong incentive to innovate because pandemic influenza vaccine manufacturers are selling a product for which demand exceeds supply to a captive market of nations and organizations, each of which is hoping to secure as much vaccine as possible. The unique conditions associated with pandemic influenza vaccines appear to provide more of an incentive to innovate and research in this field than the fact that the innovations can be patented.

Type
Articles
Copyright
Copyright © American Society of Law, Medicine and Ethics and Boston University 2016

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References

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7 Id. at 191.

8 It should be noted that the argument formed in this paper is related specifically only to pandemic influenza vaccines. Pandemic influenza vaccines are somewhat unique entities, both in their formulation, and the issues concerning access. See infra Part V. In the first instance the majority of pandemic influenza vaccines are manufactured using embryonated chicken eggs, and the knowledge of this process, which is a fundamental element of manufacturing such vaccine, is not patented, nor is it readily found outside the small number of existing influenza vaccine production plants. See WHO, Global Pandemic Influenza Action Plan to Increase Vaccine Supply: Progress Report 2006–2008 33 (2009), http://whqlibdoc.who.int/hq/2009/WHO_IVB_09.05_eng.pdf [perma.cc/RN3R-BX2X]; Eluemuno R. Biyden, New Approaches to Improved Vaccine Manufacturing in Embryonated Eggs: Recombinant Vector Technologies Can Improve the Yield and Lower the Cost of Egg-Based Influenza Vaccine Production, BioPharm (Jan. 2, 2010), http://www.biopharminternational.com/print/219657?page=full&id=&pageID=1&sk=&date= [http://perma.cc/YLH7-CMMC]. Moreover, due to the process of antigentic shift within the influenza virus which causes pandemic strains, the pandemic influenza vaccine must be reformulated with each new pandemic strain which emerges, and most humans typically require two-doses of the vaccine in order to ensure full immunity to a novel pandemic strain. See How the Flu Virus Can Change: “Drift” and “Shift”, CDC, http://www.cdc.gov/flu/about/viruses/change.htm [http://perma.cc/MM5M-V3YF]; infra note 10 and accompanying text. Due to these unique characteristics associated with pandemic influenza and pandemic influenza vaccines, it is not certain at this stage to what extent the arguments advanced in this paper are also applicable to other vaccines for global health emergencies.

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14 See e.g., Smith, Charles G. & O’Donnell, James T., Overview of the Current Process of New Drug Discovery and Development, in The Process Of New Drug Discovery And Development 9 (Smith, Charles G. & O’Donnell, James T., eds., 2d ed. 2006)CrossRefGoogle Scholar; Barton, John H. & Emanuel, Ezekiel J., The Patents-Based Pharmaceutical Development Process: Rationale, Problems, and Potential Reforms, 294 J. Am. Med. Ass’n 2075, 2076 (2005)Google Scholar (“[P]atents are a means to enhance innovation ….” ); Grabowski, Henry, Patents And New Product Development in the Pharmaceutical and Biotechnology Industries, 8 Georgetown Pub. Pol’y Rev. 7, 9 (2003)Google Scholar (“The explanation for why patents are more important to pharmaceutical firms in appropriating the benefits from innovation follows directly from the characteristics of the pharmaceutical R&D process.”); Grabowski, Henry, Patents, Innovation and Access to New Pharmaceuticals, 5 J. Int’l Econ. L. 849, 851 (2002)Google Scholar [hereinafter Grabowski, Innovation and Access] (“In essence, it takes several hundred million dollars to discover, develop, and gain regulatory approval for a new medicine. Absent patent protection, or some equivalent barrier, imitators could free ride on the innovator’s FDA approval and duplicate the compound for a small fraction of the originator’s costs.”).

15 See e.g., Comm’n on Intellectual Property Rights, Integrating Intellectual Property Rights and Development Policy 7 (2002), http://www.iprcommission.org/papers/pdfs/final_report/CIPRfullfinal.pdf [http://perma.cc/N9BA-G3CU] (“The immediate impact of intellectual property protection is to benefit financially those who have knowledge and inventive power, and to increase the costs of access to those without.”); Carlos M. Correa, Intellectual Property Rights, the WTO, and Developing Countries: The TRIPS Agreement and Policy Options 36-39 (2000) (“[A]n impact on prices may be expected in [the pharmaceutical sector], … in which product patent protection did not exist before.”); WHO, Public Health, Innovation and Intellectual Property Rights: Report of the Commission on Intellectual Property Rights, Innovation, and Public Health 12-13 (2006), http://www.who.int/intellectualproperty/documents/thereport/ENPublicHealthReport.pdf [http://perma.cc/X4BZ-3UEG] (“An implicit assumption in the justification for patents is that they are applied in an economic and technological context where they can induce innovation …. The assumption may be generally correct in developed countries and in a few developing countries which have the required capital and innovative capacity, but this is not the case in those developing countries which lack both a significant scientific and technological infrastructure and a private sector capable of innovation.”); Sterckx, Sigrid, Can Drug Patents Be Morally Justified? 11 Sci. & Engineering Ethics 81 (2005)Google Scholar (noting that”[e]mpirical economic research on the incentive effect of the patent system hardly exists”); Sterckx, Sigrid, Patents and Access to Drugs in Developing Countries: An Ethical Analysis, 4 Dev. World Bioethics 58, 61 (2004)Google Scholar (“Many developing countries have traditionally excluded pharmaceutical products from patent protection …. The rationale of such a policy is to guarantee that the local industry can play a significant role in the manufacturing of pharmaceuticals.”).

16 See Correa, supra note 15, at 36 (“It is in the logic of monopoly to charge as high a price as the market can bear, with the purpose of maximizing profits. Price increases shall be a regular feature … with the introduction and/or strengthening of patent protection in developing countries.”).

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19 Suzanne Scotchmer, Innovation and Incentives 325-26 (2004).

20 Advancing Public Goods 20, 151 (Jean-Philippe Touffut ed., 2006).

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22 Comm’n on Intellectual Property Rights, supra note 15, at 34. Although there are some limited circumstances in which a patented product can be exploited without the consent of the patentee. See infra Part V.D.

23 Outterson, Kevin, Pharmaceutical Arbitrage: Balancing Access and Innovation in International Prescription Drug Markets, 5 Yale J. Health Pol’y L. & Ethics 193, 217 (2005)Google Scholar.

24 The History of Patents, Brookes Batchellor (July 19, 2011), http://www.bb-ip.com/the-history-of-patents/ [http://perma.cc/5F4L-F9B4].

25 See, e.g., Adam Smith, Lectures on Jurisprudence 11, 83 (R. L. Meek et al., Oxford Univ. Press 1978) (1723) (“We may observe that not only property but all other exclusive rights are real rights. Thurs the property one has in a book he has written or a machine he has invented, which continues by patent in this country for 14 years, is actually a real right.”); Bentham, Jeremy, Manual of Political Economy, in Jeremy Bentham’s Economic Writings 260-65Google Scholar (Werner Stark ed., Routledge 2004) (1793-95) (“[I]f a man can not keep his invention secret without precluding himself from the benefit of practising it, or can not practise it without disclosing it to those who … will be ready to copy it, he … can not reap any benefit of it, without sharing that benefit with those who have borne no part of the burthen …. ”); John Stuart Mill, Principles of Political Economy 1081 (2001) (ebook); John Stuart Mill, Chapters on Socialism 118-19 (2009) (ebook).

26 See, e.g., Denicolò, Vincenzo & Franzoni, Luigi Alberto, Innovation, Duplication, and the Contract Theory of Patents, in 286 Contributions to Economic Analysis: The Economics of Innovation: Incentives, Cooperation, and R&D Policy 1531 (Cellini, Roberto & Lambertini, Luca eds., 2008)CrossRefGoogle Scholar (discussing patent protection and secrecys); Denicolò, Vincenzo & Franzoni, Luigi Alberto, The Contract Theory of Patents, 23 Int’l Rev. L. & Econ 365, 366 (2003)Google Scholar (“provid[ing] a rigorous economic analysis of the contract theory of patents”).

27 See H. I. Dutton, The Patent System and Inventive Activity During the Industrial Revolution, 17 (1984) (“The natural-law thesis assumes that individuals have a natural right of property in their own ideas. On this argument, using the ideas of others without some form of compensation amounted to theft, and since property was personal and exclusive, the State was morally obligated to enforce exclusivity.”); see also John Locke, Two Treatises of Government 115-18 (1823) (ebook) (discussing property).

Robert Nozick, Anarchy, State, and Utopia 178-82 (1975) (“An inventor’s patent does not deprive others of an object which would not exist if not for the inventor.”).

28 See Immanuel Kant, The Metaphysics of Morals 88-90 (Mary J. Gregor trans., Cambridge Univ. Press 1991).

29 See Dutton, supra note 27, at 20-29 (“The monopoly-profit-incentive thesis was probably the most quoted argument in support of patents.”).

30 Bentham, Jeremy, Patents for Inventions, in Benthamiana: or, Selected Extracts from the Works of Jeremy Bentham 192 (Burton, John Hill ed., Phila. Lea & Blanchard 1844)Google Scholar.

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32 For a discussion on historic literature review on the economic justification for patents see S. Subcomm. on Patents, Trademarks, and Copyrights of the Comm. on the Judiciary 85th Cong., An Economic Review of the Patent System III (Comm. Print 1958); Plant, Arnold, The Economic Theory Concerning Patents for Inventions, 1 Economica 30, 30 (1934)Google Scholar. See Matthew Fisher, Fundamentals of Patent Law: Interpretation and Scope of Protection 64-85 (2007) (“[I]t is now universally accepted that the patent right … creates a form of personal property. However, it will now be apparent that it is only relatively recently that the patent has come to be appreciated as an entity distinct from an instrument of Crown privilege.”) for more recent reviews; Guellec & de la Potterie, supra note 31 at 46-51; Menell, Peter S., 1600 Intellectual Property: General Theories, in The Encyclopedia of Law and Economics 129148 (Bouckaert, Boudewijn & Geest, Gerrit De eds., 2000)Google Scholar (ebook); Scotchmer, Suzanne, Patents as an Incentive System, reprinted in The Economics of Intellectual Property II 232-33 (Towse, Ruth & Holzhauer, Rudi eds., 2002)Google Scholar; Encaoua, David et al., Patent Systems for Encouraging Innovation: Lessons from Economic Analysis, 35 Res. Pol’y 1423, 1423-24 (2006)Google Scholar; Mackaay, Ejan, Economic Incentives in Markets for Information and Innovation, 13 Harv. J.L. & Pub. Pol’y 867, 868-71 (1990)Google Scholar; Merges, Robert P., Of Property Rules, Coase, and Intellectual Property, 94 Colum. L. Rev. 2655, 2655 (1994)Google Scholar.

33 See HM Treasury, Controller of Her Majesty’s Stationary Office, Gowers Review Of Intellectual Property, 2006, at 12 (UK) https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/228849/0118404830.pdf [http://perma.cc/H5DF-5VS5]; Ian Hargreaves, Digital Opportunity: A Review Of Intellectual Property And Growth 10-11, 27 (2011), https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/32563/ipreview-finalreport.pdf [http://perma.cc/A9TL-9BTF]; Parliamentary Office of Science & Technology, Biomedical Patents (Postnote) No. 401, 2012, at 4, http://researchbriefings.files.parliament.uk/documents/POST-PN-401/POST-PN-401.pdf for examples in the UK; U. S. Dep’t of Justice, Office of the Attorney General, Report of The Department of Justice’s Task Force on Intellectual Property 41 (2004), https://www.justice.gov/sites/default/files/olp/docs/ip_task_force_report.pdf [http://perma.cc/AQA8-NGSU]; Econ. & Stats. Admin. & U. S. Patent & Trademark Office, Intellectual Property and the U.S. Economy: Industries in Focus 1 (2012), http://www.uspto.gov/sites/default/files/news/publications/IP_Report_March_2012.pdf [http://perma.cc/V4B4-G7AF ]; Exec. Office of the U. S. Trade Representative, 2015 Special 301 Report 6 (2015), https://www.iprcenter.gov/reports/ipr-center-reports/2015-special-301-report/view for U.S. examples.

34 See Motion Picture Patents Co. v. Universal Film Mfg. Co., 243 U.S. 502, 510-511 (1917); Graham v. John Deere Co., 383 U.S. 1, 7-8 (1966) for examples of U.S. cases; Mazer v. Stein 347 U.S. 201, 217-219 (1954); Fox Film Corp. v. Doyal, 286 U.S. 123, 127-28 (1932); Kendall v. Winsor, 62 U.S. (21 How.) 322, 327-28 (1858) for general discussion on the economic theory of intellectual property.

35 See Asahi Kasei Kogyo KK’s Application, [1991] R.P.C. 485; Research Corp’s Supplementary Protection Certificate [1994] R.P.C. 667; Goddin and Rennie’s Application, [1995] R.P.C. 141; Teva Pharm. Indus. Ltd., v. Instituto Gentili SpA, [2004] F.S.R. 16.

36 See, e.g., Barton & Emanuel, supra note 14, at 2075 (discussing the economic justification for patents); Grabowski, Innovation and Access, supra note 14, at 849 (“There is accumulating epirical evidence that new drug introductions have indeed played a central role in increased longevity, enhance quality of life and improved labour force participation and productivity.”); Honig, P. & Lalonde, R., Editorial, The Economics of Drug Development: A Grim Reality and a Role for Clinical Pharmacology, 87 Clinical Pharmacology & Therapeutics 247, 247 (2010)Google Scholar (“Th[e] lack of top-line growth [of new molecular entities] combined with the expiration of patent protection for many blockbuster products if reflected in almost universal and dramatic gaps in positive pipeline [net present value]s across the industry.”).

37 Human Genome Sciences, Inc. v. Eli Lilly & Co. [2011] UKSC 51, [2012] R.P.C. 6.

38 Id. at 130-[98].

39 Rimmer, Matthew, The Race to Patent the SARS Virus: The TRIPS Agreement and Access to Essential Medicines 5 Melb. J. Int'l L. 335, 353 (2004)Google Scholar.

40 See Peter Drahos & John Braithwaite, Information Feudalism: Who Owns the Knowledge Economy? 13 (2002) [hereinafter Drahos & Braithwaite, Information Feudalism] (“Economic theory suggests that bargaining among self-interested and rational actors can produce efficient outcomes by allowing resources to go to those actors who value them most.”); see generally Peter Drahos, A Philosophy of Intellectual Property (1996) [hereinafter Drahos, Intellectual Property] (“[C]reating property rights in abstract objects invites socially costly levels of opportunistic behavior. Self-interest makes individuals accept the invitation.”).

41 Drahos & Braithwaite, Information Feudalism, supra note 40, at 215.

42 Drahos, Intellectual Property, supra note 40, at 6.

43 William D. Nordhaus, Invention, Growth and Welfare: A Theoretical Treatment of Technological Change 88-89 (1969).

44 Id. at 89.

45 Id. at 88-89.

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56 Moser, Petra, Patents and Innovation: Evidence from Economic History, 27 J. Econ. Persp. 23, 26 (2013)Google Scholar.

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58 See id. (“Fundamental advances in science and engineering …. may also creates changes in patenting decisions …. [T]hey also lower competitors’ costs to reverse-engineer innovations.”).

59 See Rao, P. M., The Emergence of the Pharmaceutical Industry in the Developing World and Its Implications for Multinational Enterprise Strategies, 2 Int’l J. of Pharmaceutical & Healthcare Marketing 103, 104 (2008)Google Scholar.

60 See Fisher, supra note 32, at 70-71 (“However, this settled view, that the inventor deserved reward and that the patent system was the most economical method of providing it, did not escape criticism….”).

61 James Bessen & Michael J. Meurer, Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk 106 (2008) (“And only managers in the pharmaceutical and chemical industries considered patents as essential to developing and marketing 30 percent or more of inventions.”); Quaedvlieg, Antoon A., The Economic Analysis of Intellectual Property Law, in Information Law Towards the 21st Century 385 (Korthals Altes, Willem F. et al. eds., 1992)Google Scholar (explaining that some “consider [the patent system] an advantage that intensive research is done by multiple competitors in the same field. It leads to more inventions of a greater variety, thus creating more choices for the consumer”); David Schwartzman, Innovation in the Pharmaceutical Industry 3 (1976) (“Pharmaceutical manufacturers compete for sales chiefly by seeking to discover and develop new drugs ….”); C. T. Taylor & Z. A. Silberston, The Economic Impact of the Patent System: A Study of the British Experience xi (1973) (“This volume presents the result of about three years’ work on the basic economic effects of the [patent] system ….”); see, e.g, Kay, John, The Economics of Intellectual Property Rights, 13 Int’l Rev. L. & Econ. 337, 344-47 (1993)Google Scholar (discussing the value of tranquilizer and anti-ulcerant patents); Levin, Richard C. et al., Appropriating the Returns from Industrial Research and Development, Brookings Papers on Econ. Activity 796, 797 (1987)Google Scholar (finding that across industries, the pharmaceutical industry “a majority regarded process patents as at least the equal of the most effective alternative mechanism of appropriation.”); Mansfield, Edwin, Patents and Innovation: An Empirical Study, 32 Mgmt Sci. 173 (1986)Google Scholar (finding patents are most important in pharmaceuticals, as 60 percent of pharmaceutical research and development depends on patents).

62 Bruce Lehman, The Pharmaceutical Industry and the Patent System, International Intellectual Property Institute 2 (2003), http://users.wfu.edu/mcfallta/DIR0/pharma_patents.pdf [http://perma.cc/JSA8-WQDQ].

63 See generally Chris Garrison, Background Paper for WHO Workshop: Intellectual Property Rights and Vaccines in Developing Countries, World Health Organization (Apr. 13, 2004), http://www.who.int/intellectualproperty/events/en/Background_paper.pdf [http://perma.cc/BM4J-TUPM] (noting that the issue of patents on vaccines as end-products and their possible impact on access differ from that in pharmaceuticals).

64 Webber, David & Kremer, Michael, Perspectives on Stimulating Industrial Research and Development for Neglected Infectious Disease, 79 Bull. World Health Org. 735, 736 (2001)Google Scholar.

65 See Milstien, Julie & Kaddar, Miloud, Managing the Effect of TRIPs on Availability of Priority Vaccines, 84 Bull. World Health Org. 360, 361 (2006)Google Scholar.

66 See Robert P. Merges et al., Intellectual Property in the New Technological Age 131 (6th ed. 2012).

67 Garrison, supra note 63, at 29.

68 Milstien & Kaddar, supra note 65, at 360.

69 See Kremer, Michael, Creating Markets for New Vaccines - Part I: Rationale, 1 Innovation Pol’y & Econ. 35, 5259 (2000)Google Scholar for a discussion of this market stimulation in some vaccine markets provided by push and/or pull mechanisms being provided for by organizations such as GAVI and BARDA. This is not the case for pandemic influenza vaccines. Daems, Rudi et al., Anticipating Crisis: Towards a Pandemic Flu Vaccination Strategy Through Alignment of Public Health and Industrial Policy, 23 Vaccine 5732 (2005) (5735-36)Google Scholar (detailing some of the problems with using push/pull mechanisms for pandemic influenza vaccines).

70 WHO, Department of Immunization, Vaccines and Biologicals, Intellectual Property Rights and Vaccines in Developing Countries 5 (2004), http://apps.who.int/iris/bitstream/10665/68875/1/WHO_IVB_04.21_(302KB).pdf [http://perma.cc/X9AW-ZSKP] [hereinafter WHO, Developing Countries].

71 See Capps, Benjamin & Lysaght, Tamra, Challenging the Production of Vaccines for a Future Influenza Pandemic, 5 Asian Bioethics Rev. 110, 110, 120 (2013)Google Scholar; Jennings, Lance C. et al., Stockpiling Prepandemic Influenza Vaccines: A New Cornerstone of Pandemic Preparedness Plans, 8 Lancet Infectious Diseases 650, 652-53 (2008)Google Scholar (“[T]he possibility of governments nationalizing vaccine production during a pandemic will remain.”). However, the political implications of nationalizing vaccine production, and the fact that a state must have domestic manufacturing facilities in their territory to nationalise means that this is also not a viable alternative for the majority of developing states.

72 See, e.g., GSK, GSK Public Policy Positions: Pandemic Preparedness 5 (May 2014), http://www.gsk.com/media/280878/pandemic-preparedness-policy.pdf [http://perma.cc/TEC9-BR6C] (“[P]andemic vaccines will be produced in the same facilities that currently make seasonal flu vaccines.”); Sanofi Pasteur, Sanofi Pasteur, Leading Provider of Seasonal Influenza Vaccines 1 (Apr. 2015), http://www.sanofipasteur.com/en/Documents/PDF/Fact_Sheet_SP_World_Manufacturer_2015_03_26.pdf [http://perma.cc/ER3E-63UH] (“All Sanofi Pasteur production sites have been designed and built to rapidly switch production from seasonal to pandemic influenza vaccines.”).

73 Partridge, Jeffrey & Kieny, Marie Paule, Global Production Capacity of Seasonal Influenza Vaccine in 2011, 31 Vaccine 728, 729 (2013)Google Scholar.

74 Daems, Rudi et al., Anticipating Crisis: Towards a Pandemic Flu Vaccination Strategy Through Alignment of Public Health and Industrial Policy, 23 Vaccine 5732, 5735 (2005)Google Scholar.

75 See David Brown, How U.S. Got Down to Two Makers Of Flu Vaccine, Wash. Post (Oct. 16, 2004), http://www.washingtonpost.com/wp-dyn/articles/A38776-2004Oct16.html.

76 Iskander, John et al., Pandemic Influenza Planning, United States, 1978–2008, 19 Emerging Infectious Diseases 879, 882 (2013)Google Scholar.

77 See WHO, Global Pandemic Influenza Action Plan to Increase Vaccine Supply: Progress Report 2006–2008, supra note 8, at 33 (concluding that technical know-how and “access to regulatory dossiers are more significant barriers than patents”).

78 Id.

79 See Friede, M. et al., Letter to the Editor, Technology Transfer Hub for Pandemic Influenza Vaccine, 27 Vaccine 631, 631 (2009)Google Scholar for information on how the hub facilitates transfer of technology.

80 Partridge, Jeffrey & Kieny, Marie Paule, Global Production of Seasonal and Pandemic (H1N1) Influenza Vaccines in 2009–2010 and Comparison with Previous Estimates and Global Action Plan Targets, 28 Vaccine 4709, 4710 (2010)Google Scholar; see Partridge & Kieny, supra note 73, at 730 fig. 2.

81 Partridge & Kieny, supra note 73, at 729 Fig. 1, 729-30.

82 See WHO, Open-Ended Working Group Of Member States On Pandemic Influenza Preparedness: Sharing Of Influenza Viruses And Access To Vaccines and Other Benefits: Technical Studies Under Resolution WHA63.1 58-59, http://apps.who.int/gb/pip/pdf_files/OEWG3/technical-studies-en.pdf [http://perma.cc/4KNX-G8J4] [hereinafter WHO, Technical Studies].

83 See WTO et al., Promoting Access to Medical Technologies and Innovation: Intersections Between Public Health, Intellectual Property and Trade 12 (2013), https://www.wto.org/english/res_e/booksp_e/pamtiwhowipowtoweb13_e.pdf [http://perma.cc/D665-N5CK].

84 See id. at 12, 111.

85 Fedson, David S., Preparing for Pandemic Vaccination: An International Policy Agenda for Vaccine Development, 26 J. Pub. Health Pol’y 4, 21 (2005)Google Scholar.

86 Danzon, Patricia M. & Pereira, Nuno Sousa, Vaccine Supply: Effects of Regulation and Competition, 18 Int’l J. Econ. Bus. 239, 265 (2011)Google Scholar.

87 See supra note 22 and accompanying text.

88 See Eur. Parl. Doc. (2011/83/EC) Art. 10 (2004) (describing the European Medicine Agencies abridged application process for generic drugs).

89 See Roger, S. D. & Goldsmith, D., Biosimilars: It’s not as Simple as Cost Alone, 33 J. Clinical Pharmacy & Therapeutics 459, 462 (2008)Google Scholar.

90 See Nordhaus, supra note 43, at vii. (“The present work is offered as an attempt to explore some of the problems raised by the economics of technology.”).

91 See generally Bentham, supra note 25, at 260-65 (“What is the effect of a patent? In respect of things, to cause that to be produced which, had it not been for this security given to the fruits of industry, would not have been produced: and thence in to produce the thing, who, had it not been for the invention thus brought to light, could never have produced it.”).

92 Garrison, supra note 63, at 8.

93 See Garrett, Laurie & Fidler, David P., Sharing H5N1 Viruses to Stop a Global Influenza Pandemic, 4 PLoS Medicine 1712, 1712-13 (2007)Google Scholar for a discussion of what has become known as “the virus sharing impasse.” It is worth noting that access to, and use of, viral samples from developing countries to manufacture said vaccines is highly controversial. See id.

94 WHO, Developing Countries, supra note 70, at 5.

95 See Shapiro, Carl, Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard Setting, in Innovation Policy and the Economy vol. I 121 (Jaffe, Adam B. et al. eds., 2001)Google Scholar (“[O]ur patent system, while surely a spur to innovation overall, is in danger of imposing an unnecessary drag on innovation by enabling multiple rights owners to ‘tax’ new products, processes, and even business methods.”); Heller, Michael A. & Eisenberg, Rebecca S., Can Patents Deter Innovation? The Anticommons in Biomedical Research 280 Sci. 698, 701 (1998)Google Scholar (“Policy-makers should seek to ensure coherent boundaries of upstream patents and to minimize restrictive licensing practices that interfere with downstream product development. Otherwise, more upstream rights may lead paradoxically to fewer useful products for improving human health.”).

96 Shapiro, supra note 95, at 120.

97 Heller & Eisenberg, supra note 95, at 698.

98 See Krattiger, Anatole & Kowalski, Stanley P., Facilitating Assembly of and Access to Intellectual Property: Focus on Patent Pools and a Review of Other Mechanisms, in Intellectual Property Management in Health and Agricultural Innovation: A Handbook of Best Practices 135 (Krattiger, Anatole et al. eds,. 2007)Google Scholar.

99 Burk, Dan L. & Lemley, Mark A., Biotechnology’s Uncertainty Principle, 54 Case W. Res. L. Rev. 691, 728-30 (2004)Google Scholar (outlining the role these patent thickets have on disincentivizing potential investment, and development, in the biotechnology industry).

100 See id. at 729, 732.

101 See Mireles, Michael S., An Examination of Patents, Licensing, Research Tools, and the Tragedy of the Anticommons in Biotechnology Innovation, 38 U. of Mich. J. of L. Reform 141 (2004)Google Scholar (summarizing some of Heller & Eisenberg’s empirical work).

102 WHO, Developing Countries, supra note 70, at 12.

103 See Garrison, supra note 63, at 38.

104 See Shapiro, supra note 95, at 12-13.

105 See, e.g., Benkler, Yochai, Intellectual Property: Commons-Based Strategies and the Problems of Patents, 305 Sci. 1110, 1110 (2004)Google Scholar (“Excessive patent protection has been criticized as impeding scientific research through ‘anticommons’ effects… and as imposing cost barriers on access to medicines.”); Burk & Lemley supra note 99 (“The problem is this: If a product must include components A and B, and A and B are each covered by patents that grant different companies monopoly control over the components, each company will charge a monopoly price for its component. As a result, the price of the integrated product will be inefficiently high-and output inefficiently low-because it reflects an attempt to charge two different monopoly prices. The anticommons literature builds on this economic work, offering additional reasons to believe that the companies may not come to terms at all.”).

106 See Burk & Lemley, supra note 99, at 728.

107 Turner, supra note 12, at 326-27.

108 “Patent thicket” is a term coined by Shapiro, and is defined as being “a dense web of overlapping intellectual property rights that a company must hack its way through in order to actually commercialize new technology.” Shapiro, supra note 95, at 120.

109 See WHO, Technical Studies, supra note 82, at 24.

110 Kane, Eileen M., Achieving Clinical Equality in an Influenza Pandemic: Patent Realities, 39 Seton Hall L. Rev. 1137, 1159 (2009)Google Scholar.

111 There are generally regarded to be four patent portfolios associated with the reverse genetics technology. E.g., Multi-plasmid System for the Production of Influenza Virus WIPO Patent No. WO2007048089 A2 (filed Oct. 17, 2006); Helper-Free Rescue of Recombinant Negative Strand RNA Viruses, U.S. Patent No. 6,544,785 B1 (filed July 14, 2000); Recombinant Influenza Viruses for Vaccines and Gene Therapy, WIPO Patent No. WO2000060050A2 (filed Apr. 5, 2000); Recombinant Negative Strand RNA Virus Expression Systems and Vaccines, WIPO Patent No. WO1991003552A1 (filed Aug. 27, 1990).

112 See Elderfield, Ruth A. et al., Using Reverse Genetics to Improve Influenza Vaccines, in Reverse Genetics of RNA Viruses: Applications and Perspectives 224, 232-33 (Bridgen, Anne ed., 2012)Google Scholar.

113 MedImmune: Advancing Science for Better Health, Annual Report 2005 19, http://media.corporate-ir.net/media_files/irol/83/83037/Annual%20Reports/AR2005.pdf; see MedImmune, Inc., Statement from Medimmune, Inc., Regarding Reverse Genetics Technology, in The Threat of Pandemic Influenza: Are We Ready?, Workshop Summary 196-97 (Stacey L. Knobler et al. eds., 2005) [hereinafter Statement from MedImmune, Inc.].

114 Statement from MedImmune, Inc., supra note 113, at 196-97.

115 Id.

116 Id.

117 Greene, Hillary, Patent Pooling Behind the Veil of Uncertainty: Antitrust, Competition Policy, and the Vaccine Industry, 90 B.U. L. Rev. 1397, 1453 (2010).Google Scholar

118 See Stöhr, Klaus, Influenza Vaccine Production, in Textbook of Influenza 352-53 (Webster, Robert G. et al. eds., 2nd ed. 2013)Google Scholar.

119 See infra Part VI for further details.

120 Huzair, Farah, The Influenza Vaccine Innovation System and Lessons for PDPs, 8 Human Vaccines & Immunotherapeutics 407, 409 (2012)Google Scholar.

121 Khazeni et al., supra note 11, at 836 tbl.3 (noting that administration costs include cost of healthcare workers to administer the vaccine to the population).

122 WHO, Report of the WHO Pandemic Influenza A(H1N1) Vaccine Deployment Initiative 13 (2012), http://www.who.int/influenza_vaccines_plan/resources/h1n1_deployment_report.pdf [http://perma.cc/2FQ3-GGHD].

123 WHO, Main Operational Lessons from the WHO Pandemic Influenza A(H1N1) Vaccine Deployment Initiative 5 (2011), http://www.who.int/influenza_vaccines_plan/resources/h1n1_vaccine_deployment_initiaitve_moll.pdf [http://perma.cc/D2DG-WSH7].

124 These claims are made generally in relation to all drugs, such claims encompass pandemic influenza vaccines, without expressly referring to them. See, e.g., Flynn, Sean et al., An Economic Justification for Open Access to Essential Medicine Patents in Developing Countries, 37 J.L. Med. & Ethics 184 (2009)Google Scholar (encouraging compulsory licensing to ensure access to necessary medicines across countries; Scherer, F. M. & Watal, Jayashree, Post-TRIPS Options for Access to Patented Medicines in Developing Nations, 5 J. Int’l Econ. L. 913 (2002)Google Scholar (“explor[ing] the tension between granting patent protection under the TRIPS Agreement and the availability of medicines at affordable prices to developing countries”).

125 WTO et al., supra note 83, at 52-54.

126 Lawrence M. Friedman et al., Fundamentals of Clinical Trials 2-8 (4th ed. 2010) (providing a thorough breakdown of these phases).

127 Eisenstein, Eric L. et al., Sensible Approaches for Reducing Clinical Trial Costs, 5 Clinical Trials 75, 81 tbl. 1 (2008)Google Scholar.

128 Rägo, Lembit & Santoso, Budiono, Drug Regulation: History, Present and Future, in Drug Benefits and Risks: International Textbook of Clinical Pharmacology 69 (van Boxtel, C. J. et al. 2d ed., 2008)Google Scholar.

130 There is an alarming trend for a proliferation of ‘Data Exclusivity’ provisions being included with free-trade agreements. See Correa, Carlos María, Implications of Bilateral Free Trade Agreements on Access to Medicines, 84 Bull. World Health Org. 399, 401 (2006)Google Scholar. This can have a significant impact on the ability of developing states to improve access to cheaper, generic drugs through the use of compulsory licensing provisions. See id; Lopert, Ruth & Gleeson, Deborah, The High Price of “Free” Trade: U.S Trade Agreements and Access to Medicines, 41 J. L. Med. & Ethics 199, 201, 203, 209 (2013)Google Scholar.

131 See Ames, Timothy W. & Sigler, Aaron, ANDA Regulatory Approval Process, in Generic Drug Product Development: Solid Oral Dose Forms 207-17 (Shargel, Leon & Kanfer, Isadore eds., 2nd ed. 2014)Google Scholar.

132 Id.; WHO, Guidelines on Evaluation of Similar Biotheraputic Products (SBPs) 3 (2009), http://www.who.int/biologicals/areas/biological_therapeutics/BIOTHERAPEUTICS_FOR_WEB_22APRIL2010.pdf [http://perma.cc/2RRG-7E6S].

133 Shein-Chung Chow & Jen-pei Liu, Design and Analysis of Bioavailability and Bioequivalence Studies 451 (3d ed. 2009).

134 WHO, Marketing Authorization of Pharmaceutical Products with Special Reference to Multisource (Generic) Products: A Manual for a Drug Regulatory Authorities 28 (1999), http://apps.who.int/prequal/info_general/documents/WHO_DMP_RGS_98_5_R.pdf [http://perma.cc/GK8Y-XKVG].

135 Wang, Jun & Chow, Shein-Chung, On the Regulatory Approval Pathway of Biosimilar Products, 5 Pharmaceuticals 353, 354 (2012)Google Scholar.

136 Roger & Mikhail, supra note 46, at 406 (“It is thus impossible to produce an exact copy of a biopharmaceutical, as changes to the structure of the molecule can occur with changes in the production process.”).

137 See generally WHO, Expert Committee on Biological Standardization, Guidelines on Evaluation of Similar Biotherapeutic Products (SBPs) (2009), http://www.who.int/biologicals/areas/biological_therapeutics/BIOTHERAPEUTICS_FOR_WEB_22APRIL2010.pdf [http://perma.cc/GMJ7-Q8PW].

138 Id. at 4.

139 See generally Commission Directive 2003/63/EC, of The European Parliament and of the Council on the Community Code Relating to Medicinal Products for Human Use and Amending Directive 2001/83/EC, 2003 O.J. (L 159) 46; European Medicines Agency, Committee for Medicinal Products for Human Use, Guideline on the Requirements for Clinical Documentation for Orally Inhaled Products (OIP) Including the Requirements for Demonstration of Therapeutic Equivalence Between Two Inhaled Products for Use in the Treatment of Asthma and Chronic Obstructive Pulmonary Disease (COPD) in Adults and for Use in the Treatment of Asthma in Children and Adolescents (2009), http://www.ema.europa.eu/docs/en_GB/document_library/Scientific_guideline/2009/09/WC500003504.pdf [http://perma.cc/F5XL-H8TX] (updated guidelines).

140 42 U.S.C. § 262 (2012).

141 Minister of Health, Guidance for Sponsors: Information and Submission Requirements for Subsequent Entry Biologics (SEBs) (2010) http://www.hc-sc.gc.ca/dhp-mps/alt_formats/pdf/brgtherap/applic-demande/guides/seb-pbu/seb-pbu-2010-eng.pdf [http://perma.cc/K57C-EW7C].

142 See Wang & Chow, supra note 135 for more information on the differences between these systems.

143 See 42 U.S.C. § 262(a) (regulations for the United States); Minister of health, supra note 141, at 7-16 (regulations for Canada); see, e.g., European Medicines Agency, supra note 139, at 4, 7 (regulations for the United Kingdom for inhalers).

144 See 42 U.S.C. § 262(k)(2)(A)(i)(I)(cc); European Medicines Agency, supra note 139, at 18; Minister of Health, supra note 141, at 12-15.

145 See, e.g., Health Canada, Guidance Document: Data Protection under C.08.004.1 of the FOOD AND DRUG REGULATIONS 1-2 (2011), http://www.hc-sc.gc.ca/dhp-mps/alt_formats/pdf/prodpharma/applic-demande/guide-ld/data_donnees_protection-eng.pdf [http://perma.cc/6DTD-4T9V] (“Notwithstanding that a subsequent manufacturer may receive authorization to export a given drug under a compulsory license granted by the Commissioner of Patents, Health Canada will not grant a[n] [Notice of Compliance] providing Canadian market authorization unless the requirements … have been met.”).

146 See 42 U.S.C. § 262(k)(4)-(7); European Medicines Agency, supra note 139, at 8-9; Health Canada, supra note 145, at 1-2.

147 42 U.S.C. § 262(k)(7).

148 Health Canada, supra note 145, at 2-3.

149 European Commission, Pharmaceutical Sector Inquiry: Preliminary Report (DG Competition Staff Working Paper) 17 (2008), http://ec.europa.eu/competition/sectors/pharmaceuticals/inquiry/preliminary_report.pdf [http://perma.cc/K89U-DRES].

150 Indeed, recently the United States provided for four years of data exclusivity for biologic drugs, and an additional eight years of market exclusivity on biologics. 42 U.S.C. § 262(k)(7)(A)-(B). Concern has been expressed that such standards will become the norm, even in developing states, through Free-Trade Agreements, such as the Trans-Pacific Partnership Agreement. See Flynn, Sean M. et al., The U.S. Proposal for an Intellectual Property Chapter in the Trans-Pacific Partnership Agreement, 28 Am. U. Int’l L. Rev. 105 (2012)Google Scholar; Gleeson, Deborah et al., How the Trans Pacific Partnership Agreement Could Undermine PHARMAC and Threaten Access to Affordable Medicines and Health Equity in New Zealand, 112 Health Pol’y 227 (2013)Google Scholar (arguing that “[r]ecent US free trade agreements have included provisions intended to impose constraints on coverage and reimbursement programs for medicines and medical devices.”).

151 WHO, Guidelines on Evaluation of Similar Biotheraputic Products (SBPs), supra note 132, at 9-11.

152 Wang & Chow, supra note 135, at 356.

153 Calo-Fernández, Bruno & Martínez-Hurtado, Juan Leonardo, Biosimilars: Company Strategies to Capture Value from the Biologics Market, 5 Pharmaceuticals 1393, 1398 (2012)Google Scholar.

154 Cameron, Alexandra et al., Medicine Prices, Availability, and Affordability in 36 Developing and Middle-Income Countries: A Secondary Analysis, 373 Lancet 240, 245 (2009)Google Scholar.

155 Pandemic Influenza Vaccine Manufacturing Process and Timeline: Pandemic (H1N1) 2009 briefing note 7, WHO (2009) http://www.who.int/csr/disease/swineflu/notes/h1n1_vaccine_20090806/en/ [http://perma.cc/7BSB-SALN].

156 Id.

157 Id.

158 Cf. Calabresi, Guido & Douglas Melamed, A., Property Rules, Liability Rules, and Inalienability: One View of the Cathedral, 85 Harv. L. Rev. 1089, 1092 (1972)Google Scholar (“An entitlement is protected by a property rule to the extent that someone who wishes to remove the entitlement from its holder must buy it from him in a voluntary transaction in which the value of the entitlement is agreed upon by the seller.”).

159 See, e.g., Kantarjian, Hagop & Zwelling, Leonard, Cancer Drug Prices and the Free-Market Forces, 119 Cancer 3903 (2013)Google Scholar (Market forces play a role in determining the price of a product, as will competition or comparable products.); Mark Duggan & Fiona Scott M. Morton, The Distortionary Effects of Government Procurement: Evidence from Medicaid Prescription Drug Purchasing, (NBER Working Paper Series, Working Paper No. 10930, 2004) (A national government’s position in drug procurement can affect the price of the product).

160 See, e.g., Monopolies, Economics Online, http://www.economicsonline.co.uk/Business_economics/Monopoly.html [http://perma.cc/P8M4-ZK8U] (“If a firm has exclusive ownership of a scarce resource, … it has monopoly power over this resource and is the only firm that can exploit it.”).

161 See, e.g., Interview by Medecins Sans Frontieres (Doctors without Borders) with Janice Lee, Pharmacist, Medecins Sans Frontieres (Nov. 4, 2010), http://www.doctorswithoutborders.org/news-stories/field-news/why-indias-generic-medicines-industry-so-important [http://perma.cc/U5LD-BN2H] (discussing the importance of generic pharmaceuticals in India for increasing access and affordability of these products).