What’s Ours Is Ours: Enforcement of Government-Owned Patent Rights
The US government has a lot to gain by adopting a more aggressive attitude about enforcing its patents and pursuing patent infringement litigation. The Department of Health and Human Services (HHS), which is home to both the National Institutes of Health (NIH) and the Center for Disease Control and Prevention (CDC), owns 4,446 patents stemming from research done in its labs from 1980 to 2019.[1] Regarding drug development, even if the government does not own a patent on a drug, it may still have contributed significantly to the drug’s advancement.[2] In fact, studies have shown public-funded research had a major role in the development of at least one in four Food and Drug Administration (FDA)-approved drugs.[3] Despite this sizable patent portfolio and research contributions, it is not common that the government has gone to court to enforce its patents against pharmaceutical companies.
In a surprising move, the NIH recently did enforce its patent on the spike protein technologies that were used in the COVID-19 vaccine sold by Moderna, Inc.[4] Because the COVID-19 pandemic was a public health emergency, the government funded almost all of the research and development that went into creating Moderna’s vaccine.[5] Research and development is one of the costliest parts of making a vaccine.[6] The government altogether spent around $2.5 billion on the vaccine, including $1 billion in grants to Moderna as part of Operation Warp Speed, a partnership designed to expedite the vaccine response to COVID-19, and over $400 million from HHS for the large clinical trial that supported authorization by the FDA.[7]
Taxpayers financed every step of the vaccine development, from research to manufacturing to distribution.[8] If that wasn’t enough, during the negotiations for the vaccine grants, the US government and Moderna set up advance purchase agreements in which the US agreed to buy Moderna’s vaccines giving them a built-in pool of buyers.[9] To show its appreciation for this public support, when Moderna moves from government distribution to the commercial market, they have indicated they will raise the price of their vaccine by 400% to around $130 per dose.[10] The vaccine costs around $3 per dose to make.[11]
Faced with forceful opposition from Moderna, the NIH was nonetheless successful in enforcing its patent.[12] Last year, Moderna agreed to pay the NIH $400 million as a “catch-up payment.”[13] Moderna also agreed to pay low single-digit royalties on future vaccine sales.[14] These are meager costs compared to the $36 billion in sales Moderna made from the COVID-19 vaccine in the first two years of production.[15] During this commercial success, several of its executives became billionaires.[16] Still, NIH’s victory cannot be downplayed. The government must continue to enforce its patents in this way to protect the public interest.
Several of today’s most popular vaccines including Johnson & Johnson and Pfizer, rely on technology described in NIH’s spike protein patent.[17] The American people are charged twice in the pharmaceutical industry’s profit-driven scheme: once as their taxpayer dollars are used to fund government research pivotal in developing these life-saving technologies, and then again when pharmaceutical companies sell these technologies back to the public at an exorbitant profit.
Even on the rare occasion the government enforces its patents, these cases don’t always turn in the government’s favor. In US v. Gilead Sciences, Inc., the US government lost a patent infringement trial against the pharmaceutical company, Gilead, concerning its patents on HIV medications.[18] In addition to the government’s claim that Gilead infringed on their publicly-owned patent, it’s important to identify that the US taxpayer fronted $143 million toward the development of Truvada and Descovy, Gilead’s HIV prevention medications.[19] Now, Gilead charges over $20,000 for a year’s worth of these drugs.[20] Regardless of if the government wins these cases, it’s incredibly important to pursue patent litigation to hold these corporations accountable to the American people.
To put pressure on pharmaceutical companies to pay their fair share, there are many avenues besides enforcement of patent infringement. For instance, the government can attempt to force pharmaceutical companies to abandon its title to patents where that company fails to disclose government funding.[21] The government can also advocate for more equitable government returns in contracts and partnership agreements between pharmaceutical companies and government institutions, which will better ensure taxpayers see a return on their investment in drug research and development.[22] Pharmaceutical giants owe a great debt to public research institutions. It’s time they pay.
Footnotes
