Vaccine Developers Must Put Cure Before Patent Profits

By Michael O'Shaughnessy
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Law360 (November 13, 2020, 5:47 PM EST) --
Michael O'Shaughnessy
Michael O'Shaughnessy
The world received hopeful news from Pfizer Inc. on Nov. 9 when the pharmaceutical giant announced that its developmental COVID-19 vaccine has achieved 90% effectiveness in studies.

This achievement could signal the beginning of the end of the quarantines that have devastated the economy and strained home life.

Not surprisingly, the announcement quickly became political fodder and has reignited considerable ethical debates. Within all of this lies some significant lessons on managing and protecting intellectual property and brand reputation. 

Shortly after the announcement, the White House claimed that this rousing success comes in part due to Operation Warp Speed, the President Donald Trump administration's public-private partnership initiative to facilitate and accelerate the development of a COVID-19 vaccine.

However, shortly afterward Pfizer's senior vice president of research and development, Dr. Kathrin Jansen, stated that Pfizer was "never part of the Warp Speed" initiative and had "never taken any money from the US government, or from anyone."

Dr. Jansen's comments almost assuredly have little to do with politics and more to do with protecting the company's intellectual property. Indeed, this denial of government involvement or financing is likely a line drawn in the sand to fend off any claims that the vaccine falls within the provisions of the Bayh-Dole Act, which would automatically entitle the U.S. government to an irrevocable, nonexclusive license, and a right to exercise its so-called march-in rights to compel manufacture and distribution of the vaccine throughout the country. 

Dr. Jansen's statement reflects an important dilemma raised by a global pandemic: How is a for-profit company to balance ethical and altruistic values, and the professional obligation to run a profitable business and account to shareholders?

During the COVID-19 pandemic, we have observed this dilemma in action. Several corporations have purportedly put the cure above immediate business interests and even embraced collaboration to achieve results. Pfizer, for example, collaborated with its partner BioNTech SE to develop its vaccine.

Moderna Inc. took an even more uncommon approach by vowing not to enforce its patents on its broad IP portfolio covering development and commercialization of mRNA vaccines and therapeutic programs. Monderna said in a public statement that it is "not interested in using that IP to decrease the number of vaccines available in a pandemic." The company also expressed an openness to licensing its technology after the pandemic. 

In doing so, Moderna clearly established that its priority is to ensure participation in a collective effort to find a successful cure. Though this approach may present subsequent risks, including possible allegations of equitable estoppel or limitations on damages for damages due to established policy and royalty-free comparable licenses.

It is unlikely that a court would fault a company for a decision to make patent rights available to the public for limited purposes during a global pandemic. That said, Moderna might be wise to set boundaries on its altruistic contribution, to avoid unfettered use in unrelated or future development efforts.

Nevertheless, this perceived ethical restraint will likely result in long-term gains for Moderna. It will benefit from positive press coverage and enhanced reputational capital, and will likely encourage others to employ Moderna's technologies in research efforts, which will likely result in profitable licensing opportunities going forward. And more importantly, this collaborative model may result in lifesaving products.

Indeed, industry leaders have frequently touted the benefits of collaboration in development of vaccines and therapeutics to treat diseases of societal concern. By working together, partners can piggyback off each other's work, hone focus based on data accumulated from other sources, and employ unused molecules found in existing libraries.

For example, Remdesavir, which was approved by the U.S. Food and Drug Administration to treat COVID-19, was originally developed by Gilead Sciences Inc. to treat hepatitis c, Ebola and other viruses.

Thus, it is clear that repurposing of existing molecules or antibodies can serve as an important tool to find a fast and effective therapy, and an opportunity for companies to revitalize and benefit financially from earlier work, even if previously ineffective when originally pursued.

At the same time, intellectual property must be regarded as a foundational asset to protect innovation and drive return on investment and fund additional development. When faced with circumstances in which the whole world will need to employ a business' technology to solve a global problem, it is enticing to enforce IP to gain immediate profit and notoriety. Allele Biotechnology and Pharmaceuticals Inc. is one entity that has elected to pursue this tactic in a matter that directly relates to Pfizer's vaccine.

In October, Allele claimed patent infringement against Pfizer and BioNTech in complaints filed in the U.S. District Court for the Southern District of California.[1] Allele asserted an old patent directed to a "Monomeric Yellow-Green Fluorescent Protein from Cephalochodate." Allele claimed that the patent covers its mNeonGreen product, which has been dubbed the "king of fluorescent proteins."

Although mNeonGreen is not specific to COVID-19, Allele alleged that a university employed mNeonGreen to screen for COVID-19 vaccine candidates and measure COVID-19 neutralizing activity. Allele argued that Pfizer and BioNTech have "readily [taken] for their own unauthorized commercial testing and development," and have used mNeonGreen throughout their COVID-19 vaccine trials, permitting them to enjoy hundreds of millions of dollars in grants and billions of dollars in sales of their vaccines. 

The press has been largely silent on this assertion of rights, but time will tell whether the assertion of patent rights against entities fighting time to develop a COVID-19 vaccine actually helps business, or hurts. On the one hand, Allele's assertion of patent rights will block others and preserve a financial monopoly. On the other hand, it may encourage others to design around their technology and incur ill will for presenting a road block to stemming the tide of the global pandemic.

Ultimately, pharmaceutical and biologic companies are fighting COVID-19 on multiple fronts. Obviously, they are fighting to become the first entity to safely and effectively defend against the virus. But behind the scenes, they are fighting a separate battle to preserve consumer trust, ethical reputation and fiscal profitability.

The good news is that it appears that many entities such as Pfizer are putting the search for a cure first and achieving promising results. But behind the scenes, companies like Pfizer must be very savvy to convert philanthropy into profit.

Mike V. O'Shaughnessy is a partner at Womble Bond Dickinson LLP.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the organization, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

[1] Allele Biotechnology and Pharmaceuticals Inc. v. Pfizer Inc. et al., no. 3:20-cv-01958 (S.D. Cal. Oct. 5, 2020).

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