Tag: pharmaceuticals

In August 2022, over two and a half years after the start of the Covid-19 pandemic, Moderna sued Pfizer and BioNTech for patent infringement. Specifically, Moderna claimed that Pfizer and BioNTech used its patented mRNA technology to develop their Covid-19 vaccine. Covid’s swift, widespread, and devastating effects and the urgent need for a vaccine accelerated a typically years-long research and development process into one short year. Although public health and humanitarian aid were undoubtedly at the forefront of vaccine developers’ minds, intellectual property (IP) rights and their economic incentives were a significant factor as well.

In the United States, IP laws regarding patent protection are largely based on utilitarian and economic theories. The monopolistic rights given to patentholders and the typical damages for patent infringement reflect these theoretical foundations. In its complaint, Moderna seeks “fair compensation” for Pfizer’s use of the mRNA technology, essentially a cut of Pfizer’s profits, which could potentially amount to billions of dollars from a period of only two to three years. Despite the billion-dollar vaccine industry, the strong economic bases of patent protection are potentially at odds with promoting scientific innovation. The critical need for worldwide Covid vaccines to save potentially millions of lives underscored whether utilitarianism and economics are always the best rationales for IP. Public policy considerations, including public health and humanitarian aid, may justify at least partial waiver of IP rights in certain circumstances. Even Moderna acknowledged this, professing in its complaint its “belief that intellectual property should never be a barrier” to the vaccine. The company initially pledged not to assert its Covid-19 patent rights against fellow Covid vaccine developers to reduce barriers to global vaccine access. However, billions of dollars in competitors’ profits and an amended pledge later, the biotech industry is now watching an imminent IP battle between pharmaceutical giants. This current situation is unique in many respects, due to not only the scientific, economic, and social significance of the patents at stake, but also the companies’ global reputations as leading medical innovators.

Moderna’s complaint alleges that Pfizer and BioNTech infringed Moderna’s patents on mRNA technology used between 2011 and 2016 in other vaccines. In the company’s press release, Moderna’s CEO also emphasized its prominence in the field of RNA technology and the substantial time and resources used to develop the technology that Pfizer copied. The infringement focuses on the chemical modifications Moderna introduced to mRNA to improve immune system evasion and the lipid nanoparticle formulation used to deliver the modified mRNA.

Like most patent infringement plaintiffs, Moderna has financial stakes as a top priority. Moderna ultimately seeks a portion of Pfizer’s profits from its Covid vaccine, citing Pfizer’s unjust “substantial financial windfall” from its allegedly unauthorized use of Moderna’s technology. Pfizer’s 2021 revenue from its Covid vaccine totaled over $36 billion, and it expects another $32 billion in 2022. Moderna also seeks enhanced treble damages, suggesting willful or bad faith infringement from Pfizer. These are bold claims coming from Moderna, a relatively young company founded in 2010, against the nearly two-century-old industry giant, Pfizer.

This lawsuit demonstrates the utilitarian and economic theories of IP law, particularly patent law, in the United States. Under these theories, patent protection incentivizes invention and innovation by giving the inventor a temporary but strong monopoly on their invention. This monopoly allows the inventor to exclude others from using their information and knowledge without authorization. Information is non-rivalrous and non-excludible and would otherwise fall victim to public goods problems. For example, free riders can wait for someone else to create the invention, and then replicate the invention at a much lower cost. The original inventor would thus be disincentivized to disclose their invention for fear of losing valuable profits in a market saturated with copycats. Patent rights prevent these detriments of information as a public good by giving the inventor legal control over dissemination of the information. Applying this theory here, Moderna would argue that its previous patents represented a tradeoff that the company would publicly disclose its valuable information on mRNA technology. In return, Moderna would receive a legally protected right to exclude others, including Pfizer, from using the information.

These economic theories are based on patent rights’ essential function to tightly control information use; however, free dissemination of information is critical for scientific research, including vaccine development. The utilitarian foundations of U.S. IP law may not align with vaccine research goals, particularly in urgent pandemic circumstances. In these time-sensitive situations, allowing simultaneous inventors access to each other’s research developments may best serve the public interest. Some critics even argue that patents and economic incentives are entirely unneeded for vaccine research and development. The highly specialized technical know-how required and the complex regulatory framework for entering the vaccine market naturally weed out copycat competitors and create a monopoly position without patent rights. Further, vaccine manufacturers are in a favorable position selling a product whose demand reliably far outstrips supply.

Despite this view, patent rights will likely still play a role in pandemic vaccine development. However, this role may be more detrimental than beneficial to inventors and ultimately consumers. Although an inventor would prefer to keep a tightly guarded monopoly on their lucrative vaccine technology, this economically driven IP strategy may exacerbate the pandemic. Research responses to pandemics may require inventors to relinquish potential profits from strong information monopolies in exchange for rapid information sharing to encourage life-saving follow-on innovation. Enforcing pandemic research patent rights can significantly limit advancements in vaccine development, the opposite of the intended goal to serve public health.

Moderna recognized this dilemma and in October of 2020, it initially pledged to not enforce its IP rights related to Covid-19 vaccines during the pandemic. Considering the myriad economic benefits of IP rights, this pledge may have seemed financially counterproductive for Moderna. However, it demonstrated that Moderna also knew of the unprecedented public health and policy concerns at stake and did not want to deter other researchers from simultaneously developing Covid vaccines. However, in March 2022, Moderna updated its IP pledge, instead committing to never enforcing its Covid-19 patents against 92 middle- and low-income countries, thus making this lawsuit possible. It remains a question whether the original October 2020 pledge caused any parties to reasonably rely on Moderna’s assurance and whether there may be legal contract obligations to Pfizer or other vaccine developers. Regardless of potential contract law disputes, the urgent pandemic needs for Covid vaccines drove Moderna to its “Global Commitment to Intellectual Property Never Being a Barrier to COVID-19 Vaccine Access” cited in its complaint. Money and economic benefits are a significant motivating factor in the lawsuit, but the public health and humanitarian considerations underly the policy concerns of the claim.

The Covid pandemic forced the IP field, the scientific community, and the global public health sector to reconsider the role of economic and utilitarian theories in patent rights. Although innovators deserve financial rewards for being the first to develop and license their vaccines, the intended widespread benefit of this biotechnology can be significantly limited with overly restrictive information monopolies. Due to the scope and effects of Covid, vaccines have taken a new meaning, representing the potential return to the pre-pandemic “normal” and restoring society and the economy. Thus, the patent rights for Covid vaccines might have more than just economic value; they also bring reputational influence of goodwill and societal stabilization. Other areas of IP, such as copyright and trademark law, are less rooted in utilitarianism and are partly based on the personhood theory, which relates the IP to the creator’s sense of self and identity. Patent law is less concerned with traditional expressive elements of creation. However, the humanitarian nature of Covid vaccine development and distribution may implicate some personhood concerns of distributive justice and fairness. During such global health crises, reducing some of IP’s economic barriers to information and focusing on the personal effects on vaccine distribution may better serve the public interest.

Overall, IP scholars and policymakers should consider how non-economic theories may be, at times, better suited for IP protection and can help shape a more dynamic patent law system. While patent law should still strive to incentivize innovation and creation, policies must also acknowledge the effects of purely economic motivations on patient health and global health disparities. The Moderna v. Pfizer lawsuit illustrates the mismatches between economic foundations of patent law, biotechnological and pharmaceutical innovation, and emergency or pandemic situations.

Shelby Yuan is a second-year JD-PhD student at the Northwestern Pritzker School of Law.