In its struggle to obtain vaccines from drug giants like Pfizer and Moderna, the federal government has one powerful weapon it has not yet used.
That weapon is compulsory licensing. It is a law, on the books since 1923, that allows the government to override the monopoly patent rights of drug manufacturers in times of public health emergencies.
More specifically, it would allow Ottawa to authorize cheaper generic copies of the COVID-19 vaccines developed and patented by companies like Pfizer and Moderna.
In effect, it would limit the brand-name drug companies’ ability to renege on their promises to provide vaccines to Canada. Those that did renege would face generic competition.
Compulsory licensing is recognized as a legitimate public policy tool by the World Trade Organization. Here in Canada, the government’s ability to use compulsory licensing was quietly strengthened last March with passage of the COVID-19 Emergency Response Act.
Among other things, that act made it easier for Ottawa to impose compulsory licensing on recalcitrant companies. It did so by removing a requirement that the federal government first try to negotiate a deal with patent holders before acting.
Compulsory licensing has a long history in Canada. In 1969, Pierre Trudeau’s Liberal government used it to allow the production of cheaper generic copies of vital brand-name drugs.
The results were spectacular. From 1969 until 1987, Canada enjoyed some of the lowest drug prices in the world.
Compulsory licencing also created a thriving domestic generic industry, as companies like Barry Sherman’s Apotex took off.
But the brand-name firms hated compulsory licensing. It ate into their monopoly profits. They threatened to kill their drug manufacturing operations in Ontario and Quebec unless Ottawa relented.
In 1987, Brian Mulroney’s federal government responded to the pressure by limiting compulsory licensing. The brand-name giants praised him. But over time they cut back their Canadian manufacturing operations anyway.
So far, the federal government has given no hint that it plans to use its expanded compulsory licensing powers to deal with the pandemic. Quite the reverse — it talks of partnership with the big drug firms.
At a meeting of the WTO last month, it chose not to support a South African proposal to loosen the patent protection enjoyed by the big vaccine developers.
But politically, the partnership is not working. Both Pfizer and Moderna say they will not provide vaccines to Canada on the schedule that was originally promised. The business press helps to explain why.
It reports that Pfizer expects to earn more than $15 billion in revenue this year from vaccine production and is aiming for more. It says the company expects to raise vaccine prices once the pandemic is under control. It also says that the appearance of new variants of the virus will probably require regular booster shots of the vaccine, which will increase Pfizer’s profits even more.
The federal government, meanwhile, has been left scrambling. It was taken aback by the decision of Pfizer and Moderna to cut vaccine shipments to Canada. Even Pfizer’s self-serving calculation that each vial of its vaccine contains one more dose than originally thought appears to have surprised Ottawa.
To deal with all of this, the federal government has belatedly announced support for the domestic manufacture of new vaccines. But it has admitted nothing will happen on this front for months.
Compulsory licensing would be faster. First, the vaccine is already known. A generic manufacturer need only copy the recipe. It wouldn’t have to reinvent it.
Second, compulsory licensing would eliminate the need for constant negotiation. The government would make its decision and that would be that.
The drug giants would be furious. Pfizer and Moderna might refuse to honour their pledges. They might cut back promised shipments of the vaccine.
But they are doing that anyway. And the government has been unable to use the usual methods of contract compliance to stop them.
Compulsory licensing provides government with a workable alternative: if a vaccine’s developer is not willing to produce enough to meet Canadian needs, it allows Ottawa to find a generic manufacturer that is.
https://www.thestar.com/opinion/contributors/2021/02/04/compulsory-licensing-would-allow-ottawa-to-authorize-generic-copies-of-the-covid-19-vaccines.html
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