The Economic Theory of Patent Protection and Pandemic Influenza Vaccines

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.