Intellectual Property Rights are a driver of innovation in the healthcare sector

DeTech.World
4 min readJul 20, 2022

Healthcare sector is innately related to bioinformatics, biotechnology, pharmaceuticals and drug discovery, medical and clinical research, diagnostic and medical devices, and pharmacological products.

The COVID-19 pandemic brought systemic challenges to the healthcare sector: A race for technological breakthroughs to develop effective treatments and new vaccines for the virus; concerns about global equity and access to those solutions; supply chain and logistical hurdles to the delivery of vaccines and treatments; psychological barriers to vaccine uptake; and, an intensification — in part an occlusion — of the long-running debate about the role of Intellectual Property (IP) Rights in the research and development, production, and distribution of, and access to, healthcare technology.

In the process, IP rights were misunderstood and too often stigmatised. Without an appreciation for the economic function of IP rights, the world could find itself much less capable of securing the technological solutions needed to deal with future crises, in the form of a new pandemic, an energy shortage, climate disaster, or any number of other dreaded scenarios. How then should we understand the role of IP?

Let’s think of IP in terms of three critical functions it fills in the economy: First, IP rights enable the allocation of scarce resources — time, attention, leadership, money — to long-term, high-risk, capital- intensive investments necessary for transformative innovations, such as the mRNA vaccine technology. Second, IP forms the basis for transactions in knowledge assets, enabling the technology transfer, production partnerships, and commercial relationships that collectively form a stakeholder ecosystem that spans the lifecycle of innovation from early-stage scientific research to product development and delivery. Third, IP ownership enables trust relationships among diverse stakeholders, including governments, academia, businesses, and consumers — patients in the healthcare setting — by forcing all actors to consider and agree on the relative value of the contributions and commitments each brings to the process of innovation, and enabling commensurate accountability for the value they pledge to deliver.

IP as a driver of research and innovation in healthcare

The 2022 U. S. Chamber International IP Index highlights that an effective IP system encourages innovators and creators to embrace new ideas, take risks, and drive change. And a weak IP system undermines innovation and creativity and, perhaps more importantly, access to the latest technologies, medicines, and creative content around the world.

In 1979, the total cost of developing and approving a new drug stood at USD 138 million. Four decades later, in 2016, this figure was estimated to be USD 2.6 billion. Thus, the international experience and the basic economics of the biopharmaceutical industry show how critical IP rights are to provide a stable and transparent framework to encourage industry partnerships and encourage large investments in R&D for discovery of new drugs, products, and therapies.

IP rights provide inventors and creators a time limited market exclusivity before their technologies can be replicated, which, assuming their new product or service is successful, provides them with a window to recoup and reinvest some of their R&D investments, before competitors (who bore none of the costs of early-stage investment, R&D, and product commercialization) can enter the market. However, there is of course no barrier to other firms attempting to develop a more effective technology in the same space — they simply cannot copy whatever has been made public through the IP system, at least until these temporary protections expire over time. IP is an essential component of drug discovery, more especially given some of the latest biological technologies that are involved.

IP laws during and beyond the pandemic

There is a strong correlation between the availability of biopharmaceutical IP rights and levels of biopharmaceutical research and innovation. Like any IP-dependent industry, research-based biopharmaceutical sector cannot exist and thrive in the absence of strong and clear IP incentives.

The vaccines, therapeutics, and technologies that have led the global community through the pandemic are the fruit of a pre-existing innovation ecosystem that relies on IP rights to enable allocation of resources, formation of trust-based partnerships, and voluntary transfer of technology on mutually agreed, commercial terms.

Possession of the IP rights linked with a product or therapy encouraged companies to commit to R&D and other expenses needed to develop health technologies. The development and testing of new products take years before reaching the market. However, the coronavirus pandemic stepped up this process.

An effective IP system is critical to ensure that the global community continues to deliver the next generation of innovative and creative goods and services to compete for a better tomorrow. Effective IP rights also facilitated hundreds of voluntary licensing agreements that allowed the rapid scale-up of global manufacturing. Data indicates that by June 2022, the global vaccine manufacturing capacity will reach 24 billion doses.

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