One of the oft-cited criticisms of the innovative pharmaceutical industry is that the patents drug companies obtain on new prescription drugs limit competition, allowing companies to charge exorbitant prices.
It’s a strange argument considering the source. Most critics of patents come from the political left, which has never been a big fan of competition. For example:
- Progressives prefer price controls on many (most?) products and services, which limits companies from competing based on prices.
- They support a very generous minimum wage, which limits potential workers from competing on the price of labor.
- And, of course, they hate competition in education, which charter schools, private schools and home schooling provide.
However, the drug companies’ response to the need for a vaccine and treatment for Covid-19 is proving the critics wrong.
A patent does not create a monopoly. It only prohibits another company from making an identical product. Drug companies are free to make other patentable drugs that treat the same disease, giving physicians several options to choose from.
And that’s exactly what we see in the rush to develop Covid-19 vaccines and treatments. According to the Biotechnology Innovation Industry (BIO), an industry trade group, there have been 175 unique Covid-19 vaccine projects launched globally since January. In addition, there are 306 treatments being tested, and 208 antivirals that may help reduce the symptoms.
Several of the vaccines are currently in clinical trials. So it’s possible there won’t be just one patented vaccine, but a number of them.
Some of the Covid-19 vaccines may work better than others. For example, the new shingles vaccine Shingrix, which requires two injections, is considered 97 percent effective—about twice as effective as the previous shingles vaccines.
Some of the vaccines may work better in certain populations—such as seniors—than others. Some may provide more immunity or immunity for longer periods. And some may have more side effects than others.
If several vaccines are approved, there will be a lot of competition as companies vie for market share. That competition will likely put downward pressure on prices.
The intellectual property protections provided by patents encourage companies to innovate and develop new products that consumers want and need—like a Covid-19 vaccine and treatment.
Patents do not stifle competition, they only stifle copying.