nep-ipr New Economics Papers
on Intellectual Property Rights
Issue of 2019‒11‒11
three papers chosen by
Giovanni Ramello
Università degli Studi del Piemonte Orientale “Amedeo Avogadro”

  1. The patent buyout price for Human Papilloma Virus (HPV) vaccine and the ratio of R&D costs to the patent value By Songane, Mario; Grossmann, Volker
  2. (Un)Intended Effects of Preferential Tax Regimes: The Case of European Patent Boxes By Marko Koethenbuerger; Federica Liberini; Michael Stimmelmayr
  3. Patenting Government Funded Innovations as a Strategy to Increase Budget for Academic Vaccine R&D By Songane, Mario

  1. By: Songane, Mario; Grossmann, Volker
    Abstract: Human papillomavirus (HPV) is responsible for almost all of the 530,000 new cases of cervical cancer and approximately 266,000 deaths per year. HPV vaccination is an integral component of the World Health Organization’s global strategy to fight the disease. However, high vaccine prices enforced through patent protection are limiting vaccine expansion, particularly in low- and middle-income countries. This raises the question of the patent buyout price for Merck’s HPV vaccines (Gardasil-4 and 9), which hold 87% of the global HPV vaccine market. It also raises the question about the market power from patent protection, that we assess by estimating the ratio of R&D costs for Gardasil and its patent value. We estimate the patent buyout price for various groups of countries and in total. The estimated global Gardasil patent buyout price in 2020 is between US$ 15.33 – 18.32 billion (in 2018 US$), the estimated present discounted value of the profit stream for 2007-2028 amounts to US$ 22.29 – 33.08 billion, and the estimated total R&D cost is between US$ 1.10 – 1.21 billion. Thus, we arrive at a ratio of R&D costs to the patent value of the order of 3-5%, suggesting that patent protection provides Merck with extraordinarily strong market power.
    Keywords: Human Papilloma Virus (HPV) vaccine; Market power; Patent buyout price; Patent value; R&D costs
    JEL: I18 O30
    Date: 2019–11–05
  2. By: Marko Koethenbuerger; Federica Liberini; Michael Stimmelmayr
    Abstract: Patent boxes have become an increasingly popular tax instrument in the European Union and the US to attract mobile tax bases of multinational enterprises (MNEs) as well as to foster productivity. This paper estimates the size of the (un)intended effects of the new preferential tax regime, which grants a reduction in the tax burden on income from intellectual property. We show that MNE affliates that can benefit from the preferential regime report 8.5 percent higher profits. The profit change splits up into a profit shifting and a productivity effect in proportions 2/3 and 1/3. Surprisingly, the profit shifting effect includes an unintended, reversed profit shifting out of the affiliate. Contrary to expectation, the overall tax base adjustment might lower tax revenues collected from MNEs.
    Date: 2019
  3. By: Songane, Mario
    Abstract: Vaccine development is a lengthy, expensive and risky venture, with the research and development (R&D) process costing billions of dollars. The pre-clinical stage of vaccine R&D is largely performed by academic research institutions, then continued by the pharmaceutical industry though licensing agreements, taking the most promising candidates to the clinical testing stage. Governments play a major role in de-risking the early stages of vaccine R&D for the pharmaceutical industry through the funding of research in public institutes and academic research laboratories, and providing loans and tax credit to pharmaceutical companies involved in vaccine R&D. Through these initiatives, governments fuel the industry, shape markets and aid the development of novel products and technologies. Many of the blockbuster vaccines currently on the market benefited greatly from government funding, however, pharmaceutical companies are reaping most of the rewards of the billions of dollars these vaccines generate every year. The present review will discuss the role that government funding and academic research has played in vaccines R&D. Furthermore, it will discuss some of the elaborate schemes pharmaceutical companies use to reduce their tax payments, and how strategies such as patenting government-funded innovations can help ensure that governments receive a share of the generated revenues.
    Keywords: Vaccine; Patent; R&D; Financing; Government
    JEL: I18
    Date: 2019–11–05

This nep-ipr issue is ©2019 by Giovanni Ramello. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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