The patent buyout price for Human Papilloma Virus (HPV) vaccine and the ratio of R&D costs to the patent value

Mario Songane and Volker Grossmann

No 510, FSES Working Papers from Faculty of Economics and Social Sciences, University of Freiburg/Fribourg Switzerland

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 (search for similar items in EconPapers)
JEL-codes: I18 O30 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2019-11-05
New Economics Papers: this item is included in nep-com and nep-ipr
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Working Paper: The Patent Buyout Price for Human Papilloma Virus (HPV) Vaccine and the Ratio of R&D Costs to the Patent Value (2020)
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