Protecting Intellectual Property Rights Will Save Lives Now and in the Future

The Covid-19 pandemic has killed millions of people and imposed enormous economic costs on the world. However, it would have done much more damage without the rapid development of Covid vaccines. The first effective vaccine was developed within nine months of the recognition of the pandemic by BioNTech, a startup based in Mainz, Germany. Recognizing the benefits of a division of labor, small BioNTech partnered with larger Pfizer to take the product to market. The entire process was bottom-up rather than top-down, and it began with research at an obscure start-up that never had before taken a product to market.

In the United States and many other high income countries, a large fraction of the population is now vaccinated. However, in low income countries, especially in Africa and parts of Asia, only small portions of the population have been vaccinated. Many observers now see the major problem related to the pandemic to be getting the vaccine to the vulnerable unvaccinated people. 

A radical proposal has come from groups intending to speed up the delivery of vaccines to the poor countries of the world. The governments of India, South Africa, the head of the World Health Organization and President Joe Biden have proposed that the intellectual property rights of Pfizer/BioNTech and other vaccine developers be suspended. Specifically, they have requested a waiver from the treaty on Trade-Related Aspects of Intellectual Property Rights (TRIPS). The presumption is that new firms will quickly emerge and increase production if they do not have to compensate patent holders.

The proposal to weaken property rights is equivalent to killing the goose that laid the golden egg. Producing a complex vaccine is not simple, and quality is important. Well-known quality problems have occurred at Astra Zeneca and at the Emergent BioSolutions facility in Baltimore that produced the Johnson & Johnson vaccine. Pfizer has said “the company’s vaccine requires 280 components from 86 suppliers in 19 countries, as well as highly specialized equipment and personnel”. Beginning production from scratch would not be easy, rapid, or safe. In addition to the economic arguments against the proposal, Eric Claeys of George Mason University Law School argues that it is a legally flawed request for a waiver from TRIPS.

The proven expertise of the innovators puts them in strong position to increase high-quality production faster than any new startups. They already have expanded their own production capacity both in the U.S. and abroad and finalized licensing agreements with other companies to produce the approved vaccines under their supervision. 

Suspending property rights would reduce expected future profits, which would reduce current and future production. Weakening property rights would make it more difficult to obtain financing, especially for startups, for research responding to new strains of Covid and for broader research projects, including efforts to address cancer, Alzheimer’s, and other important medical problems.

A more productive reform than weakening property rights would be to remove the substantial barriers to international trade in vaccines. In the United States, both Presidents Trump and Biden have made extensive use of the Defense Production Act of 1950 to block vaccine exports. Other countries also have weaponized vaccine nationalism. India still has not approved the use of the Pfizer/BioNTech vaccine for distribution there.

An international agreement to share vaccines would be useful to both importing and exporting countries. Members of the “Ottawa Group” of 13 WTO members agreed in November 2020 to refrain from imposing export and import limits on trade in therapeutics. Members include the European Union, Canada, Switzerland, and Japan, but the U.S. is conspicuously absent from the Group. Although the U.S. is the largest exporter of medicines, it also is the largest importer. Having secure access to imported medical-related inputs would increase U.S. production of vaccines, and it would contribute to the health of Americans.

The U.S. would benefit from an agreement that limited barriers to trade in medical products, but Presidents would be reluctant to allow exports of vaccines, unless Americans had early access to them. President Biden has said that he would allow vaccine exports after 100% of Americans were vaccinated. That is an unrealistic standard, since a significant fraction of Americans have stated that they do not want to be vaccinated. A workable agreement for free trade in medicine might allow temporary limits on exports, until all Americans had access to the vaccine. Today all Americans can get vaccinated at no cost, in many locations they can get free rides to and from vaccination sites, and they are being paid to get vaccinated in some places. Since Americans now have access to the vaccines at no cost to them, it appears that removing vaccine export restraints would not reduce Americans’ healthcare security. Allowing temporary export restraints as a kind of safety valve could make it easier for Presidents and other political leaders to enter into a medical free trade agreement.

Continued support for intellectual property rights and freer trade in Covid vaccines would save more lives today than suspending patent rights selectively. By rewarding medical research, more lives can be saved in the future.

Thomas J. Grennes is a Research Fellow at the independent Institute and Professor of Economics and Professor of Agricultural and Resource Economics at North Carolina State University. He was also a member of the founding faculty at the Stockholm School of Economics-Riga, in Riga, Latvia. He is the author of International Economics and co-author of the Economics of World Grain Trade.
Posts by Thomas J. Grennes
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