The Biden administration’s latest strategy for the pandemic is to suspend the vaccine patents without compensation. Our life expectancies are lower than they were last week. [...]
Many people have this idea that all the knowledge and skill required to produce the vaccines lies in the patents. Once you lift the patents, lots of other companies can go start producing vaccines. Except, that’s not actually true because
The vaccines require technical expertise not included in the patents, which is expensive and slow to transfer, and which would also transfer valuable knowledge that can be used for other R&D and other production and thus which the vaccine producers are not going to transfer without compensation.
Moderna explicitly already said they wouldn’t enforce the patents, and no one really expected the others to either.
Read that second one again, if it’s new to you. The greedy capitalists whose rights you took away without compensation were already voluntarily giving those rights away. If there was already clearly no intent to enforce the patents, what good does lifting those patents do?
It feels odd to me to simultaneously argue that patents were unimportant and unenforced anyway so this will produce no benefit, and that the decision to suspend patents will hurt the drug companies so much that in the future they have less of an incentive to invest in drug development?
Seems like “this will kill people” is premised on the assumption that the next time something like COVID happens, drug companies will remember what happened last so will be less incentivized to invest. But if the thing that they remember the next time is “governments did this purely symbolic gesture that didn’t really affect our profits in any way but made their voters happier”, then it would seem like they should have no particular reason to act any different?
It feels odd to me to simultaneously argue that patents were unimportant and unenforced anyway so this will produce no benefit, and that the decision to suspend patents will hurt the drug companies so much that in the future they have less of an incentive to invest in drug development?
I was also confused by this, but I can imagine the following scenario:
There are 5 companies in the world with the necessary institutional knowledge to manufacture vaccines. Because of IP laws, the only way for them to manufacture a vaccine is to either license it or invent it. So by now, all of those companies have done one of either. Voiding the patents now would not make a difference.
However, if there is a new pandemic with the understanding that all vaccine patents will be voided as soon as they are filed (as an extreme case), why would Pfizer sink money into research when they know that Moderna definitely has the knowledge to manufacture mRNA vaccines and thus would copy it immediately.
Basically (bad metaphor incoming), the first mover disadvantage does not occur when the moves are only seen after everybody has moved already.
Again, it needs to be stressed: nobody is voiding international intellectual property at this time. The only thing that’s at issue is whether the WTO should grant a waiver pursuant to Article 31(b) of TRIPS. (Even the waiver doesn’t “void” or “confiscate” IP). This is probably inevitable with or without the US, since a solid majority of member states have already endorsed this. So this gesture means that the US can at least have a say in the final language, minimizing the worst case scenario. It’s arguably the best thing the US can do for pharmaceutical companies. Having the pharmaceutical companies make a fuss about it will also help (and I wouldn’t be at all surprised if the administration gave them the heads up).
Seems like “this will kill people” is premised on the assumption that the next time something like COVID happens, drug companies will remember what happened last so will be less incentivized to invest.
We don’t want drug companies to wait for a pandemic to hit to invest into drugs that would be useful for the pandemic.
Before the pandemic we had drug companies not investing much into research that would be very helpful when a Coronovirus pandemic hit. The kind of research that CEPI financed largely wasn’t of interest to big pharma. It would be great if that would change so that in case a future pandemic hits we are better prepared.
Making it lucrative to have vaccine in this pandemic would be a justification for big pharma to invest into research that helps in the next pandemic. It’s very important for Big Pharma to justify research expenses to their shareholders.
The reaction of the financial markets does show that the event matters to shareholders and that’s what drives decisions in Big Pharma.
I had that same question. But is there a middle ground, where these companies wouldn’t enforce parents during a global emergency, but would expect to profit from the patents once the emergency is over? And that this expectation of delayed profits is a factor in their original decision to innovate?
Is it disagreeing with the OP’s original premise of “lifting the patents doesn’t do anything”, or with my inference of “if lifting the patents doesn’t do anything, then it won’t change future drug company behavior either”? I’m not sure how I’d tell, but I’d presume the more near-term premise of “lifting the patents does(n’t) do anything” would have a bigger effect on immediate stock prices.
I think it’s mostly the setting of a precedent of stripping away intellectual property rights for political expediency that is worrisome. It’s a small step in undermining the rule of law, but a step nonetheless. The symbolic gesture is the problem; it signals to the public that such moves are now not only acceptable, but applaudable.
It feels odd to me to simultaneously argue that patents were unimportant and unenforced anyway so this will produce no benefit, and that the decision to suspend patents will hurt the drug companies so much that in the future they have less of an incentive to invest in drug development?
Seems like “this will kill people” is premised on the assumption that the next time something like COVID happens, drug companies will remember what happened last so will be less incentivized to invest. But if the thing that they remember the next time is “governments did this purely symbolic gesture that didn’t really affect our profits in any way but made their voters happier”, then it would seem like they should have no particular reason to act any different?
I was also confused by this, but I can imagine the following scenario:
There are 5 companies in the world with the necessary institutional knowledge to manufacture vaccines. Because of IP laws, the only way for them to manufacture a vaccine is to either license it or invent it. So by now, all of those companies have done one of either. Voiding the patents now would not make a difference.
However, if there is a new pandemic with the understanding that all vaccine patents will be voided as soon as they are filed (as an extreme case), why would Pfizer sink money into research when they know that Moderna definitely has the knowledge to manufacture mRNA vaccines and thus would copy it immediately.
Basically (bad metaphor incoming), the first mover disadvantage does not occur when the moves are only seen after everybody has moved already.
Again, it needs to be stressed: nobody is voiding international intellectual property at this time. The only thing that’s at issue is whether the WTO should grant a waiver pursuant to Article 31(b) of TRIPS. (Even the waiver doesn’t “void” or “confiscate” IP). This is probably inevitable with or without the US, since a solid majority of member states have already endorsed this. So this gesture means that the US can at least have a say in the final language, minimizing the worst case scenario. It’s arguably the best thing the US can do for pharmaceutical companies. Having the pharmaceutical companies make a fuss about it will also help (and I wouldn’t be at all surprised if the administration gave them the heads up).
We don’t want drug companies to wait for a pandemic to hit to invest into drugs that would be useful for the pandemic.
Before the pandemic we had drug companies not investing much into research that would be very helpful when a Coronovirus pandemic hit. The kind of research that CEPI financed largely wasn’t of interest to big pharma. It would be great if that would change so that in case a future pandemic hits we are better prepared.
Making it lucrative to have vaccine in this pandemic would be a justification for big pharma to invest into research that helps in the next pandemic. It’s very important for Big Pharma to justify research expenses to their shareholders.
The reaction of the financial markets does show that the event matters to shareholders and that’s what drives decisions in Big Pharma.
I had that same question. But is there a middle ground, where these companies wouldn’t enforce parents during a global emergency, but would expect to profit from the patents once the emergency is over? And that this expectation of delayed profits is a factor in their original decision to innovate?
It’s always an emergency, lives are always at stake. That’s just the nature of the pharmaceutical business.
The stock market disagrees.
Is it disagreeing with the OP’s original premise of “lifting the patents doesn’t do anything”, or with my inference of “if lifting the patents doesn’t do anything, then it won’t change future drug company behavior either”? I’m not sure how I’d tell, but I’d presume the more near-term premise of “lifting the patents does(n’t) do anything” would have a bigger effect on immediate stock prices.
I think it’s mostly the setting of a precedent of stripping away intellectual property rights for political expediency that is worrisome. It’s a small step in undermining the rule of law, but a step nonetheless. The symbolic gesture is the problem; it signals to the public that such moves are now not only acceptable, but applaudable.
They were already acceptable under TRIPS.
It’s the perception that matters.
That’s on impulsive investors who didn’t bother familiarizing themselves with international trade agreements.