“If your new ideas outright save the world, we’re going to reward you by confiscating them, voiding the contracts and promises agreed upon and informing you that we are not a nation of laws.”
OK, that’s a little much. The U.S. is not itself doing the waiver. The administration expressed its support for negotiating waiver language to be submitted to the WTO. They’re 100% deferring to the WTO’s jurisdiction over international intellectual property law. So it’s a bit of a stretch to say that they’re “confiscating” anything simply for operating pursuant to Article 31(b) of the TRIPS agreement which states that the requirement to make “efforts to obtain authorization from the right holder on reasonable commercial terms and conditions and that such efforts have not been successful within a reasonable period of time...may be waived by a Member in the case of a national emergency or other circumstances of extreme urgency...” There you have it—it’s right there in the language of the trade agreement. Trade agreements are a legitimate “source of law” and if a contract is consummated in a jurisdiction that’s party to an existing trade agreement, the trade agreement wins. That’s the antithesis of the kind of anarchy you’re suggesting.
The companies knew that TRIPS allowed for exceptions in cases of global emergencies when they developed the vaccines. Indeed, the fact that they were so quick on the draw with talking points suggests that they had contingency plans for exactly this scenario. Heck, there are probably surplus insurance lines that cover stuff like this.
Look, reasonable people can disagree about whether it’s shrewd to waive intellectual property rights—whether it’s the U.S. or the WTO doing the waiving. But please don’t conflate jurisdictions.
P.S. “Waiver” is a bit of a term of art when talking about statutes, treaties, etc. (in contrast to words like “suspension”). It generally suggests that there’s already language in the underlying law that allows for exceptions under certain circumstances. Usually it’s accompanied by a specific citation which evolves into some sort of shorthand (kind of like the way people talk casually about their 401(k)’s). It probably would have been better if this had been communicated earlier, and we could have a more prosaic conversation about the merits of a “31(b)”.
I also think that, even assuming that the US was unilaterally “confiscating” these companies’ IP, it’s not clear what the actual impact on future innovation would be, since:
This is clearly a unique situation. It’s unlikely that these corporations would make the assumption that all future IP would also be “confiscated”
Even if they made that assumption, what are they supposed to do? Stop investing in future developments, and slowly go out of business? A much better option would be to just not get any IP protections at all, but instead rely on trade secrets to protect investments. This would probably end in a more competitive market; since the consensus among economists who specifically do research on this topic seems to be that IP laws hurt more than they help.
It should also be noted that these corporations profit from voided IP protections, since they all also produce generic medicinal products.
No, that’s like saying: Needing stock-pilled masks is a unique situation that nobody could forsee.
There might be another pandemic and we want to be prepared for that. We want companies to invest in being able to produce vaccines on short notice in case of a future pandemic and that won’t happen if it’s not lucrative to be able to produce vaccines on short notice in future pandemics.
Stop investing in future developments, and slowly go out of business?
No, just stop investing in pandemic preparedness (or not start to invest).
Even looking more broadly we also prefer that big pharma invests into research instead of investing into stock buybacks.
Pandemics are generally unique situations. Given what we know at the moment, we would expect similar events to occur perhaps two or three times a century. So developing vaccines specifically for pandemics similar in magnitude to what we are going through right now is not a sound investment to begin with.
Neither the Moderna nor the Pfizer stocks dropped very dramatically—both had solid upward trends throughout the past month, and the prices are already bouncing back. Investors make mistakes too.
Using the efficient market hypothesis to access what the true price of a security should be doesn’t work. On the other hand the stock price is a good reflection of what Wall Street thinks and that’s what’s important for how capital gets allocated.
I am a strong believer in reading a short-term reaction to news as the stock market’s true opinion about a development, whether or not one believes the underlying price was reasonable.
When my dad worked at GE, sometimes they would hire people who had worked at Pratt and Whitney. When there was a meeting and the topic started to veer towards trade secrets that the former P&W employee knew, they would “self police.”
Generally speaking trade secrets are much more important than patents.
“If your new ideas outright save the world, we’re going to reward you by confiscating them, voiding the contracts and promises agreed upon and informing you that we are not a nation of laws.”
OK, that’s a little much. The U.S. is not itself doing the waiver. The administration expressed its support for negotiating waiver language to be submitted to the WTO. They’re 100% deferring to the WTO’s jurisdiction over international intellectual property law. So it’s a bit of a stretch to say that they’re “confiscating” anything simply for operating pursuant to Article 31(b) of the TRIPS agreement which states that the requirement to make “efforts to obtain authorization from the right holder on reasonable commercial terms and conditions and that such efforts have not been successful within a reasonable period of time...may be waived by a Member in the case of a national emergency or other circumstances of extreme urgency...” There you have it—it’s right there in the language of the trade agreement. Trade agreements are a legitimate “source of law” and if a contract is consummated in a jurisdiction that’s party to an existing trade agreement, the trade agreement wins. That’s the antithesis of the kind of anarchy you’re suggesting.
The companies knew that TRIPS allowed for exceptions in cases of global emergencies when they developed the vaccines. Indeed, the fact that they were so quick on the draw with talking points suggests that they had contingency plans for exactly this scenario. Heck, there are probably surplus insurance lines that cover stuff like this.
Look, reasonable people can disagree about whether it’s shrewd to waive intellectual property rights—whether it’s the U.S. or the WTO doing the waiving. But please don’t conflate jurisdictions.
P.S. “Waiver” is a bit of a term of art when talking about statutes, treaties, etc. (in contrast to words like “suspension”). It generally suggests that there’s already language in the underlying law that allows for exceptions under certain circumstances. Usually it’s accompanied by a specific citation which evolves into some sort of shorthand (kind of like the way people talk casually about their 401(k)’s). It probably would have been better if this had been communicated earlier, and we could have a more prosaic conversation about the merits of a “31(b)”.
I also think that, even assuming that the US was unilaterally “confiscating” these companies’ IP, it’s not clear what the actual impact on future innovation would be, since:
This is clearly a unique situation. It’s unlikely that these corporations would make the assumption that all future IP would also be “confiscated”
Even if they made that assumption, what are they supposed to do? Stop investing in future developments, and slowly go out of business? A much better option would be to just not get any IP protections at all, but instead rely on trade secrets to protect investments. This would probably end in a more competitive market; since the consensus among economists who specifically do research on this topic seems to be that IP laws hurt more than they help.
It should also be noted that these corporations profit from voided IP protections, since they all also produce generic medicinal products.
No, that’s like saying: Needing stock-pilled masks is a unique situation that nobody could forsee.
There might be another pandemic and we want to be prepared for that. We want companies to invest in being able to produce vaccines on short notice in case of a future pandemic and that won’t happen if it’s not lucrative to be able to produce vaccines on short notice in future pandemics.
No, just stop investing in pandemic preparedness (or not start to invest).
Even looking more broadly we also prefer that big pharma invests into research instead of investing into stock buybacks.
Pandemics are generally unique situations. Given what we know at the moment, we would expect similar events to occur perhaps two or three times a century. So developing vaccines specifically for pandemics similar in magnitude to what we are going through right now is not a sound investment to begin with.
Do you have a good explanation to Moderna’s market price drop?
Borrow less, invest less, or, as you say in your last line, focus on other ways of making money that don’t require innovation and IP?
Neither the Moderna nor the Pfizer stocks dropped very dramatically—both had solid upward trends throughout the past month, and the prices are already bouncing back. Investors make mistakes too.
1 - it was tiny compared to recent changes
2 - the efficient market hypothesis is quite quite false.
Using the efficient market hypothesis to access what the true price of a security should be doesn’t work. On the other hand the stock price is a good reflection of what Wall Street thinks and that’s what’s important for how capital gets allocated.
I am a strong believer in reading a short-term reaction to news as the stock market’s true opinion about a development, whether or not one believes the underlying price was reasonable.
When my dad worked at GE, sometimes they would hire people who had worked at Pratt and Whitney. When there was a meeting and the topic started to veer towards trade secrets that the former P&W employee knew, they would “self police.”
Generally speaking trade secrets are much more important than patents.