W.ITH EVERYONE Fortunately, the world will be flooded with Covid-19 vaccines by the end of the year. At the moment, however, this is not the case, and of the roughly one billion doses that have been made, the vast majority have been given in richer countries. In contrast, deaths are increasingly concentrated in poorer ones like India, where only about nine out of 100 people were encountered, compared to 64 in America. Some governments are offering radical options to correct the mismatch. India and South Africa, for example, propose that World Trade Organization members renounce intellectual property (IP) Protection for technologies to fight Coviden, including vaccines. Some in the rich world are warming to the idea; In America, ten Democratic senators recently called on President Joe Biden to support it. However, drug makers warn that doing so would deal a crippling blow to innovation. Although IP Protective measures are not much of a limitation on vaccine production these days. The experience of covid-19 suggests that a re-examination of IP Rights related to health emergencies are overdue.
The economic case for IP Protection seems imperative enough. Innovation is expensive and risky. Pharmaceutical companies invest heavily in drug development with no guarantee of success. If other companies could freely copy a newly discovered treatment, its price would quickly drop to the marginal cost of production, leaving the innovator unable to cover development costs. A short-term production monopoly for innovative companies is necessary for the upfront investment to be economically viable. Patents offer this protection.
IP Protective measures don’t always work that way, however. Studies routinely find little or no evidence that strengthening them promotes later innovation, argue Michele Boldrin and David Levine of Washington University in St. Louis. Pharmaceuticals where IP Rights are often seen as essential and are no exception. Patents make rich profits for companies, even though private investments account for only about a third of US biomedical research expenditures, they estimate. Other rewards for innovation, such as financial prizes, could lead to breakthrough drugs at lower costs. For now IP Safeguards are critical to the business of most companies developing Covid-19 vaccines.
Should some of these be reversed in a pandemic that kills more than 10,000 people every day? Proponents argue that the pandemic is clearly an extreme event that warrants liberation from IP Laws. The rapid development and production of so many Covid-19 vaccines is testament to the longstanding private investment in related technologies and the urgency with which experts from biotech companies moved at the start of the pandemic. However, the enormous public funding that made these efforts possible, from supporting basic research to piles of government funding, cannot be ignored. Not doing so would not jeopardize the viability of pharmaceutical companies. Pfizer would still be highly profitable even if you excluded the expected $ 4 billion vaccine profits in 2021.
However, industry interests rightly say the vaccine will be released IP would not trigger a flood of new production. Most of the global vaccine manufacturing capacity is already in use, in some cases because developers have signed licensing agreements with other manufacturers. AstraZeneca, for example, has one such deal with Serum Institute of India, the world’s largest vaccine manufacturer. Other production restrictions are more tightly bound than IP Rules, including the limited availability of raw materials and the expertise needed to make cans safely. Some of these have been imposed by the governments themselves through export restrictions that affect supply chains.
In addition, the biggest barrier to capacity expansion is not IP Protection, but proprietary resources and other know-how not protected by patents. In many poorer countries there are no patent barriers to using the mRNA Pfizer and Moderna technologies; Instead, the obstacle is the lack of familiarity with new techniques. Similarly, potential manufacturers of adenovirus-type vaccines such as those developed by AstraZeneca do not have access to the specially designed cell lines required to manufacture them.
Obviously a bad idea
These facts highlight flaws in the way both drug manufacturers and governments have dealt with vaccination efforts. Companies were reluctant to share cell lines, data, and implicit know-how with manufacturers who one day could pose a competitive threat and slow the creation of new and life-saving manufacturing capabilities. In some cases, trade rules allow governments to issue compulsory licenses – the right to use a patented invention for a price without the inventor’s consent. However, such licenses are of no use unless developers share the other information and resources required to make cans. An initiative launched by the World Health Organization to support such exchanges has been all but ignored by industry.
However, the experience of the past year also suggests how governments could do better at the next treaty negotiations, for example with vaccines, in order to counteract new variants. After investing so much in development, they failed to include measures in contracts to force drug manufacturers to share the information other manufacturers need to produce large quantities of vaccines quickly. Nor have they tried to rush companies to transfer the technology needed to expand manufacturing. In the meantime, governments could do more to rethink the ground rules for technology transfer and intellectual property sharing in preparation for the next pandemic. Costly mistakes were made, the toll of which was measured in life. But they do not have to be repeated. ■
All of our stories about the pandemic and the vaccines can be found on ours Coronavirus Hub. You can hear too The jab, our new podcast on the race between injections and infections, and Find Tracker the global introduction of vaccines, excessive deaths by country and the virus spreads over Europe and America.
This article appeared in the Finance & Economics section of the print edition under the heading “Schutzschläger”.