Sharing Is Caring

Sharing Is Caring

Momentum gathered Thursday for an agreement to waive patent protections for COVID-19 vaccines.

Europe appeared to tentatively support the plan, which the US formally backed on Wednesday. “The EU is ready to discuss any proposal that addresses the crisis in an effective and pragmatic manner,” Ursula von der Leyen said, during online comments for a virtual conference in Florence. “We are ready to discuss how the US proposal could help achieve that objective,” she added.

Although China didn’t say whether it would actually endorse the proposal, the foreign ministry signaled openness to the discussion. “China supports attention to the issue of vaccine accessibility and we look forward to participat[ing] in positive and constructive discussions under the WTO framework to reach a balanced and effective outcome,” spokesman Wang Wenbin mused, in a carefully-worded, boilerplate statement.

Shares of vaccine makers were under pressure. Pfizer and Novavax were weak and BioNTech plunged in German trading.

WTO Director-General Ngozi Okonjo-Iweala declared this “the moral and economic issue of our time.” Bloomberg noted that a final decision on waiving IP protections “may take weeks to hammer out in the face of opposition from the pharmaceutical industry.”

The arguments from drugmakers are predictable: It’s not easy to make these even if you know the secret sauce, materials are scarce and you can’t just retool a widget factory to make an mRNA vaccine overnight.

“In what way is a US Grand Strategy helped by allowing firms to rake in mega profits in a world in which realpolitik ‘vaccine diplomacy’ is so evident?,” Rabobank’s Michael Every asked. “See the recent public fury in India against the US over vaccine hoarding, for example; and imagine a map of the world where India isn’t a friend of the US, and yet the US still has a strong hand in the Indo-Pacific; and project the Asian economy China is most worried about in the long term.”

In other vaccine news, Moderna announced that strain-matched booster shots for previously vaccinated individuals may protect against two variants of concern. “As we seek to defeat the ongoing pandemic, we remain committed to being proactive as the virus evolves,” the company said. “We are encouraged by these new data, which reinforce our confidence that our booster strategy should be protective against these newly detected variants,” Stephane Bancel remarked, adding that “the strong and rapid boost in titers to levels above primary vaccination also clearly demonstrates the ability of mRNA-1273 to induce immune memory.” That’s welcome news considering the acute situation in India. (But Mr. Bancel, be advised that this technology of yours may not… well, may not be “yours” for very long.)

Elsewhere Thursday, shares were mixed as traders and investors seem to view the world as having arrived at a kind of crossroads. Is it a grand reopening (in the US) or an emergency lockdown for 1.4 billion people (what should probably happen in India)? Is the pro-cyclical rotation here to stay in equities or will we look back and chuckle at how naive we were to pivot away from technology in an increasingly technologized world? Has the developed world finally pivoted in a serious way towards fiscal initiatives aimed at ameliorating inequality and bringing about meaningful societal change or was that a childlike pipe dream?

16 thoughts on “Sharing Is Caring

  1. Pfizer, which accepted no funding from the US government, earned 3.5 billion dollars of profit in Q12021 from covid vaccine sales. Compare this figure with any estimate of the economic damage of having an uncontrolled pandemic raging throughout the world. Certainly the developed world needs to work to try to vaccinate as many people worldwide as possible. However, as a practical matter, and as a matter of policy, this can probably better be done with government-funded donations.

    Let me ask rhetorically: In our world economy, with massive corporations earning massive profits, can you name a company in our current environment more deserving of earning massive profits than Pfizer and Moderna? What do iPhone sales contribute to human health and global economic health? How about Nike shoes? How about JP Morgan’s trading activities?

    1. At a certain point this argument, however compelling, becomes meaningless, though. Maybe with COVID the logic makes sense. But if this were (and I’m just posing a total hypothetical here) a highly transmissible, airborne virus with a mortality rate of 50%, then it’s obvious that the government would just call up Pfizer and say “You’re going to tell everybody how to make this vaccine and you’re going to do it right now or else we’re going to literally come over there and take it from you, because the other option is that our species may cease to exist.” I guess I wonder where the line on this is. And while it’s all too easy to make the wholly plausible argument you just made, would you make the same argument next month if you got cancer and then, in August, a biotech company cured cancer and said “Well, the catch is, it’s our technology, we’re not sharing it, and the cost for the treatment is $4 billion”? In that scenario (i.e., a one-treatment, 100% cure for cancer) would it not at least be worth considering whether the government should commandeer it by force or, more plausible, offer to pay the company a massive lump sum and say: “This is our offer. You can take it now and hand over the cancer cure, or we’ll come take the cure from you. Either way, you’re giving us the cancer cure.”

      1. And this isn’t really a hypothetical actually. Over the next 50 years, it’s likely that all manner of biological enhancements and improvements will be available to people who can pay. They already are, but it could become exceedingly more dramatic in fairly short order. Cost is obviously something different than IP protection, but it’s still a matter of access. And it’s highly likely that by 2100, letting the private sector make all these innovations and then leaving it to them to control who gets access and at what cost, will create a two-tiered world, where billionaires (and folks like Vladimir Putin) are almost literally a different species from the rest of us. This is one rationale for stepped-up government investment in medical research — so that the government has a claim on these technologies.

        1. In 2018, about 500,000 people in Africa died of HIV, a disease which is very well-controlled with anti-retroviral drug therapy. The two-tiered scenario you envision is here now, and has been a reality for many years: If you’re rich, you can pay to have better health outcomes, if you’re poor, you and your family may die. The US government has already made a huge investment in medical research, but as I commented below, we chose to fund basic research, and to leave the translation of discoveries to private entities. Whether that’s the most efficient method is up for debate, but that’s the (current) American way.

          By the way, it’s estimated that 13.6 million lives in Africa were saved between 2000 and 2018 as a result of government- and privately-funded efforts to make anti-retroviral therapy more widely available. I would argue that a similar path would be more effective in the current case of COVID vaccines–wealthy countries can pay drug companies for the relatively low cost of vaccine production and donate the vaccines to poorer countries. It’s a win-win-win. Drug companies make profits and are incentivized to jump into the fray to be the first with an efficacious vaccine for COVID-27. Poor countries win by getting access to vaccines. Rich countries win by stopping the global pandemic and reducing or eliminating the risk of vaccine breakthrough due to uncontrolled worldwide disease outbreaks.

      1. Yes. I agree.

        My less “smarty-pants” take: anger and dismay at the Pfizer CEO’s opposition to the Biden decision (in another WSJ article from today) contrasted with the news of the Pfizer/Tokyo Olympic donation. The donation action most likely has been in the works for a while, and under more “normal” situations could serve as good PR for Pfizer, and not be a net loss.

        The “forced” patent sharing most likely will not be a net loss for Pfizer either, although the CEO brought out the whine: “will discourage biotech companies from developing products for the next pandemic”. Nonsense. I’ll believe that limits in manufacturing mRNA components for Pfizer vaccines has been a genuine bottleneck for vaccine production. However, it seems like improving the supply chain for mRNA chemical/bio components as well as sharing production obligations is a win for Pfizer, particularly for future vaccine development.

        1. I’m not suggesting that throwing out IP protections for vaccines is necessarily a good idea, by the way. Just pointing out that it’s a pretty fuzzy debate that goes well beyond the media spin, which is basically just: Compassion vs. corporate greed.

          It’s considerably more complicated than that. Pfizer certainly wants to be compassionate to an extent. After all, they are in the pharma business. Sure, people malign that business all the time, but at the end of the day, those companies did decide to make medicine. Yes, they do it for profit, but as the reader above pointed out, they could have decided to make shoes or potato chips or something totally useless instead.

          Point is: I get both sides of the debate. But I’m inclined to worry that, over time, as medical advances become more… well, more advanced, this issue is going to get far more complex, especially as we transition from “fixing” people to “improving” them.

          1. It’s really not that complicated. It’s capitalism. People with money spend their money on the things that are of value to them. For example, they like to be entertained by athletes competing in the Olympics, and are willing to spend money for it, so they (or their agents, broadly speaking) arrange to make sure those athletes are vaccinated. The hapless mother of three in India doesn’t run the 400 flat in under 49 seconds, and doesn’t do rhythmic gymnastics, so she is expendable.

            Notice that the cries in the US to commandeer vaccines for third-world use only came after everybody in the US had access to vaccines. Me and my family in the US first, then we can worry about the third world. I think the only Americans who didn’t act based on this principle are the ones who don’t want a vaccine.

  2. I hate the precedent this idea will set. We are screaming at the Chinese for stealing our IP. If it’s valuable then private ownership should be allowed. Otherwise there won’t be any IP. The simple solution is do what IBM has done for years. Get the patent and license it for zero royalty to those who could use it for good. However, the licenses can be made specific to protect the ownership rights, other applications of the IP and the prospect of bad uses. The two main vaccines involve novel technology that we don’t fully understand. The developers, Pfizer and Moderna may well have laid the groundwork for trillions in future sales. Forcing them to give that up is unconscionable. Asking them to license production for no royalties for the pandemic is better and protects their ability to be compensated for extensions of this technology. They can choose to share their IP with anyone for any agreed upon price from zero to whatever.

    1. Mr. Lucky. Some good thoughts there.

      But what interests me is that Pfizer did not develop the mRNA technology, right? Wasn’t it that Turkish couple in Germany? That may help explain the German government’s response to Biden’s proposal.

      Countries are becoming more and more protective of their “national champions.” 5G, chip design software and now a more basic human need, vaccines. How can IP survive this swing back to protectionism and mercantilism?

      I worry that the genie is now out of the bottle.

  3. The vast majority of private sector drug patents come from research originated at the NIH. American taxpayers should have a voice in this allocation of resources, but for now, I’m pleased with Biden’s decision. I just can’t get Nato’s invocation of Article V out of my head.

    1. Yes, and no. The US government, and other governments, have decided to fund basic research at universities. This results in basic biological discoveries which have relevance for disease–along with lots of basic biological discoveries that cannot be exploited. The translation of basic research into treatments is where pharmaceutical companies come in. There are very, very few slam dunks in the world of translating basic research into treatments. The US has decided to leave the profits, and the risks, of drug discovery research to private companies. Around 2017 there was a study that concluded that the internal rate of return from drug discovery research, for industry as a whole, had fallen to zero, in contrast to the 20-30% rate in the early 1990s. The good companies are still profitable, but there’s a lot of wasted money thrown at biopharma research. It’s not simply a matter of catching the drugs as they fall out of the government-funded universities.

  4. There is a precedent for government taking of private property through eminent domain (normally land taken to be used for a greater public good, such as a road), in conjunction with a payment for the purchase of the taken land.

    The break down of the rule of law with regard to the moratorium on rent payments and vaccines could have been handled in a much fairer way that respected and upheld the existing legal agreements, the rights of the property owner and the legal rights of the owner of the vaccine formula. The government could have paid the landlords and the owner of the vaccine for such takings.

    What happens to our country, and for that matter, all of mankind, if inventors, problem solvers, risk takers, builders and creators decide not to go forward and invest money to realize their problem-solving ideas- because they have a legitimate concern that if they are successful, the government will just take it anyway? Seems bad to me. We might never know what inventions never made it off the drafting table.

    Our country just printed trillions- we could have printed a few more to uphold our rule of law, which is one of the greatest pillars of the USA and sets us apart from most other “banana republic” countries (which do not have property rights and/or a rule of law).

    No wonder some believe in Bitcoin.

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