Waiver

The Biden administration surprised everyone by joining the call for a waiver of patents for COVID-19 vaccines. One news agency described the policy change a “blockbuster.”

Indeed it is. Protection for intellectual property rights has been like religion for the US government. By joining the call for a waiver of vaccine patents, the Biden administration has taken an abrupt about face.

The clamor for a waiver originates from the World Trade Organization (WTO). About a hundred countries, mainly from the Global South, argue that a waiver will enable poorer countries to start producing vaccines on their own, using the blueprints from the big pharmaceutical companies now supplying the global market.

Advocates of a waiver on COVID-19 vaccines specifically say this will be the solution to the grossly uneven distribution of supplies. While the rich countries have hoarded more doses than their population needs, many poor countries do not have enough to begin vaccinating on any meaningful scale.

Besides, setting aside the patents will immediately broaden the manufacturing base for critically needed vaccines. But that alone might not address the crippling supply problem.

The World Health Organization (WHO), that has been denouncing the moral calamity of vaccine nationalism, supports the patent waiver. Dr. Anthony Fauci, the chief US epidemiologist, also supports the position of the Biden administration on this question.

Supporting the call for a waiver would have been unthinkable during the Trump years. The one-term former president not only withdrew US funding for the WHO but also held complete disdain for the WTO. The disdain is understandable, considering Trump’s chauvinism. The WTO is an international organization where all 190 countries, regardless of economic status and size, enjoy an equal vote.

The market responded to the Biden administration’s support for a waiver by selling down stocks of the major pharmaceutical companies. Except for the Oxford-AstraZeneca consortium that committed to sell their vaccine at cost, all the large vaccine maker were expecting a windfall from this pandemic.

PhARMA, the association of global pharmaceutical companies, expectedly frowns upon the proposal to waive patent rights. The group warns that a waiver will cause more harm than good.

The current vaccine supply shortage, they argue, is caused not by limitations on manufacturing capacity. The vaccine suppliers can always use existing capacity elsewhere as Pfizer is trying to do with Merck and as AstraZeneca has done by licensing manufacturing to Serum Institute of India. The real limitation is the reproduction of the basic components to make the vaccines, such as the mRNA or the virus parts used to arm the doses.

Waiving the patents could open a Pandora’s Box of horrors. Inferior doses could proliferate without effective quality controls. Counterfeit vaccines could be brought to market and bring harm to people. The global vaccine market could become a Wild, Wild West of bandit suppliers accountable to no one.

The UK and the EU, for their part, propose a system of licensing. This will allow the technology to be shared but under close oversight. The model for this could be the licensing agreement between AstraZeneca and the Serum Institute of India.

Experts favoring this approach propose that licensing arrangements could be made compulsory. This could serve the purpose of technology sharing without undermining the international regime of property rights protection.

There is wisdom in the international patents regime. It is an incentive for cutting edge research required to advance the frontiers of human knowledge. Biotech companies, for instance, could spend years and invest large fortunes to make the products that serve humanity. Sometimes the investments of time and money end up for naught.

A patent awarded a product gives the discoverer enough time to enjoy monopoly privileges until it recovers investments and turn up a profit for shareholders. Without patent protection, cutting edge research will likely decline dramatically. This will be a net loss for humanity.

Governments, we know, are not the best in encouraging research and development. Government-sponsored research often reflects the priorities of bureaucrats rather then the priorities for consumers. Left entirely to government, we would have large and centralized computer systems instead of the dynamic world of personal computing we now enjoy.

Much of the medical and scientific breakthroughs that happened the past decades were brought to us by corporate research and development. The research was driven by the prospect of profitability, to be sure. But there has been no more consistent driver of innovation in modern civilization than the quest for profit. Shareholders will not put in funds for research without prospect of return.

The entire superstructure of private sector-led research and development could suffer a severe setback if intellectual property rights are abruptly waived for developers of COVID-19 vaccines on the ground that “extraordinary times require extraordinary measures.” When another pandemic hits us in the future, those with the know-how to develop vaccines against it could hold back because the same principle could be invoked.

In a word, a waiver at this time could become a poisoned precedent. The approach preferred by the UK and the EU could be the more prudent response to the vaccine shortages we are now experiencing.

Nevertheless, the prospect of a waiver by itself could produce some good results. The big pharmaceutical companies could be better inclined to enter into licensing arrangements to supplement manufacturing capacity.

The waiver option, at any rate, will take much time to execute. It is vulnerable to legal challenges. Over the amount of time required to execute it, we could be over the hump. The supply shortages could be surmounted much sooner.