Don’t Strip Intellectual-Property Rights from Vaccine-Makers

By Kevin D. Williamson

Thursday, May 13, 2021

 

President Joe Biden proposes to relieve U.S. pharmaceutical companies of their intellectual-property rights relating to COVID-19 vaccines. This would be a destructive policy even if it were necessary, but it is not necessary — it is not even likely to prove beneficial for the purpose at hand, which is helping to speed the pace of global vaccinations.

 

The COVID-19 epidemic has provided an unexpected acid test for any number of U.S. and global institutions. Some of those institutions, notably our Centers for Disease Control and Prevention, the World Health Organization, and a host of European Union agencies, have been found wanting. Others have stepped up, from Amazon and the nation’s logistics workforce to the nimble manufacturers that redirected their resources into producing personal-protective equipment, hand sanitizer, and other emergency supplies in the early days of the epidemic. But if any institutions have come out of this horrifying episode with their prestige enhanced, it is surely the pharmaceutical companies — those hated, greedy, transnational behemoths that managed, as though miraculously, to develop three reliable and effective vaccines in a remarkably short period of time and then to bring hundreds of millions of doses to market.

 

Two of those vaccines, from Pfizer-BioNTech and Moderna, employed messenger-RNA technology that had never been deployed in a vaccine in general use. It wasn’t a dramatic “let’s see if this works!” moon shot — it was a quiet, confident “We got this,” which is exactly what was needed. To the extent that life in the United States is getting back to normal, we have the pharmaceutical companies to thank. But, happily, they don’t have to settle for our thanks: They are getting paid.

 

Naturally, they must be punished.

 

President Biden, who perhaps needs to be reminded from time to time which country it is whose interests have been entrusted to him, proposes to “waive” — in this case, you can read that as “strip away” — the intellectual-property rights of U.S. pharmaceutical companies at the World Trade Organization on the theory that this will enable faster production of the vaccines for people in countries that have not enjoyed the relatively easy access to them that we have in the United States — backwards and savage places at the edges of the earth, such as Belgium.

 

There are several things slowing down vaccinations around the world, but the property rights of U.S. companies are nowhere near the top of the list. In fact, Massachusetts-based Moderna already has announced that it will not enforce its COVID-related patents in the immediate future, and other companies with vaccines in the works, such as Germany’s CureVac, have said the same. But that doesn’t mean that Bob’s Generic Drugs in Oceania can flip a switch and start producing COVID-19 vaccine doses by the million. There are many firms around the world that have the capability to produce drugs of many kinds, but there is a world of difference between churning out generic Viagra and manufacturing a brand-new mRNA vaccine that has been around for only a few months.

 

There are shortages of both highly specialized labor and raw materials slowing down vaccine-manufacturing. Somewhere, someone in the Biden ad­ministration knows this, because Pfizer came to the administration to ask it to use the Defense Production Act to prioritize its orders for vaccine-related materials. And that is all to the good: Pfizer-BioNTech will, if all goes according to plan, produce 3 billion vaccine doses this year, which, along with the other jabs on the market, will go a long way toward getting the world vaccinated. But the Biden administration’s use of the DPA also means that exports of vaccine-related materials to manufacturers abroad have been limited and in some cases remain restricted, which is why the International Federation of Pharmaceutical Manu­facturers and Associations cites the DPA and other trade barriers, rather than patents, as a main limiting factor. Again, someone in the Biden administration is aware of this — the government recently ordered the diversion of DPA-controlled vaccine supplies from U.S. users to India, which is being ravaged by the epidemic.

 

The IFPMA and the pharmaceutical industry at large of course have their own parochial interests. But the trade association’s warning that a waiver of intellectual-property rights at the WTO would invite “rogue” companies to begin manufacturing sought-after vaccines without sufficient expertise or oversight is worth considering. With the supply of necessary materials limited, it would be a tragedy for these to be wasted on an effort that produces a subpar vaccine, or an ineffective one. And it is of course easy to imagine ways in which an improperly manufactured COVID-19 vaccine could be far worse than ineffective.

 

If the Biden administration wants to help the inoculation effort around the world — and it should — then there are two relatively straightforward things it could do: The first would be to further relax DPA controls on vaccine-related materials, allowing more of them to make their way to overseas manufacturers; the second, most obvious, and probably best alternative would be to ramp up vaccine donations to those in need around the world. That may not have made sense a month or two ago, when U.S. demand accounted for practically every available dose. But with the U.S. vaccination rate declining, some of the pressure is off. And the United States already is giving away vaccine doses, but in relatively small amounts. The Biden administration’s planned donation of AstraZeneca doses will be enough for only 30 million people. That is better than nothing, but not a lot better than nothing.

 

The U.S. government has done well for itself with mass purchases of vaccine doses. Its pre-orders for hundreds of millions of doses flooded pharmaceutical manufacturers with capital and ensured that Americans would be first in line. Compared with the sclerotic, bureaucratic European Union, our federal government for once looks positively nimble. There are not very many problems that can actually be solved by throwing money at them, but vaccine procurement was, as it turns out, one of them, and Washington was right to throw all that money.

 

But in order to procure vaccines, there have to be vaccines to procure. And that great wash of federal cash did not simply bring those vaccines into existence. Vaccine development is part of a complex intellectual and financial ecosystem made possible by patents and other protections for property rights. Doing violence to that property-rights regime, as President Biden proposes to do, is dangerous and unnecessary.

 

Libertarians and progressives both suffer from a tendency to tell themselves just-so stories, in this case competing, mirror-image accounts of how valuable things enter the world. Think: “The government invented the Internet” vs. “The Internet was basically useless until private businesses took the lead,” as tired a dorm-room debate as you’ll ever endure. In reality, you need more than one player when you’re inventing the Internet: the U.S. government’s Advanced Research Projects Agency (which built the proto-Internet as a defense project), Tim Berners-Lee (who invented the World Wide Web in 1989 while working at Europe’s CERN), Marc Andreessen, who founded Netscape and brought the world its first mass-market Web browser, and many more. Pharmaceutical development works in much the same way: There are government-supported programs and university-based research, public–private collaborations pursuing military and public-health work, and the incredibly fruitful research, development, and commercialization work done by pharmaceutical companies.

 

Each of these elements has its own shortcomings, and, sometimes, they all make the same mistake: For example, mRNA-vaccine research has been going on for decades but was largely ignored by government, universities, and corporate researchers, all of whom were skeptical of its long-term value. Katalin Karikó, one of the most important pioneers in that research, got shoved off the tenure track by Penn when her work failed to bring in sufficient grant money. It wasn’t until her work caught the interest of Derrick Rossi, who would go on to found Moderna — with ample venture-capital backing — that it really found its place. Government agencies and universities are good at supporting basic science research and broad-based development of new methods and technologies, but the sustained effort of turning those into workable medicines that can be mass-manufactured and economically deployed is something that profit-seeking businesses tend to be better at. It is a rich ecosystem with many important elements, including patents and other intellectual-property protections.

 

We talk about profit — whether it is the profit of a pharmaceutical company or some other kind of firm — as though it were a net deduction from the public good rather than evidence of value created. We should try to liberate ourselves from that superstition. Set aside, for the moment, the case of the pharmaceutical companies and think about another epidemic-related property-rights issue: eviction moratoriums. Press coverage of that issue has followed the predictable victims-and-villains model: greedy landlords scheming to kick out people whose lives have been disrupted by the recent economic convulsions. In reality, many of the landlords who rent to low-income people are low-income themselves, typically with only one rental property that they rely on for a relatively large share of their income. Making it less profitable and more difficult for these landlords to manage their properties doesn’t mean that poor people are going to get a break on their rents — it means that other low-income families will be financially ruined and that there will be fewer incentives in the marketplace for creating rental housing for low-income people at all. It is perverse, but it is no accident that the parts of the country with the most aggressive affordable-housing policies are the ones with the least affordable housing. Landlords’ property rights ultimately serve tenants’ interests.

 

The more profitable it is to provide affordable housing, the more affordable housing there will be. The more profit­able it is to make lifesaving medications and vaccines, the more investment and innovation will be put into the service of such projects. This isn’t Ayn Rand–style utopian capitalism — it is how the world as we know it actually works, right here and right now.

 

With pharmaceuticals, there is an old-fashioned goose-and-golden-egg proposition. Gut their property rights today in the pursuit of short-term political advantage and you’ll drive away the capital that creates tomorrow’s miracles.

 

Pharmaceutical companies do life-saving work that is funded by the in­vest­ment capital attracted by the profits pharmaceutical companies — sometimes — achieve. That same capital also funds a great deal of research that never goes anywhere or that produces only mediocre and disappointing results. There are, in fact, a great many businesses that employ the same basic portfolio approach. Book publishers, for example, make most of their money from a relatively small number of runaway best sellers, but nobody has a very good record for picking those out in advance. So they publish a lot of books in the hopes of putting out a few big hits. But they couldn’t do that if they lost their copyrights every time they had a best seller. The pharmaceutical industry cannot do what it does without its property rights.

 

If President Biden throws a monkey wrench into that in a fit of populist hysteria, he will be doing the world — and especially its most vulnerable — a great disservice. ­­