ANALYSIS / OPINION:
Three US companies – Pfizer, Moderna and Johnson & Johnson – have created and manufactured the world’s most effective COVID mRNA vaccines in record time. A growing majority of Americans have now been vaccinated, but much of the developing world is in desperate need of vaccines. Americans naturally want to help. The question is how.
Last month, President Biden called for the removal of international intellectual property rights (IPR) protections for COVID-19 vaccines made in the United States. This, he said, would help make vaccines more abundant and available in needy countries.
It is a short-sighted and doomed approach.
Mr Biden wants to abandon the World Trade Organization’s agreement on “Trade-Related Aspects of Intellectual Property Rights” (TRIPS) for American vaccines and let foreign countries issue “compulsory licenses” allowing their vaccines. national pharmaceutical companies to manufacture the drugs without adequately compensating the companies. who invented them.
In practice, countries like India and South Africa are unlikely to manufacture the vaccines. They lack an advanced infrastructure for cold supply chain distribution and many other critical resources required by the advanced capital-intensive manufacturing process of these products.
But Biden’s policies are bad for many other reasons.
The development of revolutionary drugs requires enormous ingenuity and immense financial investments. It’s an extremely risky business, and the prospect of making a profit is what convinces private companies to take those risks.
Signaling that the United States will not fight to defend its intellectual property rights actively undermines innovation and manufacturing in American health care and drugs.
It also erodes patient protections by undermining quality control. Foreign companies may view the president’s policy as a green light to produce counterfeit and reverse-engineered substitutes. Already, there are reports of ineffective and even dangerous counterfeit COVID-19 vaccines being sold around the world.
Those who push for breaking US pharmaceutical patents say they want to do so for altruistic reasons. Therefore, they also insist that drug prices be set well below their real value.
But history shows us that forcing private companies to provide vaccines at an “affordable price”, regardless of the cost to the companies, actually hinders the manufacture of high-quality vaccines. In addition, it inhibits the future development of vaccines needed to deal with still unknown diseases.
Washington first imposed price controls on vaccines as part of Hillary Clinton’s 1993 Health-for-All Crusade. As the Wall Street Journal later noted, it was a blow to the US vaccine industry. Ironically, the government-enacted prices have left companies unable to produce enough vaccines to meet Clinton’s admittedly admirable goal of universal childhood immunizations. Since then, US companies have largely avoided the vaccine market because they could not recoup their R&D and manufacturing costs and make enough profit to fund future innovation.
Ultimately, the compulsory license legalizes the theft of intellectual property. Recognizing this, senators on both sides of the aisle joined with other government officials and industry leaders in calling on the administration to reverse this poor decision.
The US patent protection system has served the nation well since its inception. It is and has been a bulwark of American prosperity, but the strength of that protection has weakened in recent decades. Compulsory licenses contribute to the erosion of this protection.
As the United States and the rest of the world emerges from the pandemic, it is clear that more innovative drugs and vaccines will be needed for future protection against viruses and other emerging biological threats.
The best way to prevent and treat these new diseases is to ensure that private US pharmaceutical companies continue with their innovative research and vaccine production.
In this way, vaccines made in the United States can be quickly made available to all Americans. And governments can subsidize their exports and sales to other countries much more efficiently and at less cost than through compulsory licensing programs.
In the meantime, let’s hope Mr Biden listens to the more reasonable and less agenda-driven voices in this debate and turns the tide on the TRIPS waiver.
James M. Roberts is Research Fellow for Economic Freedom and Growth at the Center for International Trade and Economics of the Heritage Foundation.