Retroactively lifting intellectual-property protections for companies that just saved the world is a bad idea.
Earlier this month, U.S. president Joe Biden backed the proposal by India and South Africa to lift intellectual-property rights related to COVID-19 vaccines. Some claimed this was really intended to divert attention from U.S. steps that had acted as a de facto ban on vaccine exports. While won’t know for a while to what extent waivers will finally be agreed on, we do know this is yet another sign of the influence of the left wing of the Democratic Party in this White House.
It has to be said that Biden’s move seems like a very churlish response to the success of those pharmaceutical companies that managed to develop vaccines against COVID at record speed, an achievement that has not only saved countless lives but been an enormous boon to economies badly affected by the pandemic.
Boosting vaccine production around the world is not something that would flow from a simple waiver. What is needed are facilities that are capable of producing sophisticated vaccines and employees who know how to run them. Get this wrong, and there is a high chance of quality defects, with potentially doubly disastrous consequences — both for those who receive faulty doses and for those who would be discouraged from getting themselves safely inoculated.
Many, such as German Chancellor Merkel, have rightly warned that undermining patents would not only affect pharmaceutical innovation in the future but possibly imminently, when updates to the COVID vaccines against new variants will probably be needed. The latter might seem far-fetched, but do we want to risk it?
Moreover, the legal framework for “intellectual property” (IP) has been designed in a way that obliges industry to share certain information while giving companies the reassurance that they can do so without the risk that others will commercialize this information while not compensating the innovators. In the absence of IP protection, companies would in all likelihood keep research as secretive as possible, which would have negative consequences for innovation.
A lot is already possible within the current IP framework
This is not to deny that improvements could be made to the current IP regime. The American legal scholar Dalindyebo Shabalala, who specializes in the topic, has pointed out that there are already possibilities within the IP framework allowing countries to issue so-called compulsory licenses. This comes with a catch, however. A company in a country, India say, that has taken advantage of this procedure to manufacture a COVID-19 vaccine is heavily restricted (the rules are complex) in the extent to which it can then export those vaccines to countries without production capacity, or in any case, under the current rules. Shabalala has called for the removal of the “TRIPS limitations” (TRIPS is a WTO agreement relating to the trade in IP rights) “on production for export,” which he thinks “would allow a country like India, at the request of a qualifying country, to issue blanket compulsory licenses covering all COVID-19 vaccine technologies, set the compensation prices, and allow the vaccines to be exported to multiple countries simultaneously.”
Even in such a scenario, the pharmaceutical industry would retain its right to compensation. It seems obvious that this compensation should be agreed to with the industry, precisely because the vaccines are so difficult to produce, meaning that cooperation with and not against the private sector should be the guiding principle.
The European Union is standing up for patents.
Fortunately, EU countries are, for the most part, not going along with Biden’s policy turn. There are some divisions within the bloc, with the leftist Spanish government as well as Ireland and some other EU member states supporting Biden, but according to the Portuguese EU Council presidency, a “clear majority” of EU member states are on the same side as Germany, which is firmly against undermining patent protection.
German Chancellor Angela Merkel has stated that patent protection for COVID vaccines “must remain,” because removing them would not “give us more or better vaccines in the first place.” She has also warned that scrapping IP could play into China’s hands. This is because in practice, only China would be technically able to copy the vaccines, and even then it would take a year.
French President Macron initially took a more ambiguous line but then made it clear that in his view the solution was first and foremost for “the U.S. to end their export ban of vaccines and components that prevent production.” He further complained that CureVac, a German pharmaceutical company that should soon come out with a new COVID vaccine, “says it can’t produce in Europe because components are blocked in the U.S.” His Advice? “So lift the export ban — lift it, on the ingredients and the vaccines. And, secondly, liberate the doses.”
Belgian prime minister Alexander De Croo did not mince his words, either. He stated, “As Europeans, we don’t need to be schooled. The U.S. hasn’t exported a single vaccine in the past six months. Europe is the one that’s been producing for itself and the rest of the world these past six months.”
This is the right signal, certainly given Belgium’s position as a real vaccine hub. It is also a welcome signal after the European Union took a number of — fortunately limited — protectionist measures to limit vaccine exports.
A false note was nevertheless struck — once again by the European Commission’s hapless president, Ursula von der Leyen, who in an initial reaction expressed some kind of half-hearted support for Biden’s proposal. Then she was quickly overruled by member states.
Instead of undermining IP, what is needed in order to have more vaccines is to increase production capacity. Here, the United States is playing a negative role, with all kinds of export restrictions. These may be intended to put “America first,” but in reality they slow down the world’s escape from the COVID crisis, something that is very much in America’s interest.
President Trump’s Operation Warp Speed spending program made an immense contribution to the rapid development of the COVID vaccines. Meanwhile, some uncharacteristic parsimoniousness on the part of the EU led to a botched rollout of the vaccine in the EU. Under the circumstances, it would be ironic if, whether through his de facto export ban or even, perhaps, by the impact that his IP proposal might have on the release of updates to the COVID vaccines, President Biden were to bear some responsibility for a slower ending of the pandemic than would otherwise have been the case.
Retroactively changing agreements is never a good idea.
Some have argued that taxpayers did partially finance the development of some of the COVID vaccines, and that is true in some cases and some respects, but that should not be the basis for arguing that the basis on which support was given should be altered retrospectively. Moreover, much of the valuable research to develop the COVID vaccines had been undertaken over several decades and wasn’t only a result of a last-ditch cash injection by governments, even if the actual design of the vaccine did happen extremely quickly — in the case of the Pfizer/BioNTech vaccine, in a matter of hours, on January 25, 2020.
For Europe, this is about much more than the COVID crisis alone. Some 82 percent of EU exports are from sectors dependent on intellectual property. Anyone in favor of enforcing contracts must be in favor of intellectual-property protections. One can certainly argue about how current IP rules try to shape this — for example, about the length and cost — but retroactively suspending patents from companies that just saved the world is a bad idea.