May 7, 2021
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Good morning. David Meyer here in Berlin, filling in for Alan.
The dust is still far from settled after the U.S.’s decision this week to support waivers of patent protections for COVID-19 vaccines—a move designed to boost production and avoid prolonging the pandemic.
The Biden administration’s announcement whacked not only Big Pharma stocks, but also some of the newer vaccine players that are only now gaining prominence, such as Germany’s BioNTech and CureVac (both of which have received German government funding).
It is therefore perhaps unsurprising to see Germany push back against the U.S. proposal, with a spokeswoman for Chancellor Angela Merkel warning it would cause “severe complications” for vaccine production—Chinese vaccine makers’ shares rebounded somewhat after that intervention, given the need for international consensus at the World Trade Organization. The International Federation of Pharmaceutical Manufacturers and Associations is also warning that “sort of rogue companies” could become involved.
I’m not sure I find these arguments convincing, for a couple reasons. Firstly, the purchasers of these vaccines—national and regional governments, and the COVAX facility for middle- and low-income countries—are unlikely to just buy any old stuff. They have regulatory bodies that test batches and inspect production facilities around the world; would their vigilance really diminish if intellectual-property protections are temporarily lowered?
Secondly, making a vaccine isn’t simple, especially if newfangled technology such as mRNA (used by BioNTech, Moderna and CureVac) is involved. The drugmakers use this as an argument for saying patent waivers won’t solve the production problem by themselves, which is true, but it’s also an argument for saying the threat of “rogue companies” is unlikely to be serious.
Here, I’d like to throw in a bit of Friday Feedback from reader S.K., who wrote: “Pharma gets intellectual property protection because they take the big billion dollar bets. And it needs to pay off for them sometimes. However with COVID they were prepaid and did not take any risk at all. So they should get half of the normal IP protection.”
I don’t think it’s quite fair to say they took no risk at all—consider AstraZeneca’s reputational battering—but the point about prepayments is a valid one. The companies got a lot of public funding, so I find it reasonable to say, as UNESCO has, that the results should be treated as a public good during the pandemic.
The drugmakers could have voluntarily contributed patent-protected knowhow to the World Health Organization’s COVID-19 Technology Access Pool (C-TAP) but didn’t, so it seems inevitable that they could now face compulsory knowledge-sharing.
Again, global consensus is required, and it will probably take a lot of negotiation to get there. Remember that the goal is ultimately less an anti-IP crusade and more the expansion of vaccine production—a fact that has some legal experts suggesting the U.S. move could prompt drugmakers to be more open to partnerships and licensing than they have been thus far.
More news below.
David Meyer
@superglaze
david.meyer@fortune.com
