May 04, 2021
You can’t get a graduate education (or undergrad) in economics without hearing a thousand times that protectionism is bad. When you get to actually deal with policy issues, you discover that only protectionism that benefits ordinary workers is bad, protectionism that benefits high-end workers and corporate profits is sacred.
This is exactly the point of the Washington Post editorial condemning efforts to suspend patent monopolies and other protections of intellectual products on pandemic-related vaccines, treatments, and tests. To make its case the Post does some name-calling and double-talk.
In the name-calling category, we are told the idea of a free people’s vaccine is “is more slogan than solution.” A little later it appears as a “chimera.” We get it, the Post doesn’t like it.
On the double-talk front, the Post tells us:
“The most salient fact is that patents on vaccines are not the central bottleneck, and even if turned over to other nations, would not quickly result in more shots. This is because vaccine manufacturing is exacting and time-consuming.”
Arguing over the “central bottleneck” is hardly worth anyone’s time. The demand is not just that patents be suspended, but that the technology needed to produce vaccines (and tests and treatments) be freely shared for the duration of the pandemic. It is amazing that the Post somehow does not realize this fact, or alternatively has deliberately decided to misrepresent the position it is criticizing.
The sharing of technology would mean that Pfizer, Moderna, and other producers of vaccines would share detailed descriptions of their manufacturing technology, conduct webinars, and provide hands-on assistance to manufacturers around the world to enable them to produce their vaccines on a large scale. They can be paid for this, but they will have little choice in the matter. If they don’t agree, the government can offer large payments to their top engineers (e.g. $1 million a month) to share their knowledge directly, while indemnifying them from future legal actions by their former employers.
As far as the time involved, it’s not zero, but we know it is not all that long. The vaccines did not exist last March, yet these companies were able to produce large quantities by November. Presumably, we can assume at least the same speed going forward. Of course, it would have been much better if we had followed this path at the start of the pandemic, as some of us advocated at the time, or at least in October when South Africa and India introduced their resolution at the World Trade Organization.
Perhaps the most stunning part of the editorial is the warning about incentives:
“It is true that pharmaceutical companies stand to profit handsomely from monopolies on individual patented vaccines. It is also true that stripping away their intellectual property now could discourage future innovation. The U.S. government spent some $10 billion in Operation Warp Speed to help that effort, among other things, but did not require companies to turn over their intellectual property to the government — or to share it.”
The companies involved have all made enormous profits on a relatively small short-term investment. The government put up much of the money and took much of the risk. That is not sufficient incentive?
Furthermore, we should assume that the people running pharmaceutical companies are not dumber than rocks. The law allows for the government to require the licensing of patents in emergencies (Section 1498 of the commercial code). Presumably, they know this. The loss of incentive story here is that if they hoped to get some pandemic super-bonanza in the future, they now know that they will just get extraordinarily large profits. Let’s cry for the drug companies.
I have argued that patent monopolies are actually a terrible way to finance drug research (see Rigged, chapter 5 [it’s free]). If we changed our mechanism for financing research, then we could ignore the issue of incentives here altogether. But that’s a longer discussion.
The reality is that much of the developing world is needlessly facing a humanitarian disaster because of vaccine nationalism and our protection of intellectual products. Furthermore, even the U.S. and other wealthy countries face an enormous risk that a new vaccine-resistant strain will develop (anyone want to go through another round of infections and lockdowns?), as long as the pandemic spreads unchecked anywhere in the world.
But to the Post, all of this is secondary to drug company profits.