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US nod for vaccine patent waiver a positive first step

Vaccine Nationalism and Intellectual Property Waiver

America’s support could be a significant boost in the fight to increase global supplies of vaccines and loosen the grip of Western pharmaceutical companies that have used the pandemic, perversely, to bulk up profits while throttling governments of poor nations that are going through fiscal strain. There is still a long struggle ahead to get the patent waiver through the World Trade Organisation (WTO).

South Africa and India took the lead in 2020 in making a solid case for a time-limited waiver from specific provisions of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), especially those pertaining to copyright, industrial designs, patents and undisclosed information. The waiver makes sense from a public value perspective, even though it will not immediately translate to growth in manufacturing capacity for low and middle-income countries.

Crucially, the waiver could broaden the supplier options for developing countries that have lagged in drug production due to constraints imposed by intellectual property rights. There are other constraints that undermine African countries’ production capacity, such as the dearth of scientific and technical expertise, the absence of economies of scale, and weak collaboration for building cross-border value chains. Despite this, the weight of intellectual property as a constraining factor should not be underestimated.

Influential countries in the European Union, such as Germany, oppose the waiver. They are on the wrong side of history. It is noteworthy that the European Union have expressed their backing of Biden’s call, even though they are tentative about it. The Microsoft founder and philanthropist, Bill Gates, has also lent weight to the perverse stance of the pharmaceutical companies. This is driven more by a religious commitment to intellectual property protection than informed by sound reasoning in the face of a pandemic. There are two main arguments pharmaceutical companies have made against the relaxation of intellectual property provisions.

The first is that the waiver would impair the incentive structure for innovation and diminish companies’ entrepreneurial risk rewards, which presumably fuels innovation. This argument ignores the reality of decades of massive public investment acting as the catalyst for successful vaccine development. Even during Covid-19, many pharmaceutical companies producing vaccines benefitted handsomely from public financing to help them with early-stage drug development.

Second, developed countries and leading drug manufacturers have argued that even if patents are waived, this will not solve limited supplies. Owing to their limited capacities such as technical know-how, skills and financial resources, developing countries will not be drug producers overnight at the disappearance of patents. This is partially true. However, restrictive intellectual property rights for essential drugs foreclose any possibility in future for these countries to develop drug manufacturing capabilities or even to build their limited capabilities gradually to scale.

Even though there is no expectation for developing countries, particularly African countries, to immediately establish manufacturing capacity, at least they will have one major obstacle out of the way through the waiver. A boost in supply will also aid in narrowing the possibility for virus mutations, which undermine the global fight against the pandemic. The difficulties of securing sufficient supplies of vaccines by developing countries have been worsened by the hoarding of more than needed vaccine doses by developed countries.

Researchers at Duke University analysed publicly available data on vaccine procurement. As of April 2021, high-income countries sat on confirmed 4.9 billion doses, upper-middle-income countries accessed 1.5 billion doses, lower-middle-income countries possessed 713 million doses, whilst low-income countries had 770 million had doses.  This skewed distribution reveals the extent to which the world is fractured along rich and poor nations.

Despite massive public investment that laid the foundation for rapid vaccine development, various pharmaceutical companies are fixated on narrow metrics – bulking their margins to boost share price. The US government extended a largesse to pharmaceutical companies by funding the development of Covid-19 vaccines through agencies such as the US National Institutes of Health (NIH) laboratory, the Defence Department, and federally funded academic laboratories.

It makes perfect sense for the Biden administration to take the lead in orienting vaccines towards the public good by supporting the intellectual protection waiver. This is a show of enlightened self-interest, the kind of leadership expected of major powers. Shared value in a time of crisis demands that pharmaceutical companies discipline their greed and work together with governments, not-for-profit organisations, and various international organisations to find a lasting solution to the major health crisis of our time.

Supply constraints and vaccine nationalism practised by various European countries makes it all the more urgent to remove the impediments created by intellectual property protection and boost global production of vaccines at a time when the world faces a major health crisis. The waiver will be a step in the right direction if the WTO members reach a consensus. It will also be a significant mark of commitment to global solidarity between poor and rich countries.

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