Voiding vaccine patents isn't enough

Dr Eric Crampton
12 May, 2021

Vaccine access campaigners get one very big and very important thing very right.

If only the richer part of the world can afford Covid vaccinations, the costs will not be borne only by people in poorer countries suffering from ongoing waves of illness and misery. Covid mutates. If billions of people remain unvaccinated, new Covid variants will keep emerging from the unvaccinated parts of the world. Some of them will breach existing vaccines, and one of those could prove at least as deadly as current versions. New vaccines will have to be deployed, quickly, to keep up.

The case for subsidising access to vaccines is consequently incredibly strong. Even those who care a lot more about health outcomes in their own countries than about health outcomes in poorer countries should care about broad access to vaccines.

Effective improvements in vaccine access matter.

Last October, India and South Africa circulated a petition with the World Trade Organisation Trade-Related Aspects on IP Rights (TRIPS). They called for suspending intellectual property protection on Covid vaccines during the pandemic. Over a hundred countries signed the petition. And, last week, the US government reversed its more traditional position in favour of very strong intellectual property protections by endorsing the suspension.

But suspending intellectual property protections for Covid vaccines is the opposite of helping. The real bottlenecks in vaccine supply are elsewhere. And breaking the intellectual property system that helped develop new vaccines may prove rather costly.

It is fairly easy to demonstrate that overly restrictive patent law is not the barrier to getting more vaccines manufactured. In October 2020, Moderna announced that it would not be enforcing its Covid vaccine patents during the pandemic. But, as the Progressive Policy Institute’s Caleb Watney points out, no one has started making vaccines using Moderna’s recipe.

In the same way that buying a famous chef’s cookbook is unlikely to turn your kitchen into a Michelin-rated establishment, simply opening the pharmaceutical companies’ cookbooks does not quickly generate new vaccine production.

The underlying technologies are more difficult than generic pharmaceuticals. Covid vaccines are not chemicals that can simply be synthesised.

The real bottlenecks seem twofold.

Getting more facilities to manufacture vaccines requires technology transfer beyond what is published in the patent cookbook. Vaccine developers have licensed their vaccines for broader production, but doing so will often require the developers to work hand-in-hand with the new facility to teach them the techniques – the things that go on in the restaurant that are hard to put into the cookbook.

And as Professor Tabarrok points out, the Moderna and Pfizer plants are running every hour of every day of the week. If tech transfer on those vaccines were easy, they would already be licensing more companies to manufacture their vaccines, so they could ship more product.

And there are real and substantial bottlenecks in raw materials used in vaccine production. George Mason University economist Alex Tabarrok points to shortages of bioreactor plastic bags, with other raw materials, as substantial hindrance to scaling up vaccine production in India. And America restricted the export of critical supplies like these because vaccine manufacturers in the United States have also faced shortages.

Easing intellectual property provisions will solve neither problem.

Two alternatives might.

Watney suggests full technology buyouts rather than voiding patent protection. Under a technology buyout, the agency buying the patent, presumably a consortium of richer countries’ governments, also buys access to all of the softer bits of the technology that are just as important, but not included in the patent documentation. The developer’s experts would help in transferring their technology to new manufacturers as part of the buyout.

One advantage of this option would be in building future capacity. Building global capacity for mRNA production would help produce enough vaccines to get through the current pandemic and for dealing with variants as they emerge. But they would also be able to produce new mRNA vaccines, under licence, as new mRNA vaccines are developed. A new mRNA-based malaria vaccine was announced last month.

As Watney puts it, “As the famous saying goes: give the world vaccines and you stop one pandemic, teach the world how to manufacture mRNA vaccines and you stop pandemics forever.”

While this option has a far greater chance of success than simply voiding patents, it still runs into the fundamental underlying constraints. Critical raw materials remain scarce, and techniques using substitutes still need to be developed. And if transferring the technology for others to use were simple, we would already be seeing licensing arrangements for the Pfizer and Moderna vaccines.

Professor Tabarrok, along with coauthors in Science, suggest an alternative. The problem, as they see it, is that countries have been horribly pound-foolish when it comes to vaccines. Global GDP losses from Covid have been half a trillion dollars per month; adding in the misery caused by the pandemic easily brings the figure past a trillion US dollars monthly. They also cite IMF estimates of government spending on pandemic financial support, globally, amounting to $1.5 trillion USD per month.

A course of vaccines purchased through COVAX, the global initiative to get vaccines to poorer countries, costs about $7 USD. You can personally assist if you like; I have already. $10 NZD buys someone, somewhere in the world, Covid vaccination. The New Zealand government has also contributed to the COVAX effort.

Tabarrok and coauthors estimate global benefits of $576 to $989 per course of additional vaccine manufacturing capacity – multiples of the current price of vaccines. Given those benefits, and the current prices of vaccines, it would seem very difficult to spend too much on expanding vaccine manufacturing capacity.

Contracting for vaccine manufacturing capacity can then help. Rather than voiding patents and harming the incentive to create new vaccines, governments could contract with vaccine manufacturers for additional capacity, so they stand ready to produce more doses more quickly for everyone. And contracting for capacity encourages innovation in finding ways around current production bottlenecks.

Fundamentally, voiding patents is an unserious way of dealing with a serious problem. The world needs substantial expansions in vaccine manufacturing capabilities as quickly as possible. Replicating the processes used by successful manufacturers is not simple, and constraints against expanding capacity need to be solved by investment.

New Zealand’s contribution to the COVAX effort is laudable. But we remain pound-foolish. Spending a lot more on vaccines by contracting for greater capacity would help New Zealand become vaccinated more quickly, protecting us and providing some hope of normal international travel.

Contracting for capacity would also mean that more vaccines could be produced more quickly for everyone else too, reducing the risk of new variants that could lead to new border closures after New Zealand completes its first round of vaccination.

And, unlike voiding patents, it would preserve incentives to develop vaccines against new threats that might yet emerge.

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