May 18, 2021

Waivers for Vaccine IP: Folly Masquerading as Charity


KEY TAKEAWAYS

  • The Biden administration recently signaled its willingness to waive intellectual property protections for COVID-19 vaccines.
  • It will take other countries years to be able to produce sophisticated U.S. vaccines, and they will use precious raw materials that could otherwise increase production by existing manufacturers.
  • People living in poorer countries will not benefit from the waiver, but Russia and China will get free access to cutting-edge U.S. technology.

Earlier this month, U.S. Trade Representative Katherine Tai announced that the Biden administration supports waiving intellectual property protections for U.S. COVID-19 vaccines. The details remain to be negotiated, but a waiver would likely allow any company anywhere in the world to produce the vaccines without paying anything to the companies that developed them.

Who Gains from a Vaccine IP Waiver?

TRIPS Waiver

The admirable desire to help poor countries obtain vaccines is blinding proponents of the waiver to the predictable consequences. Giving away the secrets of cutting-edge technology used to produce the U.S.-created vaccines will not magically allow poorer countries to produce vaccines. It will take those countries years to build the sophisticated production systems the vaccines require. During that time, they will consume scarce raw materials that U.S. companies could have used to increase production.  

It is clear who will suffer and who will benefit from the waiver. Some people who could have received a U.S.-produced vaccine will die of COVID-19 while waiting for an ersatz version. Inevitably, the worst off will be the poorest people in the poorest countries. U.S. companies that invested billions of dollars in risky research to develop the vaccines also will be hurt, as will their employees. Major pharmaceutical companies may naturally think twice in the future before heavily investing in research if their IP is given away.

The immediate beneficiaries will be China and Russia. They are the countries investing heavily to overtake the U.S. in biopharmaceutical research. Giving away our technology will allow them to make up years of research in one fell swoop. 

What the Waiver Would Do

The 1995 Agreement on Trade-Related Aspects of Intellectual Property Rights establishes basic standards for respecting IP across World Trade Organization member countries. The WTO itself can, however, grant waivers for members’ obligations, including the obligation to respect IP under the TRIPS agreement.

The waiver process ultimately would require approval by the 164 members of the WTO. Normally, such a proposal would be reached based on consensus, but if a consensus cannot be reached, a three-fourths majority of members can decide to issue the waiver.

Actually producing vaccines requires more than just a waiver of IP laws, however. The waiver would allow WTO member countries to use patent-protected technology relating to the COVID-19 vaccines, but much of the knowledge required to actually make the vaccines is not patented. Trade secrets and expertise are not protected by patent law, and they are also necessary for producing vaccines. If the companies do not cooperate in teaching other countries to use the patented technology, those countries will struggle mightily to produce vaccines even with the waiver.

Why Giving Away Vaccine IP Hurts the Poor

Taking away IP protections for U.S. companies like Pfizer and Moderna would hurt those companies and their employees, but due to the nature of the vaccine supply chain, would-be recipients could also be harmed by the waiver. According to some scientific authorities, the most important bottleneck in producing vaccines is not intellectual property, but a shortage of essential ingredients like nucleotides, enzymes, and lipids.

At issue with the waiver are mRNA vaccines, a new type of vaccine that represents the culmination of more than two decades of research. But developing the vaccines is only one part of the process of producing them. Because of their revolutionary nature, they are not simple to make. There are a number of highly complicated aspects to their production that cannot be easily transferred, duplicated, or taught.

Other companies tooling up to produce the vaccines would take raw materials away from the existing, proven producers. The new producers would invariably waste resources as they learn best practices. The current producers are already shipping vaccines outside of the United States. Pfizer alone has shipped 430 million doses to 91 countries. U.S. manufacturers are on track to produce 12 billion doses of vaccine by the end of 2022, enough to satisfy global demand. Inviting resource shortages by waiving IP will jeopardize that goal.

Because of these supply problems, giving away vaccine technology and creating new producers would take years to help anyone. During that time, many would suffer from the shortage in vaccines.

China and Russia Benefit from a Waiver

Russia and China would stand to gain from access to mRNA vaccine technology. Both countries developed their own COVID-19 vaccines, Sputnik V and Sinovac, but they use older technology and are generally less effective.

The two countries have exported vaccines en masse in an effort to build influence around the world. Though they are behind the U.S. in vaccine technology, free access to U.S. trade secrets would allow them to catch up and eventually offer their own mRNA vaccines. They could then supercharge their vaccines-for-influence campaigns.

Issue Tags: Health Care, Judiciary