Corporate greed and COVID-19

Big pharma’s big lies

After years of passionate campaigning and millions of deaths in the HIV/AIDS epidemic, WTO countries agreed on the need for compulsory IP licensing (when governments allow domestic firms to produce a patented pharmaceutical product without the patent owner’s consent) to ensure access to medicines. But drug companies never gave up on doing everything possible to undermine this principle. It is partly because of the pharmaceutical industry’s tight-fistedness that we need a waiver in the first place. Had the prevailing pharmaceutical IP regime been more accommodating, the production of vaccines and therapeutics already would have been ramped up.

The argument that developing countries lack the skills to manufacture COVID vaccines based on new technologies is bogus. When U.S. and European vaccine makers have agreed to partnerships with foreign producers, like the Serum Institute of India (the world’s largest vaccine producer) and Aspen Pharmacare in South Africa, these organisations have had no notable manufacturing problems. There are many more firms and organisations around the world with the same potential to help boost the vaccine supply; they just need access to the technology and know-how.

For its part, the Coalition for Epidemic Preparedness Innovations has identified some 250 companies that could manufacture vaccines. As South Africa’s delegate at the WTO recently noted: “Developing countries have advanced scientific and technical capacities… the shortage of production and supply (of vaccines) is caused by the rights holders themselves who enter into restrictive agreements that serve their own narrow monopolistic purposes putting profits before life.”

While it may have been difficult and expensive to develop the mRNA vaccine technology, that does not mean production of the actual shots is out of reach for other companies around the world. Moderna’s own former director of chemistry, Suhaib Siddiqi, has argued that with enough sharing of technology and know-how, many modern factories should be able to start manufacturing mRNA vaccines within three or four months.

Drug companies’ fallback position is to claim that a waiver is not needed in light of existing WTO “flexibilities.” They point out that firms in developing countries have not sought compulsory licenses, as if to suggest that they are merely grandstanding. But this supposed lack of interest reflects the fact that Western pharmaceutical companies have done everything they can to create legal thickets of patents, copyrights, and proprietary industrial design and trade secret “exclusivities” that existing flexibilities may never cover. Because mRNA vaccines have more than 100 components worldwide, many with some form of IP protection, coordinating compulsory licenses between countries for this supply chain is almost impossible.

Moreover, under WTO rules, compulsory licensing for export is even more complex, even though this trade is absolutely essential for increasing the global vaccine supply. The Canadian drug maker Biolyse, for example, is not permitted to produce and export generic versions of the Johnson & Johnson vaccine to developing countries after J&J rejected its request for a voluntary license.

Another factor in the vaccine supply shortage is fear, both at the corporate and the national level. Many countries worry that the United States and the European Union would cut off aid or impose sanctions if they issued compulsory licenses after decades of threats to do so. With a WTO waiver, however, these governments and companies would be insulated from corporate lawsuits, injunctions, and other challenges.

The people’s vaccines

This brings us to the third argument that the big pharmaceutical companies make: that an IP waiver would reduce profits and discourage future research and development. Like the previous two claims, this one is patently false. A WTO waiver would not abolish national legal requirements that IP holders be paid royalties or other forms of compensation. But by removing the monopolists’ option of simply blocking more production, a waiver would increase incentives for pharmaceutical companies to enter into voluntary arrangements.

Hence, even with a WTO waiver, the vaccine makers stand to make heaps of money. COVID-19 vaccine revenue for Pfizer and Moderna just in 2021 is projected to reach $15 billion and $18.4 billion, respectively, even though governments financed much of the basic research and provided substantial upfront funds to bring the vaccines to market.

To be clear: The problem for the pharmaceutical industry is not that drug manufacturers will be deprived of high returns on their investments; it is that they will miss out on monopoly profits, including those from future annual booster shots that doubtless will be sold at high prices in rich countries.

Finally, when all of its other claims fall through, the industry’s last resort is to argue that a waiver would help China and Russia gain access to a U.S. technology. But this is a canard, because the vaccines are not a U.S. creation in the first place. Cross-country collaborative research into mRNA and its medical applications has been underway for decades. The Hungarian scientist Katalin Karikó made the initial breakthrough in 1978, and the work has been ongoing ever since in Turkey, Thailand, South Africa, India, Brazil, Argentina, Malaysia, Bangladesh, and other countries, including the U.S. National Institutes of Health.

Moreover, the genie is already out of the bottle. The mRNA technology in the Pfizer-produced vaccine is owned by BioNTech (a German company founded by a Turkish immigrant and his wife), which has already granted the Chinese producer Fosun Pharma a license to manufacture its vaccine. While there are genuine examples of Chinese firms stealing valuable IP, this isn’t one of them. Besides, China is well on its way to developing and producing its own mRNA vaccines. One is in Phase III clinical trials; another can be stored at refrigerator temperature, eliminating the need for cold chain management.

How the US could really lose

For those focused on geopolitical issues, the bigger source of concern should be America’s failure to date to engage in constructive COVID-19 diplomacy. The U.S. has been blocking exports of vaccines that it is not even using. Only when a second wave of infections started devastating India did it see fit to release its unused AstraZeneca doses. Meanwhile, Russia and China have not only made their vaccines available; they have engaged in significant technology and knowledge transfer, forging partnerships around the world, and helping to speed up the global vaccination effort.

With daily infections continuing to reach new highs in some parts of the world, the chance of dangerous new variants emerging poses a growing risk to us all. The world will remember which countries helped, and which countries threw up hurdles, during this critical moment.

The COVID-19 vaccines have been developed by scientists from all over the world, thanks to basic science supported by numerous governments. It is only proper that the people of the world should reap the benefits. This is a matter of morality and self-interest. We must not let drug companies put profits ahead of lives.

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Joseph E. Stiglitz, a Nobel laureate in economics, is University Professor at Columbia University and a member of the Independent Commission for the Reform of International Corporate Taxation. Lori Wallach is Director of Public Citizen’s Global Trade Watch.

Copyright: Project Syndicate, 2021.