Joseph Woodward served as the President of the Boston Political Review during the 2019-2020 academic year.
President Biden’s recent decision to waive patent protections on the COVID-19 vaccines is a mistake.
On May 5, 2021, the Biden administration announced that it would pursue international proposals to waive vaccine patents for the remainder of the pandemic. Democrats have heralded the move as necessary to end the pandemic, while Republicans and drug companies are urging reconsideration. This analysis will consider both arguments under the broader context of patent law and the policy’s potential effect on global vaccine supply.
In Article I, the U.S. Constitution grants Congress the power to “Promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” This, in intellectual property law, is known as the “Patent Clause.” It’s also a bit of an anomaly in Article I. Whereas most enumerated powers are absolute and broadly interpreted (e.g., “Congress shall have the power to regulate Commerce with foreign Nations… ”), the Patent Clause is uniquely restricted. It is a qualified power. What qualifies as a “useful” art? And exactly how long is a “limited” amount of time?
Capitalizing on the vagueness of Congress’s Power, the executive branch has exerted greater influence on U.S. patent law in recent decades. Executive agencies have been entrusted with greater and greater authority over intellectual property disputes, especially when negotiating with foreign actors. The Supreme Court has yet to materially limit this power expansion, laying the foundations for presidents to temporarily amend or waive patents and patent applications.
But through centuries of landmark cases and related statutes, a reliable and consistent expectation has evolved from the Patent Clause. A delicate balance has been struck that inspires innovation without overly impeding competition.
Supporters of disrupting this balance are quick to point to legal precedents for such a move. World War II serves as a comparable situation with similar extraordinary circumstances when patents have been waived or the patent application process was altered.
The National Bureau of Economic Research (NBER) considered the long-term effects of such changes. In 1940, the U.S. Patent and Trademark Office (USPTO) began issuing secret patent applications and more than 11,000 patents were kept secret in order to prevent enemies from mimicking war-related technologies. While the patent secrecy initiative in the early 1940s opposes Biden’s plan to make intellectual property more accessible, this scenario resembles the potential effects of Biden’s well-intentioned proposal. Both policies attempt to dramatically alter patent expectations and reliability in response to an extraordinary crisis. However, as the below graphic shows, amending a reasonable and consistent patent expectation may have inhibited future innovation.
Patents issued later in WWII (and were thus made public sooner) were cited at considerably higher rates on future patents than those issued in the first two years of the war. While it is hard to empirically analyze any effect the USPTO’s policy actually had on the war itself, it almost certainly stalled future innovations.
Meanwhile, supporters of Biden's policy claim that it will help end this pandemic. U.S. Trade Representative Katherine Tai elaborated on this stance, saying “This is a global health crisis, and the extraordinary circumstances of the COVID-19 pandemic call for extraordinary measures. The administration believes strongly in intellectual property protections, but in service of ending this pandemic, supports the waiver of those protections for COVID-19 vaccines.” She is not wrong. Waiving the vaccine patents might well help end this global crisis.
But make no mistake, this decision cannot be kept in a vacuum. We will face crises again. Wars, climate changes, and resource shortages will also present novel challenges demanding novel solutions. And when they do, the United States will once again turn to its greatest asset: its innovators.
Three American-based companies developed safe, effective vaccines in record time. Pfizer, Moderna, and Johnson & Johnson (J&J) achieved one of the greatest feats in medical history. It’s not a coincidence that they’re each based in the United States.
American companies, scientists, and regulators aren’t simply smarter than their foreign counterparts. American exceptionalism goes a long way, but not that far. We are a developed and highly-educated nation, but so too are most European countries. Developed nations in the Asia-Pacific region also possess the operational capacity and know-how to develop these vaccines and hold nearly half of the world’s population. Yet it is the American companies that won the vaccine race, both in efficacy and safety.
Something is different about the American innovative system. Why did our pharmaceutical apparatus thrive while others’ struggled? Many praise Operation Warp Speed (OWS) as the catalyst behind American vaccine development. And I agree that OWS probably helped the effort.
In broad terms, the U.S. Department of Defense stated the program “will accelerate the testing, supply, development, and distribution of safe and effective vaccines, therapeutics, and diagnostics to counter COVID-19 by January 2021.” More specifically, the government pre-ordered hundreds of millions of doses of the vaccine before it knew which ones, if any, would be effective. It provided a tangible incentive for pharmaceutical companies and helped minimize the significant risks associated with vaccine development. OWS contracts with developers also explicitly stated that, even if they accepted funding, drugmakers would retain the patents for their vaccines.
However, it seems unlikely that the pharmaceutical juggernauts needed OWS to facilitate the creation of a COVID-19 vaccine. Every drugmaker should have seen the first global pandemic in a century as a lucrative opportunity to get ahead of their competitors. Furthermore, the target market for these vaccines extends to the global population. OWS just placed the U.S. population at the front of the global queue for vaccines.
Programs such as OWS are not even unique to America. Many countries either subsidized research or minimized the financial risks of vaccine development. Two other prominent vaccines, made by Pfizer and AstraZeneca, were funded by Germany and the United Kingdom, respectively.
So, the argument that the U.S. government can waive patent protections because it initially funded these projects is flawed. If President Biden and his administration were following that principle, J&J’s and Moderna’s patents would be released, but Pfizer’s protections would remain. OWS can and should be credited with allowing America to win the vaccine race. But it would be naive to peddle the theory that America’s vaccine supremacy is due solely to the program.
This article has thus far contained mostly refutations of the current policy. If the only option for increasing global vaccine supply was to release all patent protections, I would be in favor of that route. However, there is a more effective and less damaging alternative: force the vaccine developers to license out manufacturing efforts. The companies that sunk resources and opportunity costs into this project would still reap the benefit for years to come. And, the world would also have a more robust and organized vaccine-manufacturing apparatus relative to the more passive approach of simply releasing patent protections. Finally, innovation incentives for future solutions to future crises would not be weakened.
The World Trade Organization (WTO) rules state that countries have the right to issue “compulsory licenses” during public health crises. The TRIPS (Trade-Related Aspects of Intellectual Property Rights) Agreement., originally crafted in 1995, provides a clear framework for just this situation.
Under the TRIPS Agreement, both sides get what they want. Governments can inoculate their populations quicker than they would be able to by solely breaking intellectual property protections. The Agreement allows sovereigns to retain the right to issue compulsory licenses, stating “countries are free to determine the grounds for granting compulsory licenses, and to determine what constitutes a national emergency.” And, as Ambassador Tai made clear, this is certainly a national emergency.
But where do private companies fit into this picture? Why should they prefer this solution over losing their intellectual property protections? The WTO elaborates on this side as well, saying, “The patent owner still has rights over the patent, including a right to be paid compensation for copies of the products made under the compulsory license.” In other words, the innovative incentive will still be here for the next crisis.
When Moncef Slaoui, the former chief scientist to OWS, was asked about this potential solution, he expressed support, saying, “My proposal would be for the government to have a license to these technologies for pandemic agents exclusively, not for commercial use.” Dr. Slaoui did not express this opinion with future innovative incentives in mind. He advocates for this solution because it is actually more effective at boosting global vaccine supply than releasing all patent protections. The most urgent impediment to expanding global supply is not restrictive patents, but the limited raw materials and manufacturing capabilities necessary to make the vaccines.
Finally, an analysis of Biden’s move to waive patent protections would be incomplete without considering the symbolic importance of this move. Biden is proclaiming, in a political departure from his predecessor, just how dire the situation is. Where his predecessor consistently downplayed the urgent need to act, Biden wants to show that he is taking aggressive action. In doing so, the capitalist mecca of the world is abandoning one of its core principles: the inviolability of property rights.
But symbolism will not help death rates. It will not contain new variants and it will not end this pandemic. It is a clear signal to poor and developing nations, allies and foes alike, that the U.S. will be here to help in the months to come. But wouldn’t it be far more prudent and less damaging to just get those same countries the vaccines they desperately need? Waiving intellectual property protections is a symbolic, political, and moral win. But it comes with a competitive and immoral cost.
The National Bureau of Economic Research’s report referenced earlier on the impact on temporary patent policy during World War II did not consider the benefits of those patent application amendments. Among the 11,000 patent applications kept secret was the patent for the Atomic bomb. I find it an admirable goal to attempt to keep the Atomic Bomb formula secret from the Nazis. Conversely, I find it an admirable goal to make the COVID-19 vaccine formula more available to friends and adversaries alike.
But, in practice, waiving these intellectual property protections does little to help the unvaccinated world. The vaccine patents are not impeding supply.
In the twilight of the pandemic, waiving patent protections on the COVID-19 vaccine is a major misstep for the Biden administration. It leaves our pharmaceutical community, to whom we entrusted our future, at risk of losing their innovative edge. Rather than mortgaging 200 years of patent law to appease the quixotic wing of his party, Biden should support compulsory licenses. It is the middle ground between capitalism and humanitarianism – the centrist solution that Joe Biden normally clings to. Dr. Slaoui, the World Trade Organization, and even the pharmaceutical juggernauts that won the vaccine race have shown far more support for this alternative than the current solution.