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Waiving patents isn't enough — we need technology transfer to defeat COVID

Waiving patents isn't enough — we need technology transfer to defeat COVID
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On May 5, U.S. Trade Representative Katherine TaiKatherine TaiUS, Taiwan to discuss trade, investments, Blinken says On The Money: May jobs report to land at pivotal moment in Biden agenda | Biden, top GOP negotiator agree to continue infrastructure talks Friday USTR announces suspended tariffs on six nations after probes into digital taxes MORE announced that the Biden administration would support a waiver of intellectual property (IP) restrictions for coronavirus vaccines to enable low-income countries to vaccinate their populations. While such a waiver is necessary to stem the global COVID-19 pandemic, it is not sufficient. What is missing from discussions of intellectual property is that few of the countries with the potential to produce sophisticated pharmaceutical products currently have the technological capacity to manufacture mRNA and adenovirus vaccines to global standards. This is because of the highly concentrated nature of the global pharmaceutical industry, which has impeded the transfer of production technology beyond a handful of countries.  

Even after U.S. support of the IP waiver, significant obstacles to increased vaccine production and distribution remain. Primary among them is continuing resistance by profit-concerned pharmaceutical companies to sharing their technological expertise more broadly with capable partners, and the governments in high-income countries that support these strategies. 

Corporations argue that, particularly for the mRNA vaccines, wider distribution and production are prohibitively difficult due to the complex and relatively new technology involved.  

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There is some truth in this. The genetic sequence of the virus is already publicly available. The safe transfer of this sequence to human bodies, via mRNA or an inactivated adenovirus, by contrast, is a complicated and sophisticated operation. Pharmaceutical companies argue this process needs to be kept in capable hands. They argue that they are the only ones with this capacity, and have received and continue to receive tremendous public funding as a result. None are offering up their expertise and, in particular, technology that they deem trade secrets, for wider public use, which would dramatically widen production and distribution capability beyond wealthy countries. 

However, in light of the significant public funding already invested, the windfall profits already achieved and the significant public interest at stake, we can and should do more than support an intellectual property waiver to enable capacity building for pharmaceutical manufacturing and distribution in low-income countries. Vaccine producers are essentially realizing their profits as government contractors, and it is in the interest of the U.S. government for the pandemic to end globally, not just in the U.S. This will occur only if low-income countries can make and distribute vaccines.  

We already see some examples of production beyond the West. The Serum Institute of India already produces a large proportion of the AstraZeneca vaccine bound for Europe. There is no reason why it and other Indian manufacturers, and those in other countries with emerging scientific and technological capacity, could not produce much more for the developing world over the next year. This was envisioned by the WHO’s C-TAP program. But Pfizer and Moderna, with the backing of the Trump administration, opposed this program.

Yet given the global threat — a threat which will not truly diminish locally until it diminishes globally — we should create incentives for them to lend their expertise and support to manufacturing partners of their own choosing in low-income countries to radically expand production capacity. 

Fortunately, the U.S. government is well-placed to change the incentive structure of the global pharmaceutical industry. First, it can supply multinationals with generous financial inducements to build capacity for vaccine production throughout the world, creating a network of producers that can vaccinate hundreds of millions, with positive spillover effects moving forward. This is particularly compelling as it becomes increasingly likely that COVID-19 booster shots and even annual vaccines will be necessary. Such an effort would need to be paired with legislation that limits shareholder suits, because few corporate managers will want to be responsible for moves that, while clearly in the public interest, undermine shareholder value. 

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And, if necessary, the U.S. government can also use pressure. Companies that won't comply with capacity-building strategies through technology transfer can be stripped of existing patents for lucrative drugs. This is a move that international relations scholars call "issue-linkage." The state provides intellectual property protection as an incentive. It can be taken away in the same way that property owners refusing to pay taxes can lose their property. 

Capacity-building for pharmaceutical production in the developing world is crucial given the pandemic and the need for global vaccination, now and in response to future  threats. India's path to becoming a world-leading and cost-effective pharmaceutical manufacturer came initially from challenging the global intellectual property regime. In the 1970s, Indira Gandhi's populist government introduced a Patent Act which allowed companies to design alternative processes for popular products, spurring huge investments in production and innovation. Multinational pharma opposed this action, even though the same companies rely on the Indian pharmaceutical industry for production under license now. The reason why many medicines taken in the West are made by Indian firms is because of capacity-building. The fact that few countries have followed India as a global producer of pharmaceuticals is the result of politics just as much as economics — there is no reason why other countries cannot follow in India’s footsteps with the right support.     

Reconceiving the structures of production through technology transfer will be difficult, both logistically and politically. But, resolving the COVID-19 crisis requires a much greater supply of vaccines and other medicines, and production in and for wealthy countries is not enough to manage COVID-19, nor is it morally justifiable. To democratize vaccine manufacturing and to ensure that progress made in the developed world is not undercut by new variants, we need to rethink how we might build capacity beyond the West. Why do we allow technology to remain as the exclusive domain of a handful of oligopolistic firms, despite public funding and windfall profits, when coronavirus is a global threat?   

Tamara Kay is a sociologist studying trade, global health and globalization at the Keough School of Global Affairs, University of Notre Dame. Adnan Naseemullah is an international relations scholar at King's College London. Susan Ostermann is a political scientist at the Keough School of Global Affairs, Notre Dame and a former attorney at O'Melveny & Myers LLP, specializing in intellectual property law.