Three U.S. companies — Pfizer, Moderna, and Johnson & Johnson — created and manufactured the world’s most effective mRNA COVID vaccines in record time. An increasing majority of Americans have now been inoculated, but much of the developing world remains in desperate need of vaccines. Americans naturally want to help. The question is how.
Last month, President Biden advocated removing international intellectual property rights (IPR) protections for American-made COVID-19 vaccines. This, he said, would help make the vaccines more plentiful and available in needy countries.
It’s a short-sighted approach and doomed to fail.
Mr. Biden wants to waive the World Trade Organization’s “Trade-Related Aspects of Intellectual Property Rights” (TRIPS) agreement for U.S. vaccines and let foreign countries issue “compulsory licenses“ allowing their domestic pharmaceutical companies to manufacture the medicines without adequately compensating the companies that invented them.
Practically speaking, countries such as India and South Africa are unlikely to manufacture the vaccines. They lack an advanced infrastructure for cold supply-chain distribution and many other crucial resources required by these products’ capital-intensive, state-of-the-art manufacturing process.
But the Biden policy is bad for many other reasons.
Developing breakthrough medications takes tremendous ingenuity and immense financial investments. It’s an extraordinarily high-risk endeavor, and the prospect of making a profit is what convinces private companies to undertake those risks.
Signaling that the United States will not fight to defend their intellectual property rights actively undermines innovation and manufacturing in American health care and medicines.
It also erodes patient protections by undermining quality control. Foreign companies may take the president’s policy as a green light to produce reverse-engineered, counterfeit substitutes. Already there are reports of ineffective and even dangerous counterfeit COVID-19 vaccines being sold around the world.
Those pushing to break U.S. pharmaceutical patents say they want to do so for altruistic reasons. Consequently, they also insist that the prices for the medications be set far below their actual value.
But history shows us that forcing private companies to provide vaccines at an “affordable price,” regardless of the cost to the companies, actually impedes the manufacture of high-quality vaccines. Moreover, it inhibits the future development of vaccines needed to meet as-yet-unknown diseases.
Washington first imposed vaccine price controls as part of Hillary Clinton’s 1993 healthcare-for-all crusade. As the Wall Street Journal later noted, it was a body blow to the U.S. vaccine industry. Ironically, government-decreed prices left the companies unable to produce enough vaccines to meet Mrs. Clinton’s admittedly admirable goal of universal immunization of children. Since then, U.S. firms have largely eschewed the vaccine market because they could not recoup their R&D and manufacturing costs and earn enough profit to fund future innovation.
Ultimately, compulsory licensing legalizes the theft of intellectual property. Recognizing this, senators from both sides of the aisle have joined with other government officials and industry leaders to call on the administration to reverse this bad decision.
The U.S. patent protection system has served the nation well since its founding. It is and has been a bulwark of American prosperity, but the strength of that protection has been weakening in the past few decades. Compulsory licensing contributes to the erosion of that protection.
As the U.S. and the rest of the world emerge from the pandemic, it is clear that more innovative medicines and vaccines will be needed for future protection from viruses and other emerging biological threats.
The best way to prevent and treat those new diseases is to ensure that private American pharmaceutical companies continue their innovative research and vaccine production.
That way, U.S.-manufactured vaccines can be made available to all Americans quickly. And governments can subsidize their export and sale to other countries far more effectively and less expensively than through compulsory licensing schemes.
Meanwhile, let’s hope Mr. Biden listens to the more reasonable and less-agenda driven voices in this debate and reverses course on the TRIPS waiver.
James M. Roberts is research fellow for Economic Freedom and Growth in The Heritage Foundation’s Center for International Trade and Economics.
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