Big Pharma Lacks Any Decency

Mariano Torras General, Health/Disease, International/Development, Microeconomics, Politics, Public policy/Wellbeing, Science Leave a Comment

May 13, 2021

We should all commend the scientists responsible for the speedy rollout of various Covid vaccines. True, we understate the risks of mass inoculation with an inadequately tested product. But we could easily make a case that the global emergency warrants such risk taking. Yet, as illustrated by its latest conflict with President Biden, the pharmaceutical industry does not consider public health its main priority. I’ll go further: Big Pharma lacks any decency.

I’ll admit that I appear to have underestimated our new president. Like many, I believed that he would be too chicken to take on the pharmaceutical oligopoly. Yet unexpectedly, President Biden has now filed to suspend the WTOs trade-related intellectual property (TRIPS) patent protection for Covid vaccines. Trump had refused to consider it.

Ok, a little background (you might also read my earlier post on the subject of vaccines). Last October, India and South Africa filed a request with the WTO that TRIPS be waived. The purpose of the waiver would be to permit developing countries access to the latest knowledge and technology so that they could produce their own vaccine. More than 60 countries supported their request. Yet the US and the EU demurred.

Few expected the US position to change once Biden assumed office. Yet Biden is now in a tussle with German Premier Merkel – who defends patent protection of vaccines – over his sudden reversal. And Big Pharma is shocked and outraged.

They not only cry foul but maintain that the TRIPS waiver will be ineffective. Many in the industry argue that waiving the rules is pointless. They believe that developing countries are incapable, at least in the short term, of producing mRNA vaccines. Angela Merkel herself argues that, in addition to quality standards, it is production capacity (or lack thereof) that limits vaccine production. In other words, not patents.

This may all be true. But is it an argument against the TRIPS waiver? Letting India and South Africa try to produce their own vaccines couldn’t hurt, could it?

Big Pharma also argues that waiver of the vaccine patents would provoke increased competition for “scarce” supplies required to make the vaccines, possibly leading to vaccine shortages at home. Never mind that it contradicts the earlier argument that the waiver is pointless due to inadequate production capacity in poor countries!

Some in the U.S. fear that sharing vaccine information with other countries would enable our rivals Russia and China to obtain our medical “secrets.” But really, so what? Do these people know that we face a global health emergency? Or perhaps they believe other factors eclipse public health?

And my favorite argument – as old as the hills, really – is that protection of intellectual property is essential as a source of innovation and jobs. Eliminate the patents, the argument goes, and companies lose the entrepreneurial incentive to innovate, and jobs move overseas.

It is remarkable that such deceptive propaganda continues to be disseminated. The unpleasant truth is that the private sector has, for decades, been losing its desire for risk. (With the exception of finance, where risk appetite is alive and well. It explains much of the financialization phase that we are in, though elaborating on this would take us too far afield).

The only reason that research and development persist at any appreciable scale is because of generous government funding financed by, that’s right, the taxpayer. Massive government subsidies incentivize innovation by Big Pharma. 

And they get a real sweetheart deal. If they fail to develop a viable product, the loss is on the taxpayer. But if they succeed, they keep the proceeds for themselves. Pfizer, for example, is expected to earn $26 billion in revenues this year from their vaccine, according to Edward Luce of the Financial Times.

The audacity that Big Pharma now reveals in wanting to keep developing countries from making their own vaccine is truly beyond the pale.

It is fair to ask how a big a deal Biden’s last gambit really is. Cynics might argue that Biden is only trying to appear boldly progressive. In other words, that he counts on any manner of obstacles or resistance that would surely weaken his initiatives. In the case of the TRIPS waiver, a months-long negotiation with opponents unfortunately seems a best case.

It is also likely that Biden is looking for diplomatic cover for the fact that his country has only just started to export vaccines. In this sense the US compares unfavorably with the EU, which has exported about as many jabs as it has administered. Note that it is precisely on this point that Angela Merkel is criticizing Biden.

Yet given the history, I find it deliciously ironic that Merkel is resisting Biden on this point. Rather than the other way round, that is. Even if for largely symbolic reasons, breaking with decades of stalwart patent protection is no mean feat. Such breaks with precedent often herald more substantive changes. Or one can at least hope.

We are facing a health emergency, aren’t we? The mere fact that the TRIPS waiver is controversial should lay bare capitalism’s inconsistency with the goal of human health. The system makes people sick, after which it limits access to treatment. It is truly perverse. We can do better.

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