WTO Fails to Act on COVID Patent Waiver Again

The World Trade Organization (WTO) has, for the third time, failed to approve a petition submitted by South Africa and India to temporarily waive intellectual property rights relevant to the production of COVID-19 vaccines. PhRMA (the pharmaceutical industry’s lobbying group) has said that doing so would fundamentally undermine the global response to COVID-19 without providing any significant benefits to underdeveloped nations.

In a letter to President Biden earlier this month, PhRMA claimed that these countries argue “without evidence” that intellectual property rights hinder the expansion of vaccine production (the waiver does in fact provide evidence, which PhRMA’s letter fails to acknowledge). Instead, they claim that intellectual property is the foundation for both the development and sharing of new technologies. However, they offer no evidence to support these claims.

While some may consider their argument in favor of intellectual property self-evident, it contradicts the foundational premises of innovation and development in science. It’s also the same argument that was made by the industry when they sued South Africa in the late 90s for producing medicines to combat the world’s worst AIDS epidemic.

First the question of science: why is it that medicine is one of the only areas of science that requires property rights in order to maintain innovation? More specifically, why is it that the property rights only foster innovation when applied to a finished product?

When PhRMA’s arguments are framed as questions like these, they cease to make any sense. Consider the fact that these drug makers relied on both publicly-funded research and billions in direct public funding to develop their vaccines. In other words, there are no barriers to knowledge unless that knowledge is produced in a private lab. Those within the private lab are free to take all of the knowledge produced to date by taxpayer-funded labs, make their additions, and then own the entire product. If this were any other capitalist enterprise, it would be the equivalent of an industry expecting to get all of its raw materials and design templates for free.

Pick up any introductory text on research or the scientific method and you’ll find a nearly universal theme—scientific innovation relies on transparency and data sharing. Take any view on the history of science and you’ll reach an unavoidable conclusion—intellectual property has played a trivial role in discovery. When defending their patents, the pharmaceutical industry conflates the ability to maximize corporate profit with the ability to maximize scientific output.

The latter can and has been done through a variety of incentives and could be experimented with further. For instance, we could grant financial rewards for scientists who actually make discoveries, as opposed to the current system of rewarding shareholders who do no science at all. We’d pay less and have better outcomes doing so. The maximization of corporate profit, however, can only be achieved through patents. That is why they matter more than human life.

If this seems like an unfair characterization of the industry, consider the collective effort of over 40 companies to prevent South Africa from battling its AIDS epidemic in the late 1990s.

With nearly 20 percent of the adult population infected with HIV, and 60,000 children expected to be born HIV-positive every year, the South African government passed legislation to allow for compulsory licensing and parallel importing of antiretrovirals necessary for the treatment of HIV. In effect, this legislation did not abolish the corporations’ rights to hold patents, but rather forced them to grant generic production for a fee. Given that the treatments costed $12,000/year for an American, and that the average African nation was spending $10/year per person for overall medical care, this would amount to a loss for the industry.

In response, the world’s top pharmaceutical companies sued South Africa while pressuring the United States and European allies to impose economic sanctions and cut off foreign aid. In other words, they their goal was to destroy the South African economy and starve its people as they emerged from their battle against apartheid. Naturally, Western governments were inclined to comply; yet after years of public pressure, the case against South Africa was dropped.

Did South Africa’s victory establish a precedent that would collapse the market, as the industry argued it would? Given that these same companies are doing well enough to afford over $10 billion in settlements (from just 5 lawsuits) for fraud, criminal misbranding, and other offenses, it seems it did not.

Which brings us to another of the industry’s arguments—that these nations could not possibly manage the production of needed supplies on their own, and would inevitably bring dangerous products to the market. Between the industry’s own intentional malevolent use of products (such as bribing doctors to prescribe an antidepressant to children when it was not approved for pediatric use and was known to increase risk of suicide in children), and their own instances of contaminated production (such as the flawed production of their own HIV medicine that they sued over, requiring a worldwide recall), the argument conveys little more than cynical paternalism.

Solutions proposed by PhRMA, such as relying on charitable endeavors like COVAX , are a further exercise in paternalism. As of March 9th, Bosnia and Herzegovina had yet to receive a single dose of the 1.2 million they paid for through COVAX. Meanwhile, the United States has vaccinated 30 per 100 people, while South Africa has vaccinated 0.3 per 100 people. The tiered system is clear—Western nations will vaccinate their populations, including those who actively fought every effort to keep the disease under control, while everyone else takes whatever scraps they can get their hands on.

The motives for this arrangement are clear. The WTO’s refusal to grant the requested patent exceptions is not intended to foster innovation and development—it actively undermines them. Not only is this demonstrated through their own scientific double standard, but by their consistent advocacy for property rights over access to medicine, whether it be fighting to prevent the control of AIDS in South Africa or the control of COVID-19 worldwide.

*While universities do hold patents, they have little impact on the discussion at hand.