We Don’t Need Government-Granted Patent Monopolies to Finance Drug Development

I was having an exchange with an old friend on Mastodon (yes, I’m there now @deanbaker13@econtwitter.net), in which I was arguing that the best way to get alternatives to the current patent system was to have examples of successful drugs developed without relying on patent monopolies. Of course, there are great historical examples, like the development of insulin as a treatment for diabetes or the polio vaccine, but it would be good to have one from the current century.

The most obvious example, that really deserves a hell of a lot more attention than it is getting, is the Covid vaccine developed by Peter Hotez and Maria Elena Botazzi at the Center for Vaccine Development at Texas Children’s Hospital. This vaccine was developed using grants in the single digit millions. Unlike the mRNA vaccines developed by Pfizer and Moderna, it uses a long-established technology. It is also completely open-sourced; the technology is fully public and there are no patents or other restrictions preventing its manufacture anywhere in the world.

The vaccine, called Corbevax, is cheap and easy to produce, costing less than $2 per shot. By contrast Pfizer and Moderna charged close to $20 a shot for the initial round of inoculations. They are looking to charge considerably more for subsequent booster rounds. This is in spite of the fact that the U.S. government paid close to $900 million for the development and testing of Moderna’s vaccine, in addition to supporting the development of mRNA technology for decades.

Like the mRNA vaccines, Corbevax is highly effective in preventing serious illness and death. It has been administered to more than 70 million people in India and also is being used in several other developing countries.

Corbevax is an important example of a vaccine being developed without needing government-granted patent monopolies. To be clear, medical researchers need to be compensated for their work. We can’t count of all researchers being as dedicated as doctors Hotez and Botazzi in their commitment to protecting the public’s health.

However, it is absurd to imagine that we cannot get effective research without the allure of great riches promised by the current system. (Moderna’s vaccine created at least five billionaires.) We already have the National Institutes of Health (NIH), which produces great research by paying people decent salaries, but not minting billionaires.

Most of NIH’s funding goes to more basic research rather than actually developing drugs or vaccines, but there is no reason in principle that public money could not be used for downstream research as well as basic research. We might structure a system differently for downstream research. I have argued for long-term contracts, similar to what the Defense Department uses for developing weapon systems, which would be subject to review/renewal periodically (see Rigged, chapter 5 [it’s free].)

While the specific structure is important (we want to make sure a publicly funded system is operating as efficiently as possible), the key issue is establishing the possibility of an alternative to patent monopoly financing of drug development. Towards this end, we need more facts on the ground. We need, one, two, many Corbevaxes.

Sam Bankman-Fried made “effective philanthropy” famous, as giving away money to good causes was the ostensible rationale for the multi-billion dollar crypto scam he was operating. It’s not clear if there are actually any effective philanthropists among the billionaire class. But, if such a creature exists, there could hardly be a better use of their money then demonstrating the feasibility of directly funded open-source drug development. If the next great cancer drug sells for a few hundred dollars, instead of a few hundred thousand, it will be hard to ignore.

At the end of the day, we do of course need governments to pick up the tab, but the potential savings are enormous, perhaps as much as $400 billion a year ($3,000 per family). Getting rid of patent monopolies for drugs would also be a huge factor reducing inequality, as we would not be draining the pockets of ordinary workers to create more Moderna billionaires.

But most importantly, new drugs would be cheap. People in the United States and around the world would be able to afford drugs sold at free market prices, rather than patent monopoly prices. And, that would be great.

This first appeared on Dean Baker’s Beat the Press blog.

Dean Baker is the senior economist at the Center for Economic and Policy Research in Washington, DC.