Patents and the Pandemic, Again

June 18, 2020

(This post originally appeared on my Patreon page.)

I know I have been pounding on this a lot, but it is important and there is a lot of money at stake. All we need (okay, maybe not all) is some clear thinking.

The Washington Post had a good piece this week talking about how a company set up by a hedge fund, with no background or expertise in pharmacology, arranged to get rights to a drug that was developed by researchers at Emory University on a $16 million contract with the government. The drug, EIDD-2801, is thought to be a potential treatment for the coronavirus. Shortly after arranging to buy the rights to the drug, the company turned around and sold them to Merck, presumably for a substantial profit. 

The piece highlights how some companies are likely to profit off government-funded research, often while contributing little or nothing to developing effective vaccines or treatments. We also face the likelihood that any vaccines or treatments that are developed will be sold at high prices by companies that were granted patent monopolies.

But this is only the beginning of the problem with the U.S. government’s approach for developing a vaccine or treatments for the pandemic. The U.S. approach encourages secrecy in research. Companies are racing to get valuable patents. This gives pharmaceutical companies an incentive to keep as much of their research secret as possible, in order not to give away valuable information to competitors.

This is the exact opposite of what we should want to see in response to the pandemic. This is a worldwide crisis; we should want researchers across the globe working in collaboration, sharing their results as quickly as possible so that they can learn from each other’s successes and failures. This issue is recognized by the scientists who are working to develop these vaccines and treatments.

As a recent editorial in Nature magazine noted, there is an extraordinary amount of international cooperation taking place, which is allowing progress to take place far more rapidly than would ordinarily be the case. However, neither the United States nor the United Kingdom have agreed to share the fruits of research with the world, leaving open the possibility that one or more of their drug companies will take advantage of research that was widely shared to develop a vaccine or treatment on which they will claim a patent monopoly, and then charge very high prices.

It is not just for purposes of getting a vaccine and treatments quickly that we should want fully open research. There is also the issue of the credibility of research findings. There already have been questions raised about Moderna, a leading contender in the race to develop a vaccine. The company had a major stock offering just after releasing very limited results suggesting progress in developing a vaccine. Two top executives took advantage of the jump in share prices to sell a substantial portion of their holdings.

While the results released by Moderna may be entirely honest, it is difficult not to raise questions when so much money is at stake for the people controlling the release of information. It is also troubling that the results reported were very limited. For whatever reason, the company chose not to release the detailed data it had available at the time.

The issue of the integrity of research is especially serious in the context of a Trump controlled FDA. If a vaccine is developed by Moderna or another company, there will be enormous pressure on the FDA to approve it, especially if this could be done before the election. Does anyone doubt at this point that Donald Trump would fire an FDA head who refused to approve a vaccine before the election? After all, he does have the legal right to do so, and every Republican in national office, except Senator Mitt Romney, is on record saying that this sort of behavior is fine. We should just take for granted that the FDA will approve any plausible vaccine candidate because Donald Trump demands it.

Not only would this be incredibly reckless, but it is also likely to undermine the goal of having an effective vaccine widely circulated. The distinction between a vaccine and a treatment is that we are asking healthy people to take the vaccine. In the case of a treatment, we are looking at people who are already sick, and likely suffering serious symptoms. It is reasonable to take some risks in such cases if the possible alternative is dying from the coronavirus.

However, with a vaccine we are asking billions of people, most of whom are healthy and would probably not face much risk from the coronavirus, to take a vaccine that possibly could have serious side effects. Would people in the United States be willing to take the risk associated with a vaccine, whose safety is certified by a Donald Trump controlled FDA?

For my part, as someone in good health, I would much rather take my chances with the coronavirus, at least until a credible agency, like the ones in Germany or Canada, had signed off on the vaccine. I would not be willing to risk my health for a Donald Trump campaign stunt. (As a practical matter, any vaccine would almost certainly not be ready for mass circulation until some point in 2021, but if the Trump FDA had set the process in motion, it might be difficult for a new administration to stop it.)

This raises another point about the value of fully open research. If all the information submitted to the FDA to establish the safety and effectiveness of a vaccine were open to the entire scientific community, it is very unlikely that it could certify the safety and effectiveness of a vaccine, if the evidence did not support this certification. If Moderna or any other company could not establish that its vaccine was safe and effective, the community of researchers working on a vaccine would almost certainly recognize this fact.

Of course, without a patent monopoly, Moderna would have little incentive to lie about the safety and effectiveness of its vaccine. Its interest would be in establishing a reputation as a company that supported important research so that it was well-positioned to secure future research funding from the government. Bending research results, so as to get a vaccine approved that was ineffective or dangerous, would likely prevent it from ever again being in the running for research funding.[1]

And, it is worth repeating that without patent monopolies and related protections, drugs and vaccines would almost invariably be cheap. It is rare that a drug or vaccine is expensive to manufacture or distribute. Drugs are expensive because we give drug companies patent monopolies. It seems more than a bit absurd that we make drugs expensive with these monopolies and then struggle to find ways to make them affordable.

Also, the amount of money at stake here is enormous. We will spend over $500 billion in 2020 for drugs that would almost certainly cost less than $100 billion in a free market with patent monopolies and related protections. The difference of $400 billion is roughly 1.8 percent of GDP. It is more than twice the size of the Trump tax cut and more than five times the entire budget for food stamps.

It is more than a bit incredible, that a time when serious people are discussing defunding the police, that the idea that the government should own the research it pays for is too radical for public discussion. It is even more incredible that this lack of imagination cannot be overcome even as we are facing a worldwide pandemic that is more deadly than anything we have seen in over a hundred years.

Somehow, we have to convince the folks determining policy that God did not create patent monopolies. There are better ways to finance the development of new drugs and vaccines.    


[1] I discuss this system of publicly financed open-source research at more length in chapter 5 of Rigged (it’s free).


Support Cepr


If you value CEPR's work, support us by making a financial contribution.

Si valora el trabajo de CEPR, apóyenos haciendo una contribución financiera.

Donate Apóyanos

Keep up with our latest news