Assessing the Damage from Our COVID Technology Giveaway

By Joseph Allen
May 10, 2021

“The decision to abandon the traditional U.S. defense of the patent system, blaming it without any evidence as a barrier to producing desperately needed vaccines for the developing world is a real body blow…  Particularly galling is that we’re voluntarily harming ourselves.”

https://depositphotos.com/13456035/stock-photo-health-care-reform.htmlThe implications of the announcement that the Biden Administration will support efforts to waive intellectual property protection for COVID-19 vaccines and therapies is still sinking in. The Wall Street Journal wrote two editorials in three days, the second more blistering than the first. “Biden’s Vaccine IP Debacle” begins: “… [T]his may be the single worst presidential economic decision since Nixon’s wage-and-price controls.” Not to second guess the paper, but President Nixon’s decision only harmed our economy—this one threatens both our economy and our health far into the future.

The editorial continues:

In one fell swoop he has destroyed tens of billions of dollars in U.S. intellectual property, set a destructive precedent that will reduce pharmaceutical investment, and surrendered America’s advantage in biotech, a key growth industry of the future. Handed an American triumph of innovation and a great soft-power opportunity, Mr. Biden throws it all away.

The decision to abandon the traditional U.S. defense of the patent system, blaming it, without any evidence, as a barrier to producing desperately needed vaccines for the developing world, is a real body blow. Even worse, this dagger is mainly aimed at U.S. industry, as no one is clamoring for Chinese or Russian patents and know-how. Particularly galling is that we’re voluntarily harming ourselves. In the words of the old comic strip Pogo: “We’ve met the enemy and he is us.”

One of the first orders of business after a disaster is to assess the damage. Here’s some of the most likely if this decision gets implemented by the World Trade Organization.

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Threatening Vaccine Safety without Increasing Production

Despite the rhetoric, the problem with producing more COVID-19 vaccines to meet world demand isn’t patents, it’s the complexity of manufacturing using brand new technologies so that the product is both safe and effective. That’s no easy task.

Just before the Administration’s announcement, The Washington Post ran an editorial titled “A patent-free ‘people’s vaccine’ is not the best way to help poor countries,” stating:

The most salient fact is that patents on vaccines are not the central bottleneck, and even if turned over to other nations, would not quickly result in more shots. This is because vaccine manufacturing is exacting and time-consuming. Look at the production difficulties encountered by Emergent BioSolutions, a vaccine manufacturer in Baltimore, where 15 million doses were contaminated. That was caught before the shots were distributed, but one can imagine the horrific consequences of a failure to maintain quality control elsewhere in the world.

Hard-pressed Brazil learned this lesson at a painful cost. It had to suspend use of the Russian vaccine because of concerns about its safety, a move endorsed by a leading virologist over fears “about the integrity of the manufacturing process.”

Ironically, U.S. vaccine patent owners are licensing their technologies to responsible manufacturers around the world, ensuring that they will be safely made, as their reputations depend on it. These companies are also vital players in the global fight to detect and seize harmful counterfeit COVID-19 vaccines. The World Health Organization warned that criminal gangs are becoming actively involved in the sale of fake vaccines on the dark web.

Who’s going to fill the oversight role of patent owners when their technologies and know-how are forcibly taken away and made available to anyone—skilled or not?

A Stab in the Back that Won’t Be Forgotten

The Biden Administration was extraordinarily fortunate to come into office inheriting not only the most effective COVID-19 vaccines developed under Operation Warp Speed, but with widespread vaccination programs already rolling out across the nation. The companies which developed these vaccines brought significant expertise and resources to the table, re-prioritized their R&D to meet an international emergency, and complied with every requirement placed on them by the U.S. government. They are doing everything they can to increase production to meet the needs of the world population.

So how must they feel after the Administration that profited from their efforts threw them under the bus as soon as it became politically expedient?

In its editorial, “Biden’s Vaccine Patent Theft: Who will invest in future therapies when the White House helps other governments steal?” The Wall Street Journal noted that: “Once stolen, IP on breakthrough innovations like Moderna and Pfizer-BioNTech mRNA vaccines can’t be returned.” It continued:

The Administration’s WTO (World Trade Organization) waiver will break patents and legal protections for vaccine makers. Investors will be less likely to fund new drug research if they think their own government will betray them under political pressure.

A fundamental underpinning of our economy is public/private sector R&D partnerships, which vaulted the U.S. into leadership in every field of technology. These partnerships are built on trust that resulting agreements are reliable so companies will assume the necessary risk and expense of turning federally funded discoveries into useful products. Can they believe that now?

We’re Handing the Chinese Critical Technologies they Have Been Trying Hard to Steal

One year ago, the FBI and Department of Homeland Security issued a high-level warning that Chinese agents were “attempting to identify and illicitly obtain valuable intellectual property and public health data related to vaccines, treatments, and testing from networks and personnel affiliated with COVID-19- related research.”

China prioritized stealing mRNA technology and know-how. It’s a revolutionary new way of making drugs and vaccines, with applications far beyond COVID. Moderna worked on it for over 10 years and Novavax for three decades, according to The Wall Street Journal. The article added: “Waiving IP protections for Covid vaccines and medicines will give away America’s crown pharmaceutical jewels and make the U.S. and the world more dependent on India and China for pharmaceuticals.”

The top Chinese disease control official acknowledged their current COVID vaccines “don’t have very high protection rates” while praising the benefits of the mRNA vaccines considered most effective, those of Pfizer-BioNTech and Moderna.

China must be astounded that we’re giving them an essential tool to end our domination of the life sciences. And to make it even sweeter, our U.S. Trade Representative– who’s talking tough about cracking down on Chinese IP theft– will take the lead in the effort to hand it over. No wonder the Chinese see us as a nation in decline. They may have a point.

Perhaps Lectures from Germany and France Will Wake Us Up

If anyone thought that giving away our COVID IP would appease the zealots, they now know better. Rep. Alexandria Ocasio-Cortez gleefully tweeted “Let’s do insulin next” as soon as she saw vaccine makers stock’s plunge with the President’s announcement.

An op-ed in The Guardian proclaimed:

To learn the lessons of a year lost to Covid-19 – and to prepare for a long century of recurring health emergencies – the temporary Trips [the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement] suspension must give way to a total transformation of the pharmaceutical patent system. Pausing the gears of the killing machine is not enough. Our obligation is to dismantle it.

One would assume the Congresswoman and the op-ed authors declined to take the vaccines made by our evil patent system, trusting their health to Russian or Chinese vaccines instead.

One glimmer of hope was the announcement by Chancellor Angela Merkel that Germany will not support the Biden Administration’s giveaway. Her spokesperson said: “”The protection of intellectual property is a source of innovation and must remain so in the future.”

French President Emmanuel Macron agreed, saying: “What is the current issue? It is not really about intellectual property. Can you give intellectual property to laboratories that do not know how to produce and will not produce tomorrow? The main issue for solidarity is the distribution of doses.”

It’s humbling that we apparently need reminders from Germany and France about how innovation works. After all, the importance of secure intellectual property ownership is prominently enshrined in our Constitution. Apparently, these are lessons that our leaders forgot—or never knew.

Image Source: Deposit Photos
Image ID:13456035
Copyright:jamesgroup 

The Author

Joseph Allen

Joseph Allen is a Featured Contributor on IPWatchdog.com, and a 30-year veteran of national efforts to foster public/private sector commercialization partnerships, and author of numerous articles on technology management for national publications.

Joe served as a Professional Staff Member on the U.S. Senate Judiciary Committee with former Senator Birch Bayh (D-IN), and was instrumental in working behind the scenes to ensure passage of the historic Bayh-Dole Act. He is our resident Bayh-Dole expert, and will write frequently about Bayh-Dole and issues surrounding the commercialization of university research.

In 2008, Joe founded Allen & Associates, through which he offers consulting services assisting clients in technology transfer issues, including developing effective communication strategies with national policy makers.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 19 Comments comments. Join the discussion.

  1. Anon May 10, 2021 5:30 pm

    I am reminded of certain government views on copy machines (that directly led to Japan taking over that technical market).

  2. Model 101 May 10, 2021 6:43 pm

    This decision and 101 together show that our leaders are really followers..

  3. Pro Say May 10, 2021 7:49 pm

    Easy to give away that which belongs to another.

  4. Pro Say May 10, 2021 8:37 pm

    With anti-America, give-away-the-store-to-our-enemies-for-free decisions like this (and I voted for Biden), is it any wonder almost half the country voted for Trump?

    As whacked as he it, Trump never would have done this.

    Never.

    Trump 2024?

  5. Curious May 10, 2021 10:37 pm

    In one fell swoop he has destroyed tens of billions of dollars in U.S. intellectual property, set a destructive precedent that will reduce pharmaceutical investment, and surrendered America’s advantage in biotech, a key growth industry of the future. Handed an American triumph of innovation and a great soft-power opportunity, Mr. Biden throws it all away.
    Can someone please identify the specific U.S. intellectual property that has been destroyed as of right now?

    Seriously, are Indian companies now go to manufacture COVID-19 vaccines in India and then ship them to the US? Or perhaps they’ll manufacture them in the US and then ship them to India? For if they happen to make them in India and use them in India, then US IP rights are not implicated. Everyone does recognize this … right?

    From my perspective, both sides of this issue are grossly misrepresenting what is going on. Specifically, both sides are latching onto the urgency associated with COVID-19 to make the same argument they have already been making but putting a COVID-19 spin on it. One sides wants to get rid of pharma patents, and the other side wants to keep them. Anybody who has read my stuff over the years knows that I’m very pro-IP. However, I’m anti-disinformation and over-exaggeration.

  6. Ed May 11, 2021 1:31 am

    I agree with Curious and BTW doesn’t India already have compulsory licensing.

  7. Anon May 11, 2021 10:23 am

    Curious,

    I both agree and disagree with you.

    I agree that there is an abundance of “Specifically, both sides are latching onto the urgency associated with COVID-19 to make the same argument they have already been making but putting a COVID-19 spin on it

    I disagree with your attempt to paint this as a “right now” only issue.

    Take a step back and read the points presented in this article (as well as more than one article by Dr. Noonan over at PatentDocs).

    Taking the Alfred E Neuman, “What, me worry?” approach absolutely misses WHY certain countries are pushing hard for IP waiver (that explicitly includes MORE than merely patent waiver).

    You have the cynic view (I would add, appropriately), just do not be so quick to take an Ostrich’s view. That cynic view IS applicable to the larger issues in play.

  8. TFCFM May 11, 2021 10:54 am

    I still say that the Biden Administration announcement is nothing but an unmistakable declaration of what a crass, conniving liar Mr. Biden is.

    He knows darned well that no rational nation (including ours) is going to abandon innovators and that even if IP rights were waived, there would be no acceleration of vaccine deployment as a result.

    Mr. Biden merely seeks to look good before his ultra-liberal fans and supporters while knowingly doing nothing substantive. A liar of the worst sort.

    Shame on him.

  9. xtian May 11, 2021 11:07 am

    I think the unintended consequence is that this will result is less medicines in those countries. Pharma IP will be protected in major markets – think US, JP, and EP (big 5). However, why would pharma expand to CN, IN, etc? The countries already have indigenous manufacturing and clinical trial requirements. So once you set up shop in their countries, now they can just take your IP/know how/trade secrets when they declare an “emergency.”

    I don’t see how this make sense from a financial standpoint?

  10. Curious May 11, 2021 12:04 pm

    I disagree with your attempt to paint this as a “right now” only issue.
    I didn’t say it was a “right now” issue. I said that these sides have been making the same arguments but are now putting a COVID spin on them. In other words, the issue (and arguments) are old and not just “right now.”

    absolutely misses WHY certain countries are pushing hard for IP waiver
    The “WHY” is always easy. It is the easiest question in the book to answer. The answer to “WHY” is always … FOLLOW THE MONEY. Indian pharma companies want to make money too — but flooding the world market with cheap generics. However, they cannot do so if there is strong IP about. This is just a classic example of the “camel’s nose under the tent” or “foot in the door” metaphor. If they can get a waiver here, they want to use it as a stepping stone to get other waivers. This isn’t particularly hard to figure out.

    However, there is a big difference between what you ask for and what you get. The US and EU aren’t dumb. They aren’t going to give away the family jewels. They can give away a meaningless waiver that mollifies the international community, but I doubt they’ll give away anything more.

    Don’t confuse taking an Ostrich’s view with ignoring chicken little. I’m in the latter category.

  11. Jacek May 11, 2021 12:13 pm

    The fact is that in the US, taking into account “Efficient Infringement,” High Courts costs only few can afford, PTAB and 101, patent protection in the US practically doesn’t exist.
    The nonsense about giving away what doesn’t belong to him is a byproduct of Google’s (Big tech) teachings that patents are BAD adopted by some younger people (lawmakers.) from his circle.
    We are facing the consequences of years of antipatent bashing.

  12. Anon May 11, 2021 3:29 pm

    The US and EU aren’t dumb. They aren’t going to give away the family jewels.

    You speak prematurely.

    Exhibit 1: Biden’s statement.

  13. PTO-Indentured May 11, 2021 6:31 pm

    Model 101 @2 “our leaders are really followers… of… — as one leader of thought in the IP realm said as a recent webinar panelist — ““…powerful forces, who want the patent system to stay just the way it is.” Who also added with the federal circuit courts in mind: “Shame on them! Shame on them! for their arrogance” in turning up their noses at the PTO’s recent guidelines, carefully drawn up by the U.S. agency most qualified and in the know to do so.

    Q: So guess where “powerful forces” want U.S. independent inventors / innovators (and a monetarily incentivized congress inaction able to ensure it)?

    A: Powerless — and rendered irreversibly so.

    And apparently, that is just where congress wants them too. Bolster yourselves for more of the same — a decade+ of inaction.

    Did someone mention the word “leaders”?

  14. Curious May 11, 2021 7:18 pm

    Exhibit 1: Biden’s statement.

    This is the only statement I’m aware of from the administration. If you are aware of any other, I would be appreciative of a link and/or quote.

    “This is a global health crisis, and the extraordinary circumstances of the COVID-19 pandemic call for extraordinary measures. The Administration believes strongly in intellectual property protections, but in service of ending this pandemic, supports the waiver of those protections for COVID-19 vaccines. We will actively participate in text-based negotiations at the World Trade Organization (WTO) needed to make that happen. Those negotiations will take time given the consensus-based nature of the institution and the complexity of the issues involved.

    “The Administration’s aim is to get as many safe and effective vaccines to as many people as fast as possible. As our vaccine supply for the American people is secured, the Administration will continue to ramp up its efforts – working with the private sector and all possible partners – to expand vaccine manufacturing and distribution. It will also work to increase the raw materials needed to produce those vaccines.”

    I don’t see where they are giving away the family jewels in terms of forcing tech transfer. It is for COVID-19 vaccines. Not therapeutics. Moreover, you have to love this statement: “Those negotiations will take time given the consensus-based nature of the institution and the complexity of the issues involved.” In other words, the whole process is going to be slow-played — thereby allowing time for the current manufacturers to ramp up and provide those countries with the doses they need.

    Nothing about this statement necessitates the chicken little behavior I’ve seen from a lot of people. Again, if you are aware of a statement that is more onerous, I would love to see it. However, this is the only one I could find.

    What I did find is the following from an article dated yesterday:
    Several experts told STAT that the waiver would be largely symbolic, at least in the short term, as any increases in vaccine production wouldn’t materialize until at least 2022. And giving companies access to secretive vaccine recipes does nothing to ease the worldwide shortage of supplies, nor does it grant them the knowledge and expertise needed to manufacture highly complex vaccines. The Pfizer vaccine, according to spokeswoman Sharon Castillo, requires 280 components from 86 suppliers in 19 countries. “[I]t’s unrealistic to think that a waiver will facilitate ramping up so quickly as to address the supply issue,” she tells the Times, suggesting instead that the WTO should work with companies to give them the money and resources needed to increase their own production.

  15. Anon May 11, 2021 10:45 pm

    Curious – what were the specific words in support of India and South Africa’s bids?

  16. Raymond Van Dyke May 12, 2021 11:39 am

    Reading the above comments, there is skepticism both ways. Did Biden give away the crown jewels? or not? The technical details of others’ vaccine production, safety, approvals, etc., duplicating the U.S. company’s efforts, are unclear on the ultimate answer. However, it is the message that matters. Free IP. In the anthrax crisis years ago, Bayer was threatened to have its patents abrogated, but a deal was reached. Similarly, the Wright Brothers were forced, under national exigency, to license their patents. Biden’s overt action here to compromise the covid patents troubles me, but this Administration’s view toward IP will be made manifest with the appointment of the next USPTO Director. Commerce Secretary Raimondo has said very positive things about IP/patent very recently. Fingers crossed. Clearly, this “gift” to the world sounds good to most, but the very possible deleterious compromise to future vaccine production (the next virus) is too great a threat to take this lightly (why invest if taking by gifting). Also, biologics and other critical technologies also involve copious associated data, which must also be protected.

  17. Curious May 12, 2021 3:14 pm

    @15 Curious – what were the specific words in support of India and South Africa’s bids?
    You tell me. Again, I reproduced the only statement from the US that I’m aware of.

    @16 Biden’s overt action here to compromise the covid patents troubles me
    What is this “overt action” and how are COVID patents in the US being compromised? As quoted from the article, “the waiver would be largely symbolic.” While I understand that the prior administration thought “diplomacy” was a 4-letter word, I still believe that diplomacy is still useful in international relations. When China and Russia are exporting their vaccines to third-world countries, I think it is good diplomacy to say that the US is going to waive IP rights on vaccines. The next time we (i.e., the United States) go asking for help (on whatever issue), do we want the US’s opposition to a vaccine waiver pushed back in our face?

    The sophisticated know that it isn’t IP rights that are preventing vaccines from being distributed. Moreover, this waiver is going to be slow-played at the WHO so as to make it worthless.

    the very possible deleterious compromise to future vaccine production
    How so? A vaccine will be eventually be produced and distributed like this one. The first world countries will be the ones who get it first (because we’ll have developed it and we’ll have the money to pay for it). The third world countries will eventually get theirs following the same kind of equity-based hand-wringing that is occurring now. Pharma companies aren’t going to refuse to develop a vaccine next time because of the waiver being talked about now. They’ve made a boatload of money on this, and they’ll make a boatload more the next time (hopefully there isn’t a next time).

  18. Anon May 13, 2021 9:25 am

    Curious,

    You seem surprisingly NOT curious as to the Biden administration voiced support of what India et al are aiming for.

    This took less than a second to find:

    https://www.jdsupra.com/legalnews/biden-administration-supports-waiver-of-5242849/

    You also seem far too eager to play the ostrich game (nothing to see here, eh?).

    Wake up son.

    Mind you, I am NOT saying that India et al will succeed in their attempt to grab IP waiver (which – critically – involves more than merely patent waiver) – but only a fool refuses to see the larger picture and all of the pieces in play.

    On general matters, you do not strike me as a fool. So I have to wonder, why the lack of curiosity on this topic?

  19. Anon May 14, 2021 11:12 am

    I realize LAW360 is behind a paywall, but from a recent article**, Biden Administration mouthpiece Tai has been VERY carefully threading the needle in view of the FULL support of India’s FULL (including non-patent) IP waiver.***

    Nonetheless (and in face of others who have NOT been playing Ostrich), Tai did share:

    “This administration has committed itself to roll up our sleeves and engage at the WTO, to exercise leadership there, to hear the concerns on both sides of this issue and drive towards a solution that will help to save lives,” she said. “Because without a solution here, we are going to be in an economic recovery limbo for a very long time.”

    Noting that many developing countries supporting the waiver have expressed concern about not being able to make their own vaccines, Tai said she was reminded of “the really important principle that you can give a man a fish and feed him for a day, but you can teach him to fish, and he can have a meal for a lifetime.”

    That “teach him to fish” DOES implicate giving away MORE than just the patent items that would be affected with a smaller scoped patent waiver.

    This is NOT a ‘chicken little’ gambit to turn a blind eye to the necessary ramifications on the table.

    ** Tai Grilled By Congress Again On COVID-19 Vaccine IP Waiver
    By Ryan Davis

    *** I also have to pause to wonder – without necessarily diving into the politics, just why is it that only “R’s” are voicing concerns about the full scale (more than just patent waiver), and that the only “D” referenced in the article appears to be in full support of a full give-away.

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