Yves here. We are continuing to ring the changes on the theme of “Too much Covid profiteering, time to Do Something.” The initial focus was on getting a waiver on vaccine patents so that other countries could make them. It turns out Moderna saying it wouldn’t pursue violators of its intellectual property was clever PR; this article explains that its vaccine depends on other licenses that it can’t waive.
Another claim was that other countries lacked the technical chops to make such fancy-dancy mRNA vaccines. Our KLG, who has done basic research, says that’s false. I’m not clear on how much of the actual recipe an independent and qualified lab would need and how much they could reverse-engineer. However, the choke point is the US bought many of the critical inputs as part of Operation Warp Speed. And as Jomo points out, developing countries also face obstacles in getting tests.
And before you defend Big Pharma, let me hoist this from yesterday’s Water Cooler:
Intellectual Property: “Who owns the covid vaccines?” [Cory Doctorow]. ““Behind every great fortune lies a great crime.” The true mRNA vaccines theft isn’t entrepreneur-inventors who face robbery by the public sector — rather, those “entrepreneurs” have enjoyed billions in public subsidies, and now insist they owe nothing in return….. Pharma’s claim that it doesn’t owe us anything in return makes no sense, even by the companies’ own logic. They say that markets produce wonders because they reward canny risk-taking with vast fortunes. By that logic, the public — who assumed the majority of the risk in developing vaccines — are the angel investors in this high-tech unicorn, and the pharma companies are the VCs who came in with some late capital to help scale up a sure thing.”
By Jomo Kwame Sundaram, a former economics professor, who was United Nations Assistant Secretary-General for Economic Development, and received the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought. Originally published at his website
Millions of people are expected to die due to delayed and unaffordable access to COVID-19 tests, treatment, personal protective equipment and vaccines. Urgent cooperation is desperately needed to save lives and livelihoods for all.
Vaccine Apartheid
Thus far, rich countries have bought up most available vaccine supplies. By mid-April, rich countries had received more than 87 percent of the more than 700 million vaccine doses dispensed worldwide, while poor countries had received only 0.2 percent.
A quarter of the former’s population had been vaccinated compared to one in 500 of the latter’s! By mid-May, less than a twelfth of the world’s population had been vaccinated, with ten rich countries getting four-fifths of all vaccines. The Pfizer vaccine is mainly reaching the world’s rich.
Despite CEO Alberto Bourla’s promise to ensure that poorer countries “have the same access as the rest of the world”, World Health Organization (WHO) data confirm that Pfizer has actually done little for the world’s poor.
After promising earlier not to profit from the pandemic, Moderna – which has never made a profit after a decade and no other revenue – has decided to profit from its vaccine. Johnson & Johnson and AstraZeneca have both vowed not to profit from vaccine sales during the pandemic.
Pfizer Profits
According to a article, US pharmaceutical giant Pfizer chose early to profit from COVID-19 vaccines, rejecting rival developers’ decisions not to profit from them during the pandemic.
In the first quarter of 2021, Pfizer sold vaccines worth US$3.5 billion, its greatest revenue source. Vaccine sales are fast overtaking Pfizer’s cholesterol medicine, Lipitor, which sold about US$125 billion over the last 15 years.
But profits from vaccine sales have been deliberately obscured. The US pays US$19.50 for each Pfizer dose, while Israel paid over 50% more to accelerate vaccinating its citizens. Last week, the European Union agreed to pay more than before for its vaccines.
Pfizer made US$9.6 billion in profits in 2020, before vaccine revenue was significant. Already highly profitable, Pfizer did not need or take US federal funds under Operation Warp Speed. But its vaccine development partner BioNTech received much support from the German government.
CEO Bourla signed the 2019 Business Roundtable pledge to serve a range of ‘stakeholders’, not only shareholders. Pfizer even joined Covax in January 2021. Selling mainly to rich countries, by April, Pfizer had earned around US$900 million in pre-tax profits from vaccine sales.
Pfizer now expects US$26 billion in such revenue vaccine sales this year, instead of its earlier projection of US$15 billion. It now expects a massive revenue stream with COVID-19 becoming endemic, requiring booster shots. The company is changing business strategy accordingly.
What the Pandemic Demands
With the COVID-19 virus rapidly mutating, almost exponentially, this is not only of concern to poor people and nations, left far behind. Containing the pandemic requires vaccinating the whole world as soon as possible.
Several virus mutations are more contagious, with some deadlier than the original, and some more resistant to existing treatments or vaccines. Although mRNA vaccine developers believe they can be quickly modified against new mutations, there is little disagreement over the urgent need to stem the contagion.
Since 1995, patents have been enforced internationally via the WTO Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement. TRIPS prevents governments giving compulsory licences allowing “someone else to produce a patented product or process without the consent of the patent owner”.
But now, most WTO members support a temporary waiver for COVID-19 tests, treatments, vaccines, diagnostics and other technologies. Although the waiver has become all the more urgent as the pandemic toll rises rapidly, it remains blocked in the WTO.
Technology Transfer Needed
The waiver is legally necessary for progress, but hardly sufficient. Much more is needed to urgently vaccinate the world. Vaccine production has also been constrained by companies refusing to share knowledge and technology.
Even when companies have benefited from government subsidies and public research, private monopolies have little incentive to quickly supply many more vaccines affordably. Enabling and, if needed, requiring knowledge and technology transfer are clearly necessary.
Not a single major vaccine or pharmaceutical company has joined the WHO COVID-19 Technology Access Pool (C-TAP) initiative to share such knowledge. Licences and technical know-how to produce vaccines have been denied to many potential manufacturers, even those with the necessary facilities.
Taxpayer-funded basic and applied research has been essential for COVID-19 vaccine development. For example, US National Institutes of Health (NIH) patented technology is necessary to make mRNA vaccines, with Pfizer using BioNTech’s licence.
Noting that “the Biden administration has already persuaded Johnson & Johnson to share its technology with Merck to boost domestic production of its single-dose vaccine”, Jayati Ghosh suggests that “other companies that have benefited from public support could be pressed to do the same”.
“Moderna… has already declared that it will not enforce its patent. But its… vaccine uses some knowledge that it has licensed (and paid for) from other companies, which could in turn sue any other producer using the same technology.” The TRIPS waiver would eliminate such legal threats, allowing production to be rapidly scaled up.
What the World Needs Now
The current generation of COVID-19 vaccines only mitigates the severity of infections, rather than eradicates the disease, as with polio or smallpox. Thus, our world is now trapped in a seemingly endless spiral of ‘catch-up’ vaccine development with new boosters to mitigate perceived new threats.
To achieve real progress, the world desperately needs cooperation, not only among researchers working for competing vaccine developers, but also among governments who can – and must – end the protracted genocide and greater catastrophe the world is now in.
Warning “that private vaccine producers have little financial incentive to meet current global needs”, Ghosh also makes the case for public production in the US and elsewhere.
Citing a health advocacy organisation report, she argues that “the US government can build a facility to produce enough mRNA vaccine manufacturing capacity to vaccinate the entire world in one year, with each dose costing only $2”.
Sharing knowledge and working together are clearly needed to accelerate innovation. As governments have paid, directly and indirectly, for vaccine development, they can now quickly accelerate further progress needed. Previously, I suggested using the 1980 Bayh-Dole law, but in fact, this is specifically excluded by the US government contract with Moderna.
Instead, Dean Baker has noted that Section 1498 of the US commercial code provides the necessary legal authority. Thus, needed technological expertise, including trade or industrial secrets, can be either bought or otherwise secured by government authorities.
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I was Happy to see Dean Baker cited at the end of this article. (I claim to be a friend of his; on my own accord, I acquired a hard copy of his doctoral dissertation and actually read it.)
The fight in which Dean and other economists (e.g. Professor Michael Hudson) are involved is best waged, I believe, from within the classical paradigm. As I understand it – and there are certainly economists more learned than I in the field of History of Economic Thought – the whole “project” of the classical paradigm was to break the power of the [parasitical] rentier class.
And now, humanity has reached the point where this class, in the form of pharmaceutical giants that have locked up key patents, is willing to let people die by the millions to protect their profits. I just hope that college students of economics will hear about Dean Baker and Michael Hudson, and ask that Econ departments start teaching their work.
Baker’s site Beat the Press took up the fake news issue long before it was fashionable. But in his case it was a debunking of fake news in the NY Times and Washington Post. Now we have the fake fake news response based on “the best defense is a good offense.”
Way back in Web 1.0 he and Doctorow attacked the premises of rentier America with common sense.
The seminal “media critique” site was “Media Whores Online,” long defunct. I think Atrios got his start there, as a commenter.
I like dean, he fights a lonely battle over patents and he’s managed to be consistent through the crazy years…
Looks like an open italic at the link to “article” on pfizer profits that needs a close or to be excised…
I think that I mentioned a possibility a long time but will repeat it here in case I did not. So the Big Pharma companies keep a lock on these vaccines through ‘bought’ politicians from different countries so that they can assure themselves a massive revenue stream as each year people have to get the latest vaccine variation to meet the latest virus variation. The rest of the third world is left to pound sand unless they can secure supplies of vaccines from Russia, China, Cuba or one of the other suppliers. But with each person infected in the third world there is the possibility of a more lethal, more easily spread variation of this virus evolving. One that can blow through the big name vaccines as if they were not there.
Through loose border controls and people insisting that they had to have that overseas holiday, this virus is then spread throughout the rest of the world by the airlines still flying. Pretty soon it is not so much 2020 but 1919 all over again as people are forced to go back into severe lockdowns and economies grind to a halt. It would be an order of magnitude worse than it was last year and god knows what the social, economic & political consequences would be. You would hope that at that point, that Big Pharma executives would be rehearsing their testimony but I would expect that politician would sooner throw them to the wolves than risk being taken down themselves.
I should hope that this time we would know better what to do with a coronavirus mutant and can skip the hysteria, hygiene theater and (if extremely lucky) the politicization of the whole thing.
We have managed to survive generations of seasonal influenza resurgences without blaming the other political party.
Are we missing a close for italics somewhere, or is just me seeing all comments italicized?
A complex web of intellectual property (IP) protects the mRNA patents. There is no simple waiver that can hand the over IP. A feature in the latest Nature Biotechnology journal has some diagrams sketching the firms and IP relationships protecting mRNA vaccines.
“A network analysis of COVID-19 mRNA vaccine patents”
https://www.nature.com/articles/s41587-021-00912-9.pdf
Instead of playing games with TRIPS and acting as though there were some quick way to untangle one of the IP webs Big Pharma has crafted over decades to protect and extend its monopolies, why is there no discussion about the US Government stepping in to ramp up production of the mRNA vaccines in the US at the firms with working production facilities and most ready capability to expand production. The Government could step in to take care of problems like the single use plastic tank liners, single use tubing and sample devices, pipette tips, test tubes, …
Why Are There Shortages of Plastic Bags Needed for Vaccine Production? Monopolies and Patents.
A pharma talking point is “Plastic bags are a bigger bottleneck than patents.” It’s time to ask, why is that?
https://mattstoller.substack.com/p/why-are-there-shortages-of-plastic
The world needs vaccines not a special IP waiver and a play to weaken TRIPS.
i will see your stepping in and raise you a nationalize
https://www.marketwatch.com/story/rick-bright-wants-to-wipe-out-this-virus-but-its-going-to-take-better-covid-19-vaccines-distributed-to-70-of-the-worlds-population-11621345335?mod=home-page/
“Bright wants to see a better strategy for getting rid of the virus altogether. “We don’t have to let it become endemic,” he said…”
“I saw a report by Bloomberg that really gave me pause. And that was that the U.S. CDC has made a determination to not sequence all of the viruses from the vaccine breakthrough cases. Those are, in my opinion, the most important viruses that we should look at. Because those are the viruses infecting people who are supposed to be protected. Those are where the virus variants are going to appear, where mutations might occur, and the viruses there are already escaping immunity. That is where I would focus…”
> the U.S. CDC has made a determination to not sequence all of the viruses from the vaccine breakthrough cases.
WTF! (Got a link? We know the CDC nuked asymptomatic breakthrough reporting, but sequencing?
Just browsing around and it caught my eye too. This author is claiming “Bloomberg” as a source.
The NY Times had a recent article explaining the basics of how Pfizer makes their mRNA vaccine. It doesn’t look much more complicated than the recombinant technology that is used to manufacture insulin, which developing countries in Africa can now produce in factories. And a country could probably hire a construction company like Fluor, who are the contractors that actually build these facilities.
If it were all so easy — why not just step up production in the US? There are plenty of small players in Big Pharma who could just as readily step in to ramp up production of vaccine. The issue is that too little vaccine is being produced and equitably and shall I add ‘Wisely’ shared [assuming all is well with the vaccine — since so little data is being collected for its post phase II trials]. I think the “basics of how Pfizer makes their mRNA vaccine” is exactly why Big Pharma will fight tooth, nail, and nuke to hold on to the patents and IP rights chains they built around their mRNA vaccines. The Corona vaccine was just a very nice bonus to a technology Big Pharma hopes to exploit developing a fat cornucopia of extremely lucrative ‘treatments’ that give and give like booster/period-continued-‘treatment’ shots and light bulbs.
It would be very nice if the developing countries in Africa could please supply more insulin to the US at a more reasonable price. Maybe one of our states could work a trade of some kind — some of their vaccine allotment for insulin. If you have any pull … please! And yes I am being very facetious. I think we both know the root problem in the production and sharing of vaccines or of insulin is extremely remote from the issues underlying the issues raised in this post. TRIPS, patent nets, waivers, and compulsory licenses, are but the tip of the iceberg.
I agree that patents, licenses, and various IP are central to the problem of why there is too little vaccine specifically in the developing world. What I was getting at above is that most countries are probably capable of manufacturing these mRNA COVID vaccines, but as you mention they currently are not allowed to.
Regarding insulin, its uniquely high price in the U.S. is a consequence of Medicare being prohibited from negotiating drug prices, and because of an extensive chain of rebates (aka kickbacks) between drug manufacturers, wholesalers, insurers, and pharmacies. This has nothing to do with its actual cost of production or scarcity. Insulin is a 100 year old drug whose global production exploded because of recombinant DNA technology in the 1970s.
I did not argue that patents, licenses, and various IP are central to explaining why there is too little vaccine in the developing world — or in the US for that matter. I intimated a far larger, much more odious, explanation for the scarcity of vaccines, and elliptically suggested some far than flattering explanations for the “developing world’s” push to relax TRIPS to allow a waiver for producing Corona vaccines. Big Pharma in the US has identified Corona vaccines as a potential cash cow — and mRNA vaccines — as both a remarkable and given the cash flows from the Corona vaccines — a most fortuitous future cash cow for future PROFITS. Think harder! Most countries are “probably capable of manufacturing these mRNA Corona vaccines” and a great deal more if they were but given the IP, tools, and needed “know-how”. AND they can probably produce them much more cheaply — since they can exploit cheap labor, lax safety controls, “adjustable” quality controls, pliant government regulation — and can do so with few costs associated with research, or development. I have no love for US Big Pharma but I would not trust to the promises and Good Will of non-domestic Big Pharma.
Regarding insulin — I was intimating that the price of insulin has nothing to do with its costs of production. I do not agree that Medicare prohibitions are the root cause for the high prices charged for insulin .. but one among many causes. The root cause is the unregulated monopolies of Big Pharma.
I think there is an open italics HTML marker somewhere, everything after the first paragraph under “Pfizer Profits” heading is in italics.
Maybe it is time to take another look at the usefulness of IP in general. Here are some sources on the matter I found interesting:
Intellectual property: an unnecessary evil
https://www.adamsmith.org/blog/economics/intellectual-property-an-unnecessary-evil
Rethinking IP Completely | Stephan Kinsella
https://www.youtube.com/watch?v=oRqsdSARrgk
“Tragedy of the Commons”: Intellectual Property Rights in the Information Age
The Threat to Civil Liberties and Innovation Posed by Expanding Copyrights
By Robin D. Gross
Published by MIT Press, 2006
https://www.imaginelaw.com/tragedy-of-the-commons-intellectual-property-rights-in-the-infor.html
IP history. (Stanford Encyclopedia)
https://plato.stanford.edu/entries/intellectual-property/
The NY Times article explanation is quite helpful and I agree from that it seems just about any country could easily carry out at least the first steps. The article doesn’t include how the synthetic nucleotides are produced that are incorporated in the mRNA to make it more stable or how the lipid solution is manufactured and the steps required to make those chemicals. Of course this technology should be easily modified to produce just about any mRNA message so it is also easy to understand why the pharmaceutical companies don’t want it widely distributed as there is great potential for future profits for anyone who has a monopoly on the process.
Maybe it “is time” … LONG past time to take another look at the usefulness of IP as presently implemented.
Here’s a slightly different take on the subject of IP:
“Melancholy Elephants” by Spider Robinson
> Pfizer now expects US$26 billion in such revenue vaccine sales this year, instead of its earlier projection of US$15 billion.
To be fair, the article should report what margin they expect to earn on the vaccine. If the margin is 0, this can hardly be seen as profiteering.