We are in a situation where we can be waiting several months for a vaccine, after one has already been demonstrated to be safe and effective, because the Trump administration opted to pursue a route of patent monopoly research, as opposed to open-source collaborative research.
If Trump had gone the latter route, as soon as China or anyone had a vaccine, everyone would have a vaccine, or at least everyone would be able to manufacture it.
As it turned out, Trump quite explicitly turned the development of a vaccine into a race. He created “Operation Warp Speed,” to which he committed more than $10 billion of public funds. This effort is supposed to develop both vaccines and treatments for the coronavirus.
The funding takes a variety of forms. Several companies received some upfront funding, but are relying primarily on advance purchase agreements for an effective vaccine. For example, Pfizer signed a contract that commits the government to buy 100 million doses for $1.95 billion ($19.50 per shot), if it has a successful vaccine.
By contrast, Moderna relied largely on upfront funding, getting $483 million for its pre-clinical research and phase one and two trials, and then another $472 million to cover the cost of its phase three trials. Incredibly, after largely picking up Moderna’s development costs, the government is also allowing Moderna to have a patent monopoly on its vaccine. This means it will effectively be paying Moderna twice, first with the direct funding then a second time by allowing it to charge monopoly prices on its vaccine.
This nationalistic patent monopoly route was the one Trump choose to pursue. It should be mentioned there was little visible opposition from leading Democrats in Congress.
But, we could have taken a different route. We could have looked to pool research, not just nationally, but internationally. This would mean that all research findings would be posted on the web as soon as practical and that any patents would be placed in the public domain so that everyone could take advantage of them.
Since some folks have a hard time understanding what incentive Moderna would have if they weren’t getting a patent monopoly, let me explain: they would be getting paid.
Just as most of us work for money, not patent monopolies, Moderna, and other drug companies developing vaccines or treatments would be getting paid directly for their research. Their incentive would be that they presumably want to continue to get paid. If they went two or three months and had nothing to show, then they would not continue to get paid.
This is the idea of working for money. I thought that most economists were familiar with it, but when it comes to financing drug research, they seem to view it as an alien concept.
If we had leadership in the United States that was committed to pursuing a path of open research, then presumably it would be possible to quickly work out a deal that countries were reasonably satisfied.
Anyhow, in this world of open research, if it turned out that China’s vaccines were showing more promise earlier than the ones developed by Pfizer and Moderna, and other U.S. companies, we would be able to manufacture and mass distribute their vaccines, as soon as the Food and Drug Administration (FDA) approved them. No one would need permission from China since the research was open, anyone could manufacture the vaccines who had the capability.
If we had gone this route, if the Chinese vaccines are shown to be safe and effective before the vaccines developed by U.S. companies, we would not be left waiting. If China or any other country had a vaccine, we would as well. This system still leaves a problem for developing countries who lack manufacturing capabilities, but at least intellectual property concerns would not be preventing people from getting a vaccine or treatment.
It is hard to understand how, not just mainstream Democrats, but even progressive leaders like Senators Bernie Sanders, Elizabeth Warren, and Representative Alexandra Ocasio-Cortez, were not pushing for an open research response to the pandemic. This almost certainly would have given us a vaccine more quickly.
However, an open research approach to the pandemic also could have been a very important model for biomedical research more generally. If we went a route of financing research upfront and putting all patents in the public domain, it could save us $400 billion a year on prescription drug spending. This comes to more than $3,000 per household. It is more than twice the size of the Trump tax cut. This is real money.
Patent monopolies also have a lot to do with inequality. We are often told that technology is a big part of the story of upward redistribution over the last four decades. While this story is frequently exaggerated, insofar as it is true, it is because we have designed patent and copyright laws so that some people can get very rich at the expense of everyone else. Bill Gates would still be working for a living if the government did not give Microsoft patent and copyright monopolies on its software.
It is more than a bit bizarre that political figures who devote so much effort to combatting inequality look the other way when we design a pandemic health care research plan that both slows research progress and gives more money to those at the top.
In the case of the pandemic, it is not just leading to inequality it is also costing people’s health and their lives. Progressives should be paying attention.
Dean Baker is an economist and writes a blog beat the press.