REFORMING PATENT LAW: THE CASE OF COVID-19.

• Author: Boldrin, Michele

A short time ago the debate over the proposal to temporarily waive intellectual property rights on COVID-19 vaccines was raging worldwide; and the suspension of those rights seemed imminent. Public attention reached its peak in May 2021 when the Biden administration endorsed the idea and committed itself to pursuing it under the World Trade Organization-World Intellectual Property Organization (WTO-WIPO) procedural rules for waiving intellectual property (IP) protection. By suspending IP rights, the administration sought to help low-income countries to start producing vaccines more quickly, reducing the rising and dramatic worldwide vaccine inequality.

It is fair to say that neither the temporary suspension of IP nor the dramatic increase in the supply of vaccines it was supposed to bring about is in the making. In this article, we discuss why this had to be the case; what this teaches us about the economics of vaccine production; and what kinds of changes in IP legislation could increase production and distribution of medical supplies.

Patents and the Global Inequality in Vaccination

While vaccination rates are increasing quickly in wealthier countries, rates in Africa, Latin America, India, and elsewhere are not improving much. So far, the idea of suspending patents has only produced lengthy and ineffective discussions, such as the "High-Level Dialogue" on "Expanding COVID-19 Vaccine Manufacture to Promote Equitable Access" on July 21, sponsored by the World Health Organization (WHO) and the WTO. A summary of that meeting follows:

The event, which was held under the Chatham House Rule, aimed to identify obstacles, and propose solutions for increasing vaccine production and closing the wide gap in vaccination rates between rich and poor countries. Participants described current and projected production volumes as well as plans for new investments in production capacity. They shared experiences about specific supply chain bottlenecks they were encountering, from export restrictions and raw material shortages to onerous regulatory processes and exchanged ideas on how these might be addressed.... While there was broad agreement on the importance of keeping supply chains open and predictable, different perspectives were expressed on the proposed waiver of the WTO's Trade-Related Intellectual Property Rights Agreement provisions pertaining to vaccines and other products needed to combat COVID-19 [WTO 2021].

When it comes to vaccine development and distribution, the facts on the ground are easily summarized:

* Only 27.6 percent of die world population has received at least one dose of a COVID-19 vaccine, and only 14.1 percent is fully vaccinated (Our World in Data 2021). The percentage vaccinated in the poorest countries is in the single digits and often as low as 1-2 percent. The international cooperation project known as COVAX (COVID-19 Vaccines Global Access) has managed to ship only 140 million doses in 137 countries.

* About 18 months after the first vaccines were discovered, their profitability is increasing; and global productive capacity remains concentrated in a few countries and in a little more than a handful of firms (Evenett et al. 2021). Almost 90 percent of the key ingredients used in the vaccines' production come from this small group of countries, creating the material conditions for several anti-free trade policies (Toxvaerd and Yates 2021).

* Both China and India are part of this select club, while Russia is not (BBC 2021). China seems to be playing a game of its own (Mallapaty 2021); and India, the biggest vaccine factory in the world (Frayer 2021), is a major sponsor of the so far unsuccessful proposal to waive patents on vaccines.

We do not claim to provide solutions to global problems of such magnitude. Our goal is modest: we ask whether existing intellectual property regulations played any role in contributing to these inequalities, and suggest possible remedies where we believe a causal nexus exists.

We begin with a brief summary of the reasons why we argued previously (Boldrin, Levine, and Toxvaerd 2021) that the proposal to temporarily suspend patents on vaccines would be futile and divert attention from more relevant issues.

Lessons from the Suspension Debate

At the heart of the idea that by suspending a bunch of patents one could rapidly ramp up worldwide production of highly sophisticated vaccines was and is a myth-the myth of the "secret formulas" covered by a handful of patents. According to this myth (which happens to be the received economic wisdom about innovation), behind every new product, no matter how complex, are several ideas that can be summarized in a simple blueprint. The blueprint must be patented to guarantee exclusivity to its creator; such blueprints are expensive to create; and their cost needs to be recouped.

This mythological view of the economics of technological innovation leads to two incorrect policy conclusions: first, that patents are necessary for innovation, otherwise nobody would incur the expense of creating these blueprints, and, second, that if the patents could be freed, then eveiyone would be able to manufacture vaccines. These incorrect conclusions lie behind the pointless efforts to bring about a suspension of several patents through WTO rules.

This myth is close to the opposite of the truth. Producing a vaccine, or any new drug, is akin to cooking one of the elaborate dishes of contemporary molecular gastronomy. The recipe written on the mythical blueprint is just the start: one needs also to find the cooks capable of following it, the fresh special...