The Crux of the Patent Debate

US President Biden’s push to waive patent rights for coronavirus vaccines has provoked a heated debate about ways to improve the vaccine supply, especially in developing countries. But would waiving patent rights actually be an appropriate instrument? Proponents argue that exclusive patent rights are partially responsible for the catastrophic lack of coronavirus vaccine in many countries. By contrast, opponents of a patent protection waiver insist that the vaccine shortage has nothing to do with patents, but has instead resulted from inadequate production capacity.

Which argument is more persuasive? To be sure, the crux of the debate relates to the business model of the pharmaceutical industry. Since the research and development of new vaccines and drugs is laborious, risky, and expensive, current practice has the successful firm retain a monopoly right to the marketing of products for a limited period of time. In the case of COVID-19, though, the prospect of large profits in combination with government support led to the development of multiple vaccines using various techniques – thus undermining the notion that these firms are actual monopolists.

With respect to the desire to expand production capacity, there is already considerable competition between vaccine manufacturers. In addition, pharmaceutical firms cannot set textbook monopolist prices for their vaccines because they must negotiate the price with each country. This limits the power of the monopolists. Furthermore, there are options for increasing vaccine production without waiving patent protection. One example is the World Health Organisation’s COVAX initiative, which aims to enable more rapid access to vaccines for poorer nations. The COVAX budget could be expanded not only to purchase vaccines but also to increase production capacities. Yet another proposal is to forbid export bans on vaccines and other major precursor products, in order to prevent ‘vaccine nationalism’. Opening the market in this way could become part of an international agreement that would supplement the COVAX initiative.

Nevertheless, patent rights are not unproblematic in the current pandemic situation: given the risk of multiple virus variants, it might be crucial to promote further research on coronavirus vaccines and drugs. Also, research to develop new vaccines with a longer period of immunity protection would be an important step to preventing COVID-19 flare-ups in coming years. The temporary suspension of patent rights with the option of deploying proprietary knowledge across a broad front for such research purposes could provide a forceful impetus for such vaccines. The suspension would relieve research institutions and private firms from fears of patent infringement lawsuits.

A suspension of patent rights for research purposes extends beyond a waiver of proprietary rights and could be problematic with regard to its incentive effect for future research. Nevertheless, given the global threat of new virus variants, it would appear to be an appropriate instrument in the current situation. This is especially true given the fact that current patent holders would obtain access to patents held by other vaccine manufacturers for research purposes. Such an exemption clause would increase competition between patent holders and firms whose research was previously unsuccessful – and thereby contribute to better preparing the world for new virus variants.