Intellectual property considerations will hamper the development of a vaccine
With the arrival of COVID-19, it is now painfully obvious that such monopolization comes at the cost of human lives. Monopoly control over the technology used in testing for the virus has hampered the rapid rollout of more testing kits, just as 3M’s 441 patents mentioning “respirator” or “N95” have made it more difficult for new producers to manufacture medical-grade face masks at scale. Worse, multiple patents are in force in most of the world for three of the most promising treatments for COVID-19 – remdesivir, favipiravir, and lopinavir/ritonavir. Already, these patents are preventing competition and threatening both the affordability and the supply of new drugs. […] The same problem will also apply to any potential COVID-19 vaccine.
Patents vs. the Pandemic
By: Joe Stiglitz, Arjun Jayadev, Achal Prabhala – Columbia University, Azim Premji University, Shuttleworth Foundation
How to eliminate monopoly distortions and incentivize the development of a vaccine
As private incentives to accelerate vaccine development may not correspond with social benefit, Michael Kremer is proposing a funding structure that could provide the incentives necessary for a timely development and large scale manufacturing of a vaccine. This entails:
- The selection of 14 candidates necessary for a 90% chance that at least one vaccine will be available within 18 months;
- The government should provide direct financing to cover 80% of the cost of manufacturing capacity. Kremer calculates this amount to be around $72.5bn for 14 vaccines;
- Firms will be required to cover 20% of capacity cost, so they have skin in the game;
- Provide “pull” funding to make marginal firm willing to participate: this implies setting the price per dose at $35 for the first billion, $5 for the subsequent 3.5 billions. Total pull funding estimated at $52.5bn.
Encouraging the development and manufacturing of vaccines and diagnostics
By: Michael Kremer – Harvard University
The advance market commitment
The strategy described above is called advance market commitment (A.M.C.) and is a win-win solution because:
- It reduces the risk to firms from building production capacity or repurposing it from other uses before vaccine testing is complete;
- Firms can also be confident that if they develop a successful product, the government will not expropriate their intellectual property or use regulatory powers to drive down prices to a point where they cannot recover their investment;
- An advance market commitment reallocates some risk to the public sector while unleashing the resources and inventiveness of the private sector to accelerate the delivery of a vaccine.
In the Race for a Coronavirus Vaccine, We Must Go Big. Really, Really Big
By: Susan Athey, Michael Kremer, Christopher Snyder, Alex Tabarrok – Stanford University, Harvard University, Dartmouth University, George Mason University
