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Patent protection, access to Covid vaccines and the right to healthcare versus corporate profits

Patent protection, access to Covid vaccines and the right to healthcare versus corporate profits
Alexis Habiyaremye
By Alexis Habiyaremye
23 Oct 2022
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The choice of developed countries to make a fortune out of Covid-19 vaccines and their refusal to share related technologies with developing countries is a manifestation of a divide in social identity, rather than a supposed need to stimulate innovation.

The outbreak of Covid-19 and its spread around the word led to the emergence of a shared sense of human vulnerability in the face of a deadly virus.

As the devastation of the deadly virus terrified the world and neither a cure nor preventive means was available, collective vulnerability seemed to call for global solidarity to fight the pandemic. This illusion of a newly found solidarity, however, did not last long.

The infamous calls by some French scientists to test the vaccine under development on Africans sent the chilling message that even in the face of a common danger, asserting power and influence was more important than saving human lives.

The subsequent development and hoarding of vaccines by rich countries in the West brought into focus intensive debates on the trade-off between patent protection and the right of populations around the world to have access to life-saving vaccines.

The sheer magnitude of profits generated by patented Covid-19 vaccines has also raised significant concerns about the acceptable appropriation of innovation benefits, especially if one considers that many innovations in the industry are based on initial discoveries funded through public investments.

The Moderna Covid-19 vaccine, for example, generated a total revenue of $18-billion for the year 2021, with a corresponding pre-tax profit of $13-billion (a profit margin of 70%), whereas the Pfizer-BioNTech vaccine generated $37-billion in the same period.

The high sales prices of life-saving pharmaceuticals during life-threatening situations — such as the sale of Covid-19 vaccines at $37 per dose to some developing countries — also raises ethical concerns.

At the height of the pandemic, when more than 6.5 billion vaccine doses had been administered globally by the end of September 2021, 75% of all vaccines produced had been appropriated by high and upper middle-income countries, with no more than 0.5% going to low-income countries.

Most Covid-19 vaccine producers in Western countries have refused to share the technology and know-how that would have enabled developing countries to produce the needed vaccine doses domestically.

Major mRNA-based vaccine producers have also declined to support public health-oriented licensing, despite intensive lobbying for equitable access by South Africa and India.

The World Health Organization (WHO) estimates that the monopolisation of patented vaccines led to an effective exclusion of 56 low-income countries (most of them being in Africa) from reaching their WHO vaccination targets.

Innovation stimulation


The usual argument in support of stringent patent protection, which enables pharmaceutical firms to make these excessive profits, assumes that the ability of pharmaceutical firms to appropriate monopoly rents is essential to stimulate investment in research and development and to maintain the motivation and capacity to innovate.

Additional arguments in support of patent protection include the exploration control theory, which suggests that by granting exclusive control of innovation through patenting, society can prevent different firms from wasting resources in a race to discover the next generation of the patented product, and thereby avoid a disorderly innovation trajectory.

Beyond the innovation stimulation arguments, however, is the use of loopholes in patent protection laws as a strategic tool to stifle competition and keep the control of the innovation trajectory in the hands of powerful companies. This has adverse implications for the right to life, with potentially devastating consequences.

Pharmaceutical firms, for example, make frequent use of defensive and offensive patenting strategies such as “nuisance patents”, “fencing” and “patent flooding”, which are more intended to block potential competitors than to advance their own technological portfolios.



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Non-economic considerations


Because of its extensive use of strategic patenting, the pharmaceutical industry’s patent regime is often pointed out as having moved from a system aimed at protecting inventive activity to one that has become the symbol of intellectual capitalism focused on exploiting market exclusivity.

In a recent study, I use arguments from social identity theory to show that within a social group that values a strong shared identity in the face of a common threat, the inclusion of non-economic considerations in the making of decisions about the procurement of life-saving pharmaceuticals yields better social welfare than relying on the exclusive use of patent protection.

Its associated compensation mechanism also provides for enough incentives to innovate, while creating the conditions for a creative economy capable of fostering specialisation in innovations separately from their commercial exploitation.

In a society where basic social needs of citizens are satisfied, the shift of the value system towards the achievement of social goals (such as cooperation, sociocultural wellbeing and environmental sustainability) makes a creative economy possible. Individuals can be prepared to sacrifice the maximisation of their own personal rewards to advance the collective objectives of the group within which they feel a strong sense of social identity.

The power of social identity is already applied by the extra-welfarism theory in health economics, which considers the maximisation of health outcomes as the main objective, irrespective of whose health receives the needed care within a society

The choice of developed countries to make a fortune out of Covid-19 vaccines and their refusal to share related technologies with developing countries is therefore primarily a manifestation of the divide in social identity between them, rather than a supposed need to stimulate innovation.

A reminder that when solidarity fails, only bargaining power prevails. The efforts by South Africa to develop a local vaccine production capacity are therefore laudable, as they privilege access to technological knowledge over profits. DM

Professor Alexis Habiyaremye is senior researcher in the DSI/NRF South African Research Chair in Industrial Development at the University of Johannesburg.

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