By Eric Crampton 12/05/2021


This week’s Newsroom column covered some of the arguments around increasing vaccination rates in poor countries by voiding patents. It won’t work.

A snippet:

Fundamentally, voiding patents is an unserious way of dealing with a serious problem. The world needs substantial expansions in vaccine manufacturing capabilities as quickly as possible. Replicating the processes used by successful manufacturers is not simple, and constraints against expanding capacity need to be solved by investment.

New Zealand’s contribution to the COVAX effort is laudable. But we remain pound-foolish. Spending a lot more on vaccines by contracting for greater capacity would help New Zealand become vaccinated more quickly, protecting us and providing some hope of normal international travel.

Contracting for capacity would also mean that more vaccines could be produced more quickly for everyone else too, reducing the risk of new variants that could lead to new border closures after New Zealand completes its first round of vaccination.

And, unlike voiding patents, it would preserve incentives to develop vaccines against new threats that might yet emerge.

I also chatted about it with Bryan Crump last night on Radio New Zealand’s Nights programme.

The tech transfer problem seems nearly insurmountable under compulsory options.

What do I mean?

Plenty of vaccines are produced under license by other manufacturers. When that happens, the developer spends a fair bit of time in due diligence making sure that the plant is up for it. There’s a lot riding on it. A bad batch is costly; a bad released batch would be very bad. Quality assurance really matters.

Under voluntary licensing, the IP holder has strong incentive to get this right. They’ll want to make sure the plant can do it, and they’ll want to provide the assistance necessary to make it work. And there’ll be plants whose requests to be licensees get knocked back because they just can’t do it.

Now suppose we followed the abolish patents people’s suggestion. They’ll sometimes acknowledge the importance of tech transfer. But how in heck would they effect it?

There are plenty of cudgels they might threaten the vaccine’s developer with. Governments are like the mafia, they have plenty of ways of making convincing threats. So they make some threats and force the company to send its experts to teach other plants how to use the stolen plans for making vaccines. Now suppose those experts report back that the plant isn’t actually up to the job – it’s likely to produce bad batches.

How can the government’s bullies distinguish between false claims intended as IP protection, and real claims? Remember: If the government actually knew how to build this stuff, it wouldn’t need to rely on the company’s experts to effect the tech transfer. It could just void the patents and send its own officials to teach other plants how to do it.

The only workable ways of doing this seem to be ones that provide strong incentive for the company with the knowledge to have lots of quality output coming out of those licensee plants with incentives for quality control, but that’s what a standard licensing agreement could already provide.

To paraphrase an Alex Tabarrok tweet, it’s as though the anti-patent people think that buying the French Laundry’s cookbook would automatically get a Michelin star for your home kitchen. There’s a reason that top restaurants branching out don’t just send over the cookbook to the new venue.

I think a lot of the anti-patent people are grinding old axes about patents, combined with an innate hostility to the idea that anyone should ever be able to make money in medicine.