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intellectual property
WTO Pens 'Love Letter to Patents' as World Suffers From Big Pharma Greed
The World Trade Organization posted a Valentine's Day-themed poem just hours after failing to challenge the pharmaceutical industry's monopoly control over Covid-19 tests and treatments.
Feb 14, 2024
The World Trade Organization drew the ire of public health campaigners on Wednesday by failing to loosen the pharmaceutical industry's grip on Covid-19 tests and treatments—and subsequently posting to social media what one group described as a "love letter to patents."
The WTO said Wednesday that "consensus could not be reached" on whether to waive patent rights on coronavirus therapeutics and tests, an announcement that Health Justice Initiative founder Fatima Hassan called "a real slap in the face."
"It's proof of what we have been saying all along, that the WTO does not serve the interest of patients in the Global South because it is hijacked by high-income countries. This decision is a sign of whose lives are seen to matter the most," Hassan toldThe Guardian. "Global South governments are going to have to urgently reconsider what it means to be part of this bizarre one-sided system."
Adding insult to injury, the WTO marked Valentine's Day by posting on X—formerly Twitter—a poem that reads, in part: "Your love is like a patent, so rare and true/A work of art that only I can view/And just like some IP rights, it can never expire/Our love is like a never-ending fire."
"Is this a parody account?" the U.S.-based consumer advocacy group Public Citizen wrote in response. "Or did the WTO really just tweet a love letter to patents... on the same day it decided to prioritize patents over access to lifesaving Covid treatments in developing countries?"
"Rich countries, including our own, were not brave enough to stand up to Big Pharma to save lives."
In the summer of 2022, the WTO reached an extremely narrow agreement that clarified governments' power to use compulsory licensing to increase Covid-19 vaccine production without the consent of patent-holding pharmaceutical corporations.
The deal, condemned as a "sham" by public health campaigners, came after India, South Africa, and other nations pushed for an ambitious patent waiver that would have removed barriers to coronavirus vaccine production and access in developing countries, which were hit hardest by the pandemic.
The agreement that the WTO reached in June 2022 stated that "no later than six months from the date of this decision, members will decide on its extension to cover the production and supply of Covid-19 diagnostics and therapeutics."
But the WTO blew through that deadline as rich countries, including the U.S. and Switzerland, stood in the way of an extension.
Melinda St. Louis, Public Citizen's Global Trade Watch director, said in a statement Wednesday that "we will never forget the critical time the WTO wasted or the untold lives lost because rich countries refused to share the doses and knowledge that scientists around the world and public funds helped produce."
"Big Pharma's unfathomable profit margins would have hardly budged under this modest proposal, but their CEOs and lobbyists did not want the precedent of another WTO decision shifting the needle even slightly away from their sacrosanct intellectual property rights and toward public health," said St. Louis. "The urgency of the proposal became clearer after the U.S. government's October 2023 study revealed the ongoing unmet need for Covid treatments. Yet, rich countries, including our own, were not brave enough to stand up to Big Pharma to save lives."
"We thank South Africa, India, and the many governments, public health organizations, and global justice advocates who supported the original comprehensive waiver and helped shine a light on our trade regime's deadly prioritization of intellectual property over public health," she added.
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WHO Pandemic Treaty Draft Provides 'Glimmer of Hope,' Say Health Justice Advocates
"As negotiations over a pandemic treaty begin in earnest, governments must look to the greed, nationalism, and profiteering that characterized the world's response to Covid-19 and say: 'never again.'"
Feb 01, 2023
As a draft of the World Health Organization's pandemic treaty circulated Wednesday, human rights champions praised the text as a welcome departure from the corporate-friendly intellectual property regime that has constrained the global supply of lifesaving medical tools and worsened preventable suffering throughout the coronavirus pandemic.
"After the collective trauma of the Covid-19 pandemic, we have a glimmer of hope," Mohga Kamal-Yanni, policy co-lead for the People's Vaccine Alliance, said in a statement. "This text contains measures to provide everyone, everywhere with access to the tools needed to prevent and combat pandemics."
"This draft marks a powerful recognition that pandemic response cannot succeed on charity, rather it requires global solidarity."
Kamal-Yanni was not alone. James Love, director of Knowledge Ecology International, said that the WHO pandemic treaty draft "is surprisingly strong on several topics."
Love pointed to the draft treaty's intellectual property provisions, which stipulate that in the event of a pandemic, parties "will take appropriate measures to support time-bound waivers of intellectual property rights that can accelerate or scale up manufacturing of pandemic-related products."
Among other things, the text also states that parties "shall encourage all holders of patents related to the production of pandemic-related products to waive, or manage as appropriate, payment of royalties by developing country manufacturers on the use, during the pandemic, of their technology for production of pandemic-related products, and shall require, as appropriate, those that have received public financing for the development of pandemic-related products to do so."
\u201cThe WHO zero draft of the pandemic treaty is out, it is surprisingly strong on several topics. This is one section on intellectual property rights.\u201d— James Love (@James Love) 1675249804
Dose hoarding by high-income nations and knowledge hoarding by pharmaceutical corporations whose Covid-19 vaccines, tests, and treatments owe their existence to billions of dollars in public funding has resulted in artificial scarcity, prolonging the pandemic while turning several executives into billionaires. According to the latest figures from Our World in Data, less than 27% of people in low-income countries have received a single jab to date, and similar inequalities have been observed with respect to therapeutics and diagnostics.
Policymakers from wealthy countries have refused to force profitable drugmakers like Pfizer and Moderna to relinquish their monopoly power over publicly funded technology even as the pandemic's global death toll soared to well over 15 million. The coronavirus continues to kill nearly 2,600 people around the world each day. Moreover, excess mortality—an estimate of the difference in the number of deaths that occur amid a crisis compared with what would have been expected under "normal" conditions—has been four times higher in poorer countries than rich ones throughout the pandemic.
The emerging pandemic treaty acknowledges this injustice, declaring that the document's creation began in December 2021 in response to "the catastrophic failure of the international community in showing solidarity and equity in response to the coronavirus disease."
Kamal-Yanni stressed Wednesday that the new WHO document "is a draft, not a final text."
"Governments need to demonstrate their commitment to a treaty based on equity and human rights" during negotiations, she said.
The WHO's Intergovernmental Negotiating Body (INB), which assembled the draft and will lead negotiations, is scheduled to meet next on February 27. It has until the WHO's 2024 World Health Assembly to finalize the pact.
Health Policy Watchreported that the draft "is unlikely to survive in its current form given the strong pharmaceutical lobby, particularly in the European Union," while Kamal-Yanni tweeted, "Now the real fight begins!"
\u201c@FilesGeneva @ThiruGeneva @WHO Now the real fight begins! The negotiation is a Litmus test of how serious1) rich govts are about equitable access to medical tools, & preventing n controlling pandemics and 2) developing countries are about prioritising healthcare\n@peoplesvaccine \nBoth have to address funding\u201d— Geneva Health Files (@Geneva Health Files) 1675250968
James Cole, advocacy manager at STOPAIDS, echoed his colleagues.
"This draft marks a powerful recognition that pandemic response cannot succeed on charity, rather it requires global solidarity," Cole said in a statement. "With vaccines, tests, and treatments being delivered thanks to billions in public funding, it is welcome to see this text include support for intellectual property waivers, increased local production capacity, and conditions on public funding for research."
"The text is a strong first step to loosening the grip on intellectual property that Big Pharma companies have used to uphold monopolies and deny access to lifesaving health tools through the Covid pandemic," Cole continued. "By loosening this chokehold, the world will not have to fight the next pandemic with one hand behind its back."
"However," he warned, "language of 'promoting' and 'encouraging' manufacturers to enact the measures outlined lets industry off the hook and should be strengthened to ensure all stakeholders are committed to achieving an equitable pandemic response. Now, low- and middle-income member states must stand firm through negotiations and ensure that rich nations do not dilute the text in the interests of private profits."
"Low- and middle-income member states must stand firm through negotiations and ensure that rich nations do not dilute the text in the interests of private profits."
Kamal-Yanni, for her part, stated that "building manufacturing capacity in developing countries is critical to controlling pandemics, which will ultimately save lives everywhere."
Notably, the WHO has sought to facilitate knowledge sharing and ramp up local production capacity in low- and middle-income nations through its mRNA Vaccine Technology Transfer Hub.
The first consortium—based at Afrigen Biologics in Cape Town, South Africa—has successfully replicated the mRNA Covid-19 vaccine co-created by Moderna and the U.S. National Institutes of Health despite Big Pharma's best attempts to undermine their work.
As of last April, 15 manufacturers in developing countries have been named as "spokes," or recipients of mRNA technology and training from the Afrigen hub. In addition, the WHO has teamed up with South Korea to establish a global teaching facility that can share best practices.
Bolstering such efforts "will address the injustice of the Covid-19 and AIDS pandemics that saw people in lower-income countries forced to wait at the back of the line for vaccines, tests, and treatments," said Kamal-Yanni.
“To achieve this, we need more than just words," she continued. "Governments must commit to sharing medical technology and know-how. The intellectual property rules that uphold pharmaceutical company monopolies must be waived automatically when a health emergency is declared. And governments must place conditions to ensure that publicly funded innovations are available to manufacturers in the Global South."
"As negotiations over a pandemic treaty begin in earnest," Kamal-Yanni added, "governments must look to the greed, nationalism, and profiteering that characterized the world's response to Covid-19 and say: 'never again.'"
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Industrial Policy Is Not a Remedy for Income Inequality
We have to recognize that the upward redistribution of the last four decades was not something that just happened, it was the outcome of deliberate policy choices.
Dec 26, 2022
The idea of industrial policy has taken on almost a mystical quality for many progressives. The idea is that it is somehow new and different from what we had been doing, and if we had been doing industrial policy for the last half-century, everything would be better.
This has led to widespread applause on the left for aspects of President Biden’s agenda that can be considered industrial policy, like the CHIPS Act, the Inflation Reduction Act (IRA), and the infrastructure package approved last year. While these bills have considerable merit, they miss the boat in reducing income inequality in important ways.
First, the idea that we had not been doing industrial policy before Biden, in the sense of favoring specific sectors, is wrong. We have been dishing out more than $50 billion a year to support biomedical research through the National Institutes of Health and other government agencies. If that isn’t supporting our pharmaceutical industry, what would be?
We also have a whole set of structures in place — most obviously Fannie Mae and Freddie Mac, but also many other financial institutions — as well as tax policies to support home ownership. We also support the (bloated) financial sector through tax policy, deposit insurance, and all but explicit too-big-to-fail guarantees.
Even the subsidies for the shift to clean energy in the IRA were not new. They hugely expanded and extended subsidies that had already been in place. This was a good policy from the standpoint of saving the planet, but it was not a sharp break from what we had previously been doing.
The government has always favored some industries, implicitly at the expense of others, so we are not doing something new if we declare “industrial policy.” But, there is an argument for making the subsidies explicit so that they can be debated.
For example, it might have been easier to move away from fossil fuels if we had to debate whether we would continue to subsidize the industry by not making it pay for the damage it was doing to the environment. If someone proposed subsidizing a new development by letting it dump its untreated sewage on neighboring properties, there would likely be less support than if the city let the development do the dumping without any explicit policy. So, there is an advantage to having subsidies be explicit, even if the idea of subsidizing specific industries is hardly new.
Biden’s Industrial Policy and Income Inequality
There are a variety of motives for the industrial policy measures Biden has pushed through. The climate ones in the Inflation Reduction Act and the infrastructure bill are both obvious and important.
There is also the belief that these measures will hasten economic growth. There is a good case for this. Much research shows that infrastructure spending increases productivity and growth. There are certainly visible bottlenecks that can constrain the economy, which became clear with the supply chain problems during the pandemic.
There is also a national security issue. This can be overplayed. We don’t really need to worry about being cut off from supplies of key inputs from Canada, and probably not from Western Europe, in the event of a military conflict. On the other hand, being heavily dependent on semiconductors from Taiwan, in a context where a conflict with China is, unfortunately, a possibility, is a problem. For this reason, some reorientations towards domestic production make sense.
However, one of the main motivations for these measures is to reduce income inequality by increasing domestic manufacturing. This is not likely to be the outcome.
Manufacturing and Inequality
One of the great tragedies of the last four decades was the war on manufacturing, pursued by politicians of both parties, that centered on a policy of selective free trade. While we continued to protect doctors and other highly paid professionals from foreign (and domestic) competition, our trade policy was quite explicitly designed to put our manufacturing workers in direct competition with low-paid workers in the developing world.
This competition had the predicted and actual effect of costing us millions of manufacturing jobs and putting downward pressure on the wages in the jobs that remained. Since manufacturing had historically been a source of relatively high-paying jobs for workers without college degrees, our trade policy had the effect of increasing wage inequality.
It also decimated many towns and cities across the country that had been heavily dependent on manufacturing. There is no shortage of places, especially in the industrial Midwest, where the major employer closed up shop and left a community without a viable economy.
It is easy to identify villains in this story – NAFTA, the high dollar policy pursued by Clinton Treasury Secretary Robert Rubin, and admitting China to the WTO all contributed in a big way to the loss of manufacturing jobs. They also placed downward pressure on wages in the jobs that remained, but that doesn’t mean that getting manufacturing jobs back will be a step toward reducing inequality.
The problem is that the wage premium in manufacturing has largely disappeared due in large part to U.S. trade policy. The average hourly wage in manufacturing used to be higher than the average wage in the private sector as a whole. In 1980, it was 4.1 percent higher. They crossed in 2006 and have continued to diverge in the years since. The average hourly wage for production and non-supervisory workers in manufacturing is now 8.9 percent less than the average for the private sector as a whole.
This is not a comprehensive measure of the wage premium since we would have to also consider benefits, which have historically been higher in manufacturing, and also specific worker characteristics, like age, education, and location, but this sort of change in relative wages almost certainly implies a large reduction in the manufacturing wage premium.[1]
A big part of the reduction in the manufacturing wage premium is the decline of unionization in manufacturing. In 1980, close to 20 percent of the manufacturing workforce was unionized. This had fallen to just 7.7 percent by 2021, only slightly higher than the private sector average of 6.1 percent.
Furthermore, while the Biden administration has been very supportive of unions, there is little reason to believe that the return of manufacturing jobs will mean a substantial increase in unionized manufacturing jobs. From the recession trough in 2010 to 2021, the manufacturing sector added back over 800,000 jobs. However, the number of union members in manufacturing actually dropped by 400,000 over this period.
While there will undoubtedly be some good-paying manufacturing jobs associated with the reshoring efforts in these bills, there is no reason to think they will have a major impact on income inequality. The impact of trade on manufacturing over the last four decades is not reversible. Losing millions of jobs in the sector was terrible from the standpoint of income inequality, but getting some of these jobs back will not be of much help.
Intellectual Property: Where the Real Money Is
Perhaps the most disturbing aspect of these bills is the fact that there is literally no discussion of who will own intellectual property being created through government spending in these areas. For some reason, there is virtually zero interest in policy circles in discussing the impact of intellectual property on inequality, even though it has almost certainly been a huge factor.
Just as Republicans don’t like to talk about climate change, Democratic policy types don’t like to talk about intellectual property. They are much more comfortable just making assertions like “inequality is due to technology,” rather than discussing how some people have been situated to get most of the gains from technology.
The idea that intellectual property derived from government-supported research can lead to inequality should not sound far-fetched. The Trump administration, through Operation Warp Speed, paid Moderna over $400 million to cover the cost of developing a Covid vaccine and its initial Phase 1 and 2 trials. It then paid over $450 million to pay for the larger Phase 3 trials, in effect fully covering Moderna’s cost for developing a vaccine and bringing it through the FDA’s approval process.
It was necessary for Moderna to do years of research so that it was in a position to quickly develop an mRNA vaccine, but even here the government played a very important role. Much of the funding for the discovery and development of mRNA technology came from the National Institutes of Health. Without its spending on the development of this technology, it is almost inconceivable that any private company would have been in a position to develop an mRNA vaccine against the coronavirus.
In spite of this massive contribution from the public sector, Moderna has complete control over its vaccine and can charge whatever price it wants. It is likely to end up with more than $20 billion in profit from sales of its coronavirus vaccine. According to Forbes, the vaccine had made at least five Moderna billionaires by the middle of 2021, with the company’s CEO, Stephane Bancel, leading the way with an increase in his wealth of $4.3 billion. In addition, there were undoubtedly many others at Moderna who made millions or tens of millions due to this government-supported research.
And, it is important to recognize that the money for the Moderna billionaires comes directly out of the pockets of everyone else. Its control of intellectual property associated with the vaccine allowed it to charge around $20 a shot (much more for boosters) for vaccines that would likely sell for less than $2 in a free market without intellectual property protections. Higher drug prices reduce the real wage of ordinary workers.
The wealth of Moderna’s nouveau riche also has the effect of pushing up housing prices for the rest of us. When the rich can buy more and bigger houses, it raises house prices for everyone, effectively reducing their real wage. So, the issue of inequality is not an abstraction. More money for those on top means lower living standards for everyone else.
If we see many more Modernas from the funding in the CHIPS Act and the other bills, it will not reduce inequality in the economy, it will make it worse. Serious people cannot pretend to not notice the huge amounts of money redistributed upward when the government pays for research and then lets private actors get property rights in the product. This is almost literally giving away the store.
A Progressive Alternative
There is a different route the government can follow with its research spending. It can pay private companies to do work developing technologies in important areas, but it can insist that the products be in the public domain. (Where there are security issues at stake, the government can control the technology.)
This would allow private companies to profit from research, which would be awarded through a competitive bidding process, and it would also allow them to make profits off the manufacture of the finished products. However, there would be no profit to be made from ownership of the technology itself. That could be freely used by anyone with the capability to benefit from it.
This path would avoid having our industrial policy make inequality even worse. It also is exactly what we should want to see with climate technologies. We should want the technologies to generate wind and solar power, as well as to store it, to be available as cheaply as possible. This will maximize the pace at which it can be adopted.
We should also want the whole world to have access to this technology to hasten the rate at which other countries can adopt clean energy. (Ideally, we would negotiate reciprocal agreements whereby they commit to funding research in some proportion to their GDP, and also make the technology freely available.) We should go the same rate with biomedical research.
Industrial Policy Should Not be More of the Same
We have to recognize that the upward redistribution of the last four decades was not something that just happened, it was the outcome of deliberate policy choices. Trade and government policy on intellectual property are a huge part of that story.
It’s great that we are finally getting some honest discussion of the role of trade in increasing inequality, but we still need to get recognition of the impact of our policies on intellectual property. If the Biden administration and members of Congress insist on ignoring its impact, their policies are virtually certain to make inequality worse. The talk about bringing back manufacturing doesn’t change the picture.
[1] In a comprehensive analysis of the manufacturing wage premium, Mishel (2018) found a 7.8 percent straight wage premium for non-college-educated workers for the years 2010 to 2016, after controlling for age, race, gender, and other factors. That compares to a premium for non-college-educated workers of 13.1 percent in the 1980s.
The analysis found that differences in non-wage compensation added 2.6 percentage points to the manufacturing wage premium for all workers, but the compensation differential may be less for non-college-educated workers since they are less likely to get health care coverage and retirement benefits.
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