pol / economics / writing: a study of incentives
About my experience with ePolicy for Young Leaders, an online certificate course designed as an introduction to public policy.
A Study of Incentives: Patents in a Pandemic
India’s second wave of COVID-19 has wreaked havoc across the nation, and its citizens are gasping for oxygen, beds, ventilators, medicines, and everything in between.
With a Reported Cases curve that is refusing to plateau, it is becoming increasingly clear that there is only one way to beat the pandemic: quick and efficient vaccination.
Our quest for herd immunity through vaccinations seems to be failing though. According to experts, the poorer, developing, and most affected countries will attain herd immunity only by the next 3–4 years. Keeping this in mind, US President Joe Biden has finally joined India’s proposal that seeks the emergency waiver of the World Trade Organization’s Intellectual Property rules for COVID-19 vaccinations.
What is a Patent?
A patent is an exclusive right to make, use, and sell an inventive product or process. Essentially, patents act as incentives. Makers and businesses are “allowed to benefit from the fruits of their labours and merits”, thus incentivizing new technologies, inventions and benefitting society as a whole.
However, in the midst of a pandemic, it enables the Big Pharma companies to retain a monopoly over their vaccines and drastically increase their profits; but at the cost of human lives.
Patents over COVID-19 vaccines, while acting as incentives, have also acted as a barrier to knowledge and technical know-how for other companies to benefit from the innovation.
The State of Developing Countries under a Patent System:
To make maximum profits, it is essential that Big Pharma companies maintain their monopoly over the vaccine technology (especially with the long-term perspective of ‘booster’ shots). While many qualified manufacturers have sought approval to produce mRNA vaccines on a collaborative basis, Pfizer and Moderna have either outrightly refused or failed to respond.
The World Health Organization started the COVID-19 Technology Access Pool and the COVAX initiative to facilitate a more equitable battle against the pandemic. However, zero vaccine originators have shared any data. The number of doses given to the COVAX initiative as a percentage of total doses is absolutely dismal, barely adding to the global supply.
The WTO waiver would only facilitate voluntary arrangements with global manufacturers and will not legally force the Big Pharma companies to share technological know-how with anyone. These voluntary globalized arrangements won’t deplete their profits by any means: they yet stand to make billions in royalty and compensation as IP holders despite having got large government funding for R&D.
“The very poor in the developing world are condemned to death”. Under the current system, priorities are clear: companies are valuing profits over lives. What this issue boils down to, however, is what we must aim to solve: the issue of incentives.
The pandemic has opened our eyes to the inequal loss of lives suffered because of the current pharmaceutical and healthcare system. From 2007–2010, a team of economists led by Nobel laureate Joseph Stiglitz explored alternative ways of incentivizing pharmaceutical innovation without restricting knowledge. Having conducted this research 10 years before a pandemic of this scale shocked the world, the researchers were way ahead of their time. They suggested ‘a medical prize fund that would reward those who discover cures and vaccines.’
In the case of fatal pandemic diseases, it is essential to follow an “open science” approach where the emphasis is on saving lives over making a profit. In order to pursue this, there must be free knowledge and no IP/Patent considerations. According to Stiglitz, a medical prize fund would not only cover the costs of research and development but would also lead to a more equitable distribution of the resources (especially in today’s pandemic world).
The researchers suggest that financing of this prize fund can easily be undertaken by the governments. In 2007 and even today (!), governments, directly or indirectly, already pay for a majority of essential drug-related research.
For example, the mRNA technology research (innovated for the Moderna and Pfizer vaccines) was conducted by the National Institutes of Health, a federal government agency, in collaboration with other publicly funded universities and organizations. In the case of the Oxford/AstraZeneca vaccine, more than 97% of the funding for research was sourced from public money. Re-orienting this public money towards a fund that rewards innovation can incentivize WHILE not acting as a barrier to knowledge especially in suffering, developing countries.
As the number of deaths due to COVID increase, the medical inequality of today goes against any principle of global justice.
We must reorient our priorities as a global society. We need to undertake a collective analysis of alternative systems on a global level.
To effectively deal with a pandemic of this scale, we must again re-analyze the issue of incentives.
1. Stiglitz, Joseph. 2007. “Race For The Prize”. The Guardian. https://www.theguardian.com/commentisfree/2007/mar/17/prizesnotpatents.
2. Parthasarathy, Suhrith. 2021. “A Patently Wrong Regime”. The Hindu, 2021.
3. Stiglitz, Joseph, and Lori Wallach. 2021. “Will Corporate Greed Prolong The Pandemic?”. Project Syndicate. https://www.project-syndicate.org/onpoint/big-pharma-blocking-wto-waiver-to-produce-more-covid-vaccines-by-joseph-e-stiglitz-and-lori-wallach-2021-05.
4. Jayadev, Arjun, Joseph Stiglitz, and Achal Prabhala. 2020. “Patents Vs. The Pandemic”. Project Syndicate. https://www.project-syndicate.org/commentary/covid19-drugs-and-vaccine-demand-patent-reform-by-joseph-e-stiglitz-et-al-2020-04.