The US President Joe Biden proposed to waive intellectual property protections for Covid-19 vaccines. His stated goal is humanitarian: to facilitate access in low-income countries, to join the global effort against the pandemic, and to give priority to humans over profits.
This Biden proposal is facing staunch opposition from the American biotech investment community, who is warning against a slippery slope that will stifle the American innovation engine.
They argue that if it’s ok to waive patents for Covid-19 vaccines today for humanitarian reasons, then why not for other terrible diseases?
Rebuilding US influence abroad
This slippery slope argument would make sense if the Biden agenda was really humanitarian. However, I want to reassure Brad, Bruce, and all American investors: the US administration did not become a charity overnight. Biden has narrower political objectives. He wants to build up a US vaccine diplomacy, to contain Russia and China.
It’s all about the American national interest. This waiver can be seen as a requisition for national security purposes. These extraordinary circumstances would not extend to cancer, Alzheimer drugs or insulin, as long as Russia and China do not weaponize them against America (although in the case of insulin, that would be a smart move).
Said otherwise, authorities are entitled to expel a home owner to build a road, or a weapon factory, but not for the purpose of turning his house into a shelter for the homeless.
Diplomatic intent was made clear by the timing of the announcement: at the same time, Russia was shipping Sputnik vaccines to India, a country traditionally within the US sphere of influence.
Moreover, the World Health Organization was approving the Chinese Sinopharm vaccine for global use:
It was a “Sputnik moment” for the Biden administration: they started to realize that their America-first vaccine strategy was backfiring:
On social medias, Captain America was no longer the hero of the free world:
Biden had to urgently make a PR move, to show that he had something to offer to the world, especially to India, which is lobbying for this IP waiver since October
If Joe Biden was serious about his idea, he would have simply purchased the patents, and then open-sourced them. That would have been America’s gift to the world. Patents are commodities, very affordable from the viewpoint of federal spending. For example, the combined market cap of Moderna and BioNTech is 124 Billion USD, which is only 2% of the 6 Trillion USD annual budget plan, and only 15% of the 778 Billion USD military budget. The Pharma market will celebrate this super-exit.
However, this win-win deal is not interesting for Biden. He wanted to run a show to attract spotlights at the World Trade Organization.
Moreover, on the domestic front, he was looking for a mock fight with the Pharma lobby, in order to increase his popularity.
Influence progressives at home
This political stunt has a secondary goal within the domestic debate on affordable healthcare (a topic covered in a previous blog post). Biden wants leadership on the left wing of the Democratic party, while avoiding a radical rethinking of the American healthcare system (Medicare for All…).
This IP waiver is a legal hack that traps the conversation about healthcare reform into a dead end. It’s a deliberately temporary and exceptional solution, which spreads the misconception that affordable healthcare is necessarily unsustainable. Therefore, after this IP waiver, healthcare policy will get back to business as usual, and status quo is what Biden wants, after all.
However, the pandemic showed a better path towards reform. For example, vaccine development got faster and cheaper with Operation Warp Speed, a mix of government subsidies and pre-orders. It proposed a specific format of voluntary price control that happened to be attractive to the Pharma industry. Those innovative vaccines even became free at the point of delivery. And these state interventions happened to be good for the economy.
These progressive policies were implemented, quite surprisingly, by the Trump administration:
Why not extending Operation Warp Speed to few other non-communicable diseases? Medicare for All, but not yet for everything. That’s the slippery slope to follow.