How to protect taxpayers’ investments in COVID-19 vaccines
With distribution of the first COVID-19 vaccine under way, millions of Americans familiar with Big Pharma price gouging wonder if they will be priced out of access.
Although touted as “free,” taxpayers already paid once for most vaccines and those with insurance will pay again in premiums and fees while those without coverage may be charged again and again.
American taxpayers have footed the bill for much of the research, development and manufacturing of these medical products, but they have no say in how they are priced and distributed when pharmaceutical companies use government-granted legal monopolies in the form of patents to charge whatever price they wish.
To protect Americans from this dreaded virus, as well as the investments they have made, our federal government needs to use its existing tools to ensure patents do not stand in the way of access.
Long-standing federal law provides this authority, and a history of national crises shows how important this tool can be in rapid, effective responses.
Patents are granted to stimulate the development of new inventions, by giving the inventor a 20-year monopoly. Monopoly control can limit the supply of and access to essential technologies. Section 1498 of the U.S. Code enables the government to open up generic competition, with patent holders receiving a reasonable royalty in exchange.
Lawmakers’ willingness to invoke Section 1498 led Bayer to ramp up production and cut the price of ciprofloxacin in half during the post–9/11 anthrax scare, and it helped to convince Roche to allow generic oseltamivir (Tamiflu) manufacturing during the 2005 avian flu pandemic.
History shows path forward
Decisive government action on patents was critical to our national response in World Wars I and II. At the start of World War I, the United States was far behind Europe in aviation technology in part because American aviation firms spent the early 1900s bickering over patents.
To break this impasse, Congress authorized the U.S. Navy to take control of problematic patents; the threat alone induced industry to form the Manufacturers Aircraft Association, enabling construction of a competitive airplane force.
During World War II, federal antitrust head Thurman Arnold criticized a deal between Carl Zeiss and Bausch & Lomb, the two key patent-holders on optical lens technology, that squeezed American supply of military optics, including bomb sights, torpedo directors and more.
Even patriotism after Pearl Harbor could not overcome profits. The onset of war rendered many of the government’s arrangements unreasonable for wartime production quantities, yet some patent holders refused to renegotiate. Conflicts between patents and urgent public needs led Congress to pass the 1942 Royalty Adjustment Act to rearrange patent rights during the war.
In supporting enactment of that law, Sen. Homer T. Bone explained that patents “must be subordinated to the all-out effort confronting us. It is crystal clear that in this hour of trial the profit motive cannot be accented without inviting the destruction of morale.”
The victory we now seek, not on the battlefield, but against a virus, demands similar urgent action to save lives.
COVID-19 is no less an hour of trial. History shows that monopolists cannot be expected to put the public before profits.
Taxpayers underwrote research
Gilead is charging $3,200 for its treatment remdesivir, an outrageous price on a drug developed with taxpayer money which has shown only modest benefit. At least one vaccine maker has acknowledged taxpayers fully financed its vaccine, yet it will profit by more than $1.5 billion on just the first 100 million doses.
Meanwhile, the administration and Congress do nothing. The federal government should act on its moral obligation to ensure patents do not interfere with a rapid, effective national response. Big Pharma lobbying and campaign contributions have made it immune from serious federal action that would put patients first.
To ensure that patents are not a roadblock today, Congress and the administration must take action on at least two fronts. The first is transparency: Companies have repeatedly concealed federal funding behind critical patented treatments and hidden trial data on drugs like remdesivir.
The public deserves to know what rights it has in essential medicines and technologies, as well as what value those technologies hold.
Second, legal tools like Section 1498 should be used if patent holders fail to make treatments accessible, affordable or produced in sufficient capacity.
In the past, the United States took immediate action to ensure that its coordinated response was not hampered by private interests. Equally decisive action is needed today to ensure the health and safety of all Americans.
Image credit: TeroVesalainen