Big pharma shouldn’t be too greedy

Intellectual property (IP) is a convenient fiction. It is a right enforced by state power and international agreements, one that’s even more fragile than other forms of property rights since it’s not tangible. We choose to believe this fiction because we also believe that intellectual property adds to general welfare. It permits innovation and growth, and supports writers, artists, inventors — and pharmaceutical companies.
But crises upend beliefs and we are in a crisis at the moment. We should all hope the tradition of treating intellectual property as a real thing survives the pandemic. That hope must be especially keen among the companies most at risk if the myth breaks down: the pharma industry.
Nothing is more likely to test this consensus than hints of profiteering off the war against Covid-19. A
Financial Times report that the US-based company Moderna Inc has sought
to price its vaccine candidate around $50-$60 per course, for example, has shaken public health establishments across the world. The story also suggested that while Moderna might offer developing countries a lower price, rich countries would get privileged access to the vaccine.
Let me tell you the consequences if that happens and Moderna’s vaccine performs better than its cheaper competitors: The patent on the vaccine will be widely
ignored. The consensus
on intellectual property, painstakingly built up over time and spread worldwide over the past two decades, will be busted.
I don’t want to single out Moderna here. It doesn’t have a single successful commercial drug, nor any other Phase 3 candidates; its need to make money off this vaccine is arguably acute. Larger drug companies are different. Yet Pfizer Inc’s CEO recently said that calls for companies not to consider making a profit on their Covid-19 vaccines were “fanatic and radical.” (AstraZeneca PLC and Johnson & Johnson have promised a not-for-profit effort on their Covid-19 vaccines, so Pfizer clearly has an odd definition of “fanatic and radical.”)
If a vaccine proves too expensive or difficult to obtain, those who seek exorbitant profits off of it will be scrutinised far more closely than bankers were after the 2008 crash.
Actions like those that have already allowed insiders to pocket $80 million will provoke public revulsion, even if those trades were pre-scheduled. Calls to regulate sectors that take for granted intellectual property protections will grow exponentially. Those demands won’t be fanatical or radical, but mainstream.
It will be hard enough to preserve the myth of intellectual property within rich countries. Once international capital flows are involved, it’ll be impossible. Cash-strapped governments around the world are not going to pay tens of billions for vaccines needed to save the lives of their citizens.
Any attempts to collect using the traditional trading and legal architecture
will be ignored — and will indeed lead to those institutions being seen as discredited or even immoral.

—Bloomberg