BROOKE GLADSTONE This is On the Media, I'm Brooke Gladstone.
NEWS REPORT Vaccine shortages across the country. [END CLIP]
NEWS REPORT States and cities like New York are desperate for more supply. [END CLIP]
NEWS REPORT We're now on nearly at 4000 people die in the U.S. every day. [END CLIP]
BROOKE GLADSTONE Labyrinthine vaccination sign ups, lack of transparency, canceled appointments. If the pathway through this pandemic is vaccines, it's a dark and twisted one. For all the issues with distribution, and there are issues, there is equally an issue with supply. President Biden announced this week that his administration is working to buy an additional 200 million doses of the vaccines, but as Dean Baker, senior economist at the Center for Economic and Policy Research, explains, we're still constrained by the matter of who can actually manufacture them.
DEAN BAKER Moderna, Pfizer own a patent, and what that means is that no one else could produce them without getting a license from those two companies. So, while in principle we might think that there are other companies that either have the manufacturing capacity or could develop it, they don't have that option unless Moderna and Pfizer are prepared to give that to them. Patents are a form of monopoly. Unless we change the policy, there's not much we could do about that.
BROOKE GLADSTONE And both these companies had access to hundreds of millions of dollars in public money and billions of dollars in advance purchase commitments.
DEAN BAKER Yeah, this is really striking. In the case of Moderna, we literally paid for the development of this vaccine. We gave them somewhere in the order of four hundred thousand four hundred forty million to do the original development and then the phase one, phase two testing and then the government put up another roughly four hundred forty million to pay the cost of phase three testing where they determine that it's safe and effective. And of course, the Food and Drug Administration approved that. Drug companies often say, well, they need to patent and they have to charge high prices because they took a big risk and sometimes their drugs fail, which is true, of course, this case, suppose the FDA looked at and goes, it's a no go, it's not effective. It's not safe. Well, they were paid.
BROOKE GLADSTONE Reshma Ramachandran and Zoe Thill wrote in The Nation this week that we shouldn't be calling these Pfizer vaccines or Moderna vaccines at all. They are the people's vaccine.
DEAN BAKER We paid for them, and one of the things we really would have liked was full transparency on all of the research results. So they're giving it to the FDA, the Food Drug Administration. And I'm not saying they don't do a good job, but still things will get through. They can't analyze everything. They're rushed and inevitably they will make some mistakes. If we're fully transparent, if you hand the data there so that you could look what happened to younger people, to older people, people who had heart issues, people might have had other conditions, then researchers all over the country, all over the world would be able to go through it and maybe they would catch something that the FDA missed.
BROOKE GLADSTONE I don't entirely understand what the data has to do with monopoly ownership of the drug, because the data refers to how it's worked out in the trials, not how it was made or what its components are or any of that.
DEAN BAKER Well, to my view, there's not a good argument for keeping the data secret, but most of the drug companies insist on that. And there's a very pernicious reason as to why they might want to keep it secret, and that's why they may look to misrepresent the safety or effectiveness of their drugs. That's a big part of the story of the opioid crisis. You know, Purdue Pharma, which was one, of course, the big opioid manufacturers from the first day– this was selling as a generic, anyone could produce it – they wouldn't have a big incentive to go out and market and tell doctors, oh, don't worry, it's not addictive. They wouldn't be doing that. My view is, why don't we just pay for the research up front? Then you don't have that issue. And that's exactly what we did with Moderna. We paid for the research up front. We still gave them a patent monopoly, which makes zero sense, but if you pay for the research up front, then they don't have costs to cover. Currently, the government spends roughly 45 billion a year on biomedical research. If you look at what the industry spends, it's roughly 90 billion. So more or less, twice that amount. Now, suppose we look to replace what the industry spends. We were spending, say, somewhere around 130, 140 billion a year in prescription drug research and development. Well, then we would have paid for the companies in advance to do the research. Once it was approved, it could be sold as a generic from the first day.
BROOKE GLADSTONE What these manufacturers become essentially are research companies. They stand to make far less money from the actual sale of the drug that they were paid to create.
DEAN BAKER And to my view, that's exactly what we want. I'm not looking to put any of these companies out of business, Pfizer, Merck, all the big companies, presumably would want to stay in business. They've had years of experience doing research, so they would put in bids on these contracts. They're going to research cancer drugs. You know, in my view, if they're asking me to design the system, everything's open source. So as soon as you get a lab result, you put it up on the web so everyone could see it.
BROOKE GLADSTONE In your scenario, which I really I love. It's so socialist.
DEAN BAKER It's just the different type of capitalism. I'm not concerned that they could make as much profit as they do under the current system. I mean, maybe they will. I frankly hope they don't.
BROOKE GLADSTONE We're talking about serving the public.
DEAN BAKER Yes, that that's our goal in designing the system. And we always have to remember patent monopolies are government policy because again, I don't know how many times I've argued with people on the go. You want to interfere with the market? I'm sorry, a patent monopoly is from the government. So, we're already interfering with the markets, we're deciding how best to do it.
BROOKE GLADSTONE The situation that we're in now wasn't inevitable. Back at the beginning of the pandemic, the WHO set up a COVID-19 technology access pool to promote the sharing of knowledge. And there were early reports about how the pandemic was going to change how the world does science, make it more collaborative.
DEAN BAKER There was a lot of cooperation early on that many scientists talked about. There were a lot of developments that were posted on the web, you had international cooperation, scientists in Europe and China and the United States. But then we quickly huddled down, you had the companies saying, – OK, we're going to work on this, we're going to work on that – they wanted to get patent monopolies and have vaccines, treatments that would allow them to make lots of money. And what in principle we would've wanted to see was collective sharing of knowledge and also open access to technology so that when these vaccines were being developed, anyone with the means to produce the vaccines would have been able to. We would have liked to have hundreds of millions of each of these vaccines available, maybe even billions at the point where they were approved. Maybe we would have made eight hundred million, a billion doses of the vaccine. And it gets to December. And turns out FDA looks at it and they say it's a no go. Well, that's unfortunate. But you go, OK, so the vaccines cost roughly two dollars each to produce, again, not an exact figure, but ballpark number. So we threw two billion dollars in the garbage. We've spent, in the US alone, somewhere in the order of five trillion dollars now, in COVID relief.
BROOKE GLADSTONE This past October, there was a proposal put forward by India and South Africa asking the WTO to exempt member countries from some forms of intellectual property enforcement. Which would allow them to produce generic versions of COVID vaccines and treatments, and that was an immediate no go. But aren't there global provisions for emergencies just like this?
DEAN BAKER Yeah, this is a fascinating question. So, the TRIPS accords, trade related aspect of international property, part of the WTO as of 1995. Those require all countries to adopt US style patent laws, but they have special permission during emergencies to override those patent laws. Then special permission has very, very rarely been invoked, and the reason for that is the United States and I suspect European countries as well, have basically threatened retaliation.
BROOKE GLADSTONE What kind of retaliation? Denying the drugs, they're not giving them anyway.
DEAN BAKER Various forms of trade retaliation. This came up with South Africa in the 1990s. We threatened to put up tariffs because they were going to do that on a drug that was used to treat AIDS patients. And this was, I think, 1999. Bill Clinton was still president then. The US threatened them with retaliation, where we would make it more difficult for them to export items to the US. Al Gore, of course, was running for president in 2000, a number of AIDS activists went to his speeches and they protested, and Clinton backed down on it because it was hurting Gore. Gore didn't want to be associated with it. I forget whether they actually issued the compulsory license because, again, you get this this dance where countries threatened to issue compulsory licenses and then often to prevent that from actually happening, the company agrees to radically reduce the price that that's happened several times.
BROOKE GLADSTONE I don't know if Pfizer or Moderna or Johnson & Johnson, if that one comes out, could even do the little jig of saying, oh, no, we'll drop the prices, because they can't make enough. We're talking about hundreds of thousands of potential lost lives.
DEAN BAKER The pharmaceutical industry is saying, oh, well, it's complicated technology. They couldn't possibly produce it. Well, first of all, India, Brazil, some of the other countries in the developing world, they have very high-tech manufacturers. So, they're not working with sticks and rocks. India's generic manufacturers are as good as anyone in the world. Now do their facilities up and running? Probably not, they would have to retool them. So, what's the timeline we're talking about? Well, I'm not an expert in the technology, but what we do know is none of these vaccines existed back in March of last year and they were able to produce hundreds of millions of doses by November. What that tells us is in eight months, we could have hundreds of millions of doses if we had new factories ready to produce the stuff and maybe quite a bit sooner. I mean, I'd love to say that, well, eight months would be too late. We already have the pandemic under control, but I don't think anyone really believes that. So if if we said, OK, today, you know, we're going to allow anyone in the world who has the ability to produce this to go ahead and start converting a factory, that would be a huge thing in terms of controlling the pandemic.
BROOKE GLADSTONE But no sign of that so far.
DEAN BAKER The Trump administration, America, first they didn't care. I would hope the Biden administration would show more foresight. The humanitarian reasons are huge, but really just from self-interested reasons. I mean, look at what's happening. We're seeing variants of the virus. So even if we're successfully able to vaccinate everyone in the United States in 2021, if it's still raging in sub-Saharan Africa and Latin America, elsewhere in the world, we're going to see new variants and maybe the vaccines we have will be effective against them, but there's a chance they won't be.
BROOKE GLADSTONE Didn't Moderna agree not to enforce its patent until the pandemic was over?
DEAN BAKER They did, but the end of the pandemic is not well defined, so maybe the end of the pandemic, you know, from Moderna standpoint, is when it's no longer widespread in the United States.
BROOKE GLADSTONE Well, then why can't India and South Africa and all those other countries have Morderna's formula now?
DEAN BAKER So if they could get in writing that as long as it's widespread anywhere in the world, then in principle they could take up the Moderna vaccine, start producing that.
BROOKE GLADSTONE It's widespread right now.
DEAN BAKER Well, it is, but perhaps Moderna is going to say six months, eight months down the road. Oh, it's no longer widespread. We're pronouncing the pandemic over and now you owe us lots of money. Put yourself in the position of the generic manufacturer in India, Brazil, and you hear this pledge from Moderna, and that's all you have, that there's not that they're not going for their patent rights until the pandemic is over and you call them up and go, what does that mean? And they go, well, it means what we just said. Well, you go how are you defining the end of the pandemic? Well, when we say it's over. Now, if you can get them to say, “well, no as long as you have a lot of it in India, then it's not over. If you can get that commitment, that's great. But to my knowledge, they haven't been willing to say that.
BROOKE GLADSTONE So it was meaningless mumbo jumbo?
DEAN BAKER That's when I suspect. Again, these are business people, they know how to say what they mean. And if their intention is to say, as long as the pandemic is a problem anywhere in the world, people are free to use the technology. That would be great, but that's not what they said.
BROOKE GLADSTONE Dean, thank you very much.
DEAN BAKER Thanks a lot for having me on, I really enjoyed it.
BROOKE GLADSTONE Dean Baker is senior economist at the Center for Economic Policy Research.
Coming up, maybe the clearest explanation of the GameStop phenom, and how I played the long game. Very long. This is On the Media.
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