This case study, Intellectual Property in a Time of Pandemic: The COVID-19 Vaccines, focuses on one aspect of the production, allocation, and distribution of the COVID-19 vaccine: the sharing of intellectual property.
The effort to develop a vaccine for COVID-19 was underway in January 2020, months before the world would experience the full impact of the virus. Hope for a way out of the pandemic focused on rapid development, testing, and deployment of a vaccine, and as it happened, multiple safe and highly effective vaccines were developed in record time. However, ramping up production and determining how to allocate and distribute scarce supplies of vaccines was expected to be a major challenge for companies, governments, and societies.
Podcases: Case Studies, Reimagined
A “podcase” is a teaching tool: an audio version of a traditional case study, designed to provide an alternate learning method for students. It includes audio enhancements, such as sound effects, intended to illuminate the material.
Mustaqeem De Gama: No one is safe until everyone is safe. And at the end of the day, we see that intellectual property rights constitute a very substantial barrier for us to achieve this global goal of having people vaccinated.
Dr. Jeremy Levin: Why would I invest in a company if suddenly the government is going to step in and take away those patents which allow me to at least have the certainty that we are investing in something that could give us a good return long term? Waiving patents doesn’t stop a pandemic. What you have to do is get shots into arm as fast as is possible.
Jenny Luna: Hi there. I’m Jenny Luna, a multimedia producer at Stanford Graduate School of Business.
Kelsey Doyle: And I’m Kelsey Doyle, also producer here at the GSB. We’ve taken a case by political economy professor Ken Shotts and case writer Sheila Melvin and turned it into what we’re calling a podcase.
Jenny Luna: That’s the name, at least for now. This podcase is designed for use in classes on business ethics. The episode is called “Intellectual Property in a Time of Pandemic: The COVID-19 Vaccines.” It will bring up questions like, in the case of a global health emergency, should companies be able to patent vaccines even if that business monopoly means more people will get sick and die? And should wealthy countries that invested in the creation of that vaccine get first crack to distribute it to their own population? Should people in poor countries have to wait at the back of the line?
Kelsey Doyle: To dig deeper into these questions, Jenny and I will start off with the basics of what a vaccine is and how they make it to market. Then we’ll learn about COVID-19 vaccines and how they were funded, developed, and, crucially, distributed. This is an ongoing story with choices still being debated that have major implications for COVID-19 and future pandemics, which unfortunately are going to happen whether we like it or not.
Jenny Luna: We’re going to take you through this auditory experience one fact at a time. You can find a link to the written case study on our website, gsb.stanford.edu.
Judy Woodruff: In the day’s other news, China closed off Wuhan, a city of 11 million people, in an unprecedented effort to contain a deadly virus. Officials also announced that two other cities are being closed tomorrow. Train stations in Wuhan were unusually calm, and the streets were empty. Medical staff said that they are taking extreme precautions to avoid spreading the infection from isolation wards.
Jenny Luna: This was how it all started. In December 2019, several dozen residents of the city of Wuhan, China, fell ill with a viral pneumonia of unknown cause. Their symptoms included high fever, difficulty breathing, and lung lesions. The disease alarmed local medical personnel, who, recalling the 2003 SARS epidemic, hurried to identify the illness. Doctors collected a fluid sample from the lungs of a 41-year-old man and shipped it to the Shanghai Public Health Clinical Center for further testing.
Kelsey Doyle: Virologists in Shanghai were on the case right away. Fudan University’s Dr. Yongzhen Zhang and his team worked straight through for two nights and on January 5, 2020, identified the pathogen as a previously unknown virus: Severe Acute Respiratory Syndrome Coronavirus 2, or SARS-CoV-2. The World Health Organization, or WHO, subsequently named the disease caused by this virus Coronavirus 2019, or COVID-19 for short.
Jenny Luna: Researchers across the globe leapt into action, including Dr. Kizzy Corbett of the United States National Institutes of Health, or NIH.
Dr. Kizzmekia Corbett: And so, we got back to the NIH after the holidays. And around the 6th, I think that’s when it was determined that it was for sure a coronavirus. And what that mean is that, for sure, the team that I worked with most closely would be responding to it.
And so, we sat down and we planned, and the thing that came out of that plan was that we would monitor very closely. And when the sequences of that virus came out, because we knew exactly what to do based on our work from previous years, that we would go into full force trying to make sure that we were going into a clinical trial with a vaccine — namely now the Moderna vaccine — as quickly as possible.
Jenny Luna: Coincidentally, before COVID-19 emerged, the NIH had already agreed to collaborate on vaccine development with a biotech company, Moderna.
Kelsey Doyle: Meanwhile, in Germany, Dr. Uğur Şahin and his wife, Dr. Özlem Türeci, read a study about the virus and became convinced that COVID-19 would soon engulf the globe. The two scientists were cofounders of the BioNTech company. And with the genetic sequencing in hand, they sat down and designed templates for 10 possible vaccines. Other scientists in Russia, China, the United Kingdom, and India also got to work.
Jenny Luna: The global effort to develop a vaccine was underway. It was still weeks before the first American would be diagnosed with the virus and three months before WHO Director-General Dr. Tedros Adhanom Ghebreyesus would describe it as a global pandemic.
Dr. Tedros Adhanom Ghebreyesus: Good afternoon, everybody. In the past two weeks, the number of cases of COVID-19 outside China has increased 13-fold, and the number of affected countries has tripled. There are now more than 118,000 cases in 114 countries.
Kelsey Doyle: Fast forward. By the end of April 2020, worldwide cases had passed 3 million, including 1 million in the United States alone. The social and economic life of nations had ground to a halt, causing untold hardships for billions of people.
Dr. Tedros Adhanom Ghebreyesus: We know that these measures are taking a heavy toll on societies and economies, just as they did in China. All countries must strike a fine balance between protecting health, minimizing economic and social disruption, and respecting human rights.
Jenny Luna: Hope for a way out of the pandemic focused on the rapid development, testing, and deployment of a vaccine. By the end of the year, more than 220 COVID-19 vaccines were in development around the world with 56 in human trials.
Kelsey Doyle: Multiple safe and highly effective vaccines were developed in record time, about one year, as opposed to a decade or longer for vaccines in the past.
Donald Trump: I have really good news. Today our nation has achieved a medical miracle. We have delivered a safe and effective vaccine in just nine months. This is one of the greatest scientific accomplishments in history. It will save millions of lives and soon end the pandemic once and for all. I am thrilled to report that the FDA has authorized the Pfizer vaccine.
Kelsey Doyle: This was a spectacular and unprecedented achievement built on years of scientific research. But determining how to allocate and distribute scarce supplies of vaccines on a global scale was an uncharted challenge for companies, governments, and communities.
Jenny Luna: This podcase focuses on one aspect of that complex process: the sharing of intellectual property for vaccines.
So first, let’s understand the basics of what a vaccine is. We’ve been hearing that word a lot, but not always with a full explanation. Kelsey, want to give this a try?
Kelsey Doyle: OK, how about this? Vaccines mimic the bacteria or viruses that cause a disease and stimulate the body’s immune system to build up defenses, but without actually causing the disease itself.
Jenny Luna: So, it’s kind of like giving your immune system practice for the big game so it knows what to do without even thinking?
Kelsey Doyle: Yeah, that’s a pretty good way to think about it. If later on a vaccinated person is exposed to the actual virus or bacteria, their immune system responds quickly, which reduces the chances that they’re going to become ill and spread the disease.
Jenny Luna: And the history of vaccines is pretty interesting, although possibly a little gross. The first official vaccine was for smallpox back in 1798. An English physician named Edward Jenner inoculated a boy with cowpox on the theory that it would protect him from the related deadly smallpox disease. But the idea dates back much further. In China, India, and Turkey, a practice called variolation has been used for hundreds or maybe thousands of years. That’s a process where you deliberately infect someone with a trace amount of smallpox, sometimes by blowing dried scabs up their nose.
Kelsey Doyle: Ew. Ugh, that makes me think a shot in the arm isn’t so bad.
Jenny Luna: Yeah, agreed. But it works, and that’s definitely worth the yuck. Variolation was brought to the American colonies by Onesimus, a man who had experienced the practice in Africa before being enslaved. Onesimus described variolation to his enslaver, Cotton Mather, who used it to combat a smallpox outbreak in Boston in 1721.
From there, the practice of variolation spread to other colonies, saving many lives. And the global eradication of smallpox using the vaccine is seen as one of the greatest achievements in the history of public health. Polio, whooping cough, and hepatitis A and B are some of the other diseases that have been drastically reduced through the use of vaccines.
Kelsey Doyle: And by 2015, vaccines were a $25 billion global industry. There are five types of vaccines, all produced with different technologies: whole virus vaccines, which use a weakened or genetically inactivated form of the virus to trigger an immune response; subunit vaccines use a piece of the pathogen to trigger a response; viral vector vaccines, which use a different harmless virus; toxoid vaccines, which use a toxin made by the germ that caused the disease; and mRNA vaccines, which use messenger RNA to give cells instructions for producing an antigen. Before the COVID-19 pandemic, there were no mRNA vaccines in use.
Jenny Luna: Most development of vaccines is done by companies in the U.S. and the EU. The manufacturing is done in both developed and developing countries. India plays an especially crucial role, producing 60 percent of the world’s doses.
While all countries have their own vaccine approval processes, in the U.S., vaccine development normally follows these steps. First, you have research and discovery, in which scientists try and figure out how the infectious organism causes disease, then develop the ideas for combating it, create candidate vaccines, and test them in a lab setting, sometimes on animals.
Kelsey Doyle: Step two is preclinical. That includes research and testing to see precisely how the selected vaccine works and determining whether it’s likely to be safe and effective.
Jenny Luna: Then comes clinical development, which involves testing in humans. In the U.S., these tests are overseen by the Food and Drug Administration, or FDA, in three phases. Phase one includes a few dozen healthy volunteers and focuses on safety. Phase two includes hundreds of people who are given different dosages, including a placebo, to evaluate immune system responses. Phase three includes thousands of people to generate additional data on safety and effectiveness.
Kelsey Doyle: And if those trials go well, the next step is regulatory review and approval, along with a manufacturing assessment. During that step, the FDA seeks to ensure that the vaccine will be produced in a safe and consistent manner.
Jenny Luna: Finally comes approval, when the vaccine developer submits an application to the FDA to distribute and market the vaccine in the United States. After approval, the FDA continues to monitor the vaccine’s safety and effectiveness for months or even years.
Kelsey Doyle: So, that’s potentially a long process. But in certain circumstances like, oh, I don’t know, a global pandemic, it can be expedited.
Jenny Luna: And in the case of a large threat, the U.S. government can grant an emergency use authorization, or EUA, making a vaccine available to the public before completion of the formal approval process. During the COVID-19 pandemic, three vaccines were granted EUAs to speed up access to vaccines. Most of the COVID candidate vaccines that were created failed. That’s not surprising.
Kelsey Doyle: Yeah, that’s totally typical. According to the WHO, of all the vaccines that are studied in the lab in laboratory animals, roughly 7 out of every 100 will be considered good enough to move into clinical trials in humans. And of the vaccines that do make it to clinical trials, just 1 in 5 is successful.
Jenny Luna: So, having lots of different vaccines in development increases the chances that there will be one or more that will work.
Kelsey Doyle: Of course, working on lots of vaccine candidates at the same time costs lots of money. All that funding for the development of COVID-19 vaccines came from both the public and private sectors.
Jenny Luna: In the U.S., the Trump administration announced a public/private partnership called Operation Warp Speed back in May of 2020. Operation Warp Speed’s purpose was to help produce and deliver 300 million doses of safe and effective vaccines, with the initial doses available by January 2021. Lots of government agencies were involved, including the CDC, FDA, and NIH.
Donald Trump: Through Operation Warp Speed, the federal government is providing unprecedented support and resources to safely expedite the trials, moving on at record, record, record speed. While we accelerate the final phases of vaccine trials, Operation Warp Speed will be simultaneously accelerating its manufacturing and manufacturing process. In other words, we’re getting ready so that when we get the good word — that we have the vaccine, we have the formula, we have what we need — we’re ready to go, as opposed to taking years to gear up. We’re gearing up. It’s risky, it’s expensive, but we’ll be saving massive amounts of time. We’ll be saving years.
Jenna Luna: By all accounts, the operation worked. In total, it provided $18 billion, most of which funded late-stage clinical development and early manufacturing of vaccines. As part of the operation, the U.S. government signed agreements to buy 455 million doses.
Kelsey Doyle: Vaccine candidates produced by AstraZeneca, Johnson & Johnson, Merck, Pfizer, BioNTech, Moderna, Novavax, and Sanofi GlaxoSmithKline all reached stage three testing with some level of Operation Warp Speed involvement.
Jenny Luna: But there was some debate as to what exactly constituted Operation Warp Speed support.
Kelsey Doyle: Right. Pfizer stated in November 2020 that “we were never part of Operation Warp Speed” and had “never taken any money from the U.S. government or from anyone.”
Jenny Luna: But later, the company clarified the statement to say that it was part of Warp Speed as a potential supplier, since it had signed a deal worth almost $2 billion to supply a successful vaccine.
Kelsey Doyle: Meanwhile, over in Europe, Pfizer’s partner, BioNTech, received $445 million from the German government to build out vaccine manufacturing and development capacity.
Jenny Luna: And of course, private-sector companies were also major investors in their own products. Moderna and BioNTech, for example, had been working for years on mRNA technology.
Kelsey Doyle: But the Global Health Centre at the Graduate Institute in Geneva estimated that over 90 percent of $6.5 billion of publicly trackable funding for COVID-19 vaccines came from public sources.
Jenny Luna: As the world sat hoping and waiting, those billions of dollars funded a complex production process that crisscrossed the Atlantic. Each COVID-19 vaccine was produced using a recipe that required numerous ingredients, and production relied on global supply chains and manufacturing facilities around the world. Moderna’s vaccine was mainly produced at their Massachusetts headquarters, but some production was contracted to a company with facilities in New Hampshire and Switzerland. Pfizer’s vaccine was produced in four different U.S. states as well as in Belgium.
Kelsey Doyle: And getting materials from place to place wasn’t always easy. Because of the need for numerous quality checks in a precisely aligned production process, Pfizer sometimes used a corporate jet and helicopter to deliver frozen bottles of DNA plasmid. And during the early days of distribution, the vials of vaccine had to be frozen to minus-94 degrees Fahrenheit.
Jenny Luna: Vaccines, like any drugs, can be huge moneymakers. But the fact that millions of people were sick and dying from COVID created pressure on pharmaceutical companies to treat this situation differently and put saving lives ahead of making money.
Kelsey Doyle: AstraZeneca and Johnson & Johnson publicly pledged to Congress in July 2020 that they would not profit from COVID vaccines, at least initially. But the president of Moderna, Dr. Stephen Hoge, told lawmakers he wouldn’t make that commitment.
Jan Schakowsky: Now Mr. Young from Pfizer has already stated that it will sell its vaccine for a profit. So, for the rest of the witnesses, will you please answer yes or no? Will you sell your vaccine at cost and provide contract transparency so that we can verify you aren’t making a profit? So, Dr. Hoge, yes or no?
Dr. Stephen Hoge: We will not sell it at cost.
Jan Schakowsky: You will what?
Dr. Stephen Hoge: We will not sell it at cost. No, ma’am.
Jan Schakowsky: You will not sell it at cost. OK.
Jenny Luna: The vaccines that did make it to production were purchased by governments and COVAX, an organization created by the WHO and other partners in 2020 to deliver COVID vaccines to low-income nations. COVAX was funded by governments and charitable organizations like the Bill & Melinda Gates Foundation.
In the U.S. and many other countries, including those served by COVAX, COVID vaccines were free to all recipients. But the actual purchase price varied. For example, the U.S. government reportedly paid $19.50 per Pfizer dose, while Israel paid $30. The EU had the best price at $14.70 per dose. The AstraZeneca vaccine cost a lot less, with the EU paying $2.15 per dose and South Africa, $5.25.
Kelsey Doyle: Those prices, even from companies that were making a profit, weren’t seen as high. As an analyst for Schroders wrote:
John Bowler: “The developers — such as Pfizer, Moderna, and AstraZeneca — have largely viewed the first phase of the vaccine drive as an act of public service. It’s part of the social contract such companies have: They want to show the value that an innovative biotechnology industry brings to society and to demonstrate how they can use their expertise to tackle a public health emergency like this.
“AstraZeneca is the most obvious example, as it is explicitly producing its vaccine on a not-for-profit basis. However, even Pfizer/BioNTech and Moderna are not charging real commercial prices for their vaccines, and so are not making substantial profits in this first wave.”
Kelsey Doyle: For the first quarter of 2021, Pfizer reported revenue of $3.5 billion from its COVID vaccine. It didn’t disclose profits, but reiterated a previous estimate that they would be in the high 20 percent range, meaning roughly $900 million before taxes. BioNTech expected to see $15 billion in revenues in 2021 from its portion of vaccine sales.
Jenny Luna: And remember, this is a long game. Analysts expect that COVID-19 will be an endemic disease and vaccines will be an annual routine with shots for schoolchildren and boosters for others. Here’s Pfizer’s CFO, Frank D’Amelio, during an earnings call in early February:
Frank D’Amelio: We’re in a pandemic pricing environment. So, the one price that we published is the price with the U.S. of $19.50 per dose. Obviously, that’s not a normal price like we typically get for a vaccine, $150, $175 per dose. So, pandemic pricing.
Now let’s go beyond a pandemic-pricing environment, or the environment we’re currently in. Obviously, we’re going to get more on price. The more volume we put through our factories, the lower unit cost will become. So clearly, there’s a significant opportunity for those margins to improve once we get beyond the pandemic environment that we’re in.
Kelsey Doyle: Investors who anticipated a stream of profits have not been disappointed. From the start of 2020 through mid-July 2021, the share prices for Pfizer, Johnson & Johnson, and AstraZeneca all rose between 12 and 17 percent.
Jenny Luna: And the companies making the mRNA vaccines did even better. Get this: BioNTech’s share price jumped 692 percent during that year-and-a-half, and Moderna’s price skyrocketed to almost 13 times its previous value, from $20 a share to more than $286 a share.
Kelsey Doyle: Those exploding share prices are largely based on future expected profits, and those profits rely on ownership of intellectual property. Because if someone else can copy your vaccine, its value generally goes down.
Jenny Luna: Yeah, it’s all about IP. And the primary form of IP for vaccines are patents. So, let’s explain really quickly how that works. Want to give us the rundown, Kelsey?
Kelsey Doyle: OK. So, the purpose of patents is to encourage innovation by giving patentholders a temporary monopoly. They have the exclusive right to make, use, sell, and import their patented inventions. All those things are called practicing, the thing they patented. And anyone else who wants to practice the invention covered by the patent needs to get the patentholder’s permission, and generally has to pay for that right. Patents are granted for a limited amount of time, often 20 years.
Jenny Luna: And in this case, a complex intellectual property ecosystem underpinned the development of COVID-19 vaccines. Some ingredients in the vaccines were patented while others were not. In the U.S., products of nature, such as isolated human DNA sequences, could not be patented, but genetically engineered organisms could be. Public Citizen identified a dozen U.S. patents associated with the Pfizer/BioNTech mRNA vaccine, which had been filed between 2011 and 2018. Moderna’s website lists seven patents associated with its COVID-19 vaccine.
Kelsey Doyle: So, it’s complicated. And as we mentioned earlier on, Moderna and the NIH, which had been jointly researching coronaviruses for years, had signed a contract just prior to the COVID-19 pandemic that said mRNA coronavirus candidates are developed and jointly owned by both parties. According to Public Citizen, the U.S. government also filed two patents associated with the Moderna vaccine.
Jenny Luna: The patent landscape was further complicated in instances where the U.S. government provided investment or support to inventions made by private parties, as was the case with many COVID-19 vaccines.
Kelsey Doyle: And it’s important to note, there is a way to get around patents in certain circumstances. Under U.S. law, the government has broad authority to use or manufacture any patented invention or to authorize a third party to do so on its behalf, even without permission from the patentholder. The patentholder in turn has the right to sue the government for reasonable and entire compensation. So, in an emergency, the patentholder might eventually get paid. But in the meantime, the public couldn’t be denied something they desperately needed.
Jenny Luna: And we should point out that although patents got the most attention, they were not the only form of intellectual property necessary to produce vaccines. Specific combinations of the ingredients that went into vaccines comprised another form of IP known as trade secrets. Even the techniques for manufacturing vaccines were a form of intellectual property known as confidential know-how. According to Thomas Cueni, director general of the International Federation of Pharmaceutical Manufacturers and Associations, patents were just the icing on the cake.
Kelsey Doyle: OK, that’s the U.S. Now on to the global patent picture, which is really controversial with COVID vaccines. Jenny, you want to explain this one?
Jenny Luna: All right. So, patents come under the purview of the World Trade Organization, or WTO. All 164 member states — countries, in other words — are obliged to follow WTO regulations or face the possibility of trade sanctions. And back in 1994, after intense lobbying from IP holders like IBM, and a key company in this case, Pfizer, the WTO adopted what they called the Agreement on Trade-Related Aspects of Intellectual Property Rights. It’s abbreviated TRIPS, for short. And TRIPS requires all but the poorest nations to protect one another’s IP rights. So, this means, for example, that a vaccine developed in one country could receive patent protection in any other WTO country.
Kelsey Doyle: But TRIPS has exceptions, right?
Jenny Luna: It does. In certain situations, including medical emergencies, governments could unilaterally invoke the doctrine of compulsory licensing. That means they could use a patent without authorization from its owner.
Kelsey Doyle: There was concern about access to IP underpinning COVID-19 vaccines almost as soon as the global pandemic arrived, way before the vaccines even existed. In April 2020, Costa Rica proposed creating a technology access pool so that the global community would voluntarily share knowledge, intellectual property, and data necessary for COVID-19. The pool, intended to treat vaccines as global public goods, was launched by the WHO in Costa Rica with support from several dozen countries, primarily low- and middle-income, but without support from most of the key players in COVID vaccine development.
Jenny Luna: Then in October 2020, India and South Africa asked the WTO for a waiver from the implementation, application, and enforcement of intellectual property rights related to prevention, containment, or treatment of COVID-19 until widespread vaccination is in place globally and the majority of the world’s population has developed immunity. Here’s South African President Cyril Ramaphosa.
Cyril Ramaphosa: We need more countries to support this initiative. This would enable countries in Africa and elsewhere to access active pharmaceutical ingredients and benefit from technology transfer, including the know-how to manufacture vaccines in Africa at a much cheaper cost.
Jenny Luna: That proposal got bogged down in debate in the TRIPS Council, with high-income countries questioning the need for a waiver, and suggesting that the most significant barrier in low- and middle-income countries was vaccine production capacity, not intellectual property.
Kelsey Doyle: Meanwhile, as the various vaccines proceeded through clinical trials, experts debated how they should be distributed once they were ready.
Jenny Luna: Who gets the vaccine first? Within nations, almost all governments initially focused on vaccinating healthcare workers first because they were at high risk of exposure and were essential to controlling the virus.
Kelsey Doyle: A key next question was whether to prioritize people at risk of serious illness and death, including the elderly and people with health problems, or those who were more likely to engage in behaviors that transmitted the disease, like healthy young adults.
Countries around the world made different decisions. The United States prioritized the elderly. In contrast, China, which had very few cases after the initial outbreak in Wuhan, focused on vaccinating those in high-risk jobs. Indonesia, which had one of the biggest outbreaks in Asia, decided to prioritize nonelderly populations first, on the theory that younger people were more likely to spread the disease. Some analysts also suggested the need to reopen the economy, which had fallen into recession, was a consideration in this decision.
Jenny Luna: Then there’s the question of which countries get the vaccine first, and how many doses. Right away, accusations of vaccine nationalism colored those conversations about global allocation.
Kelsey Doyle: Some wealthy countries precommitted to buy COVID vaccines before the clinical trials had even finished. The Duke Global Health Innovation Center estimated that by December 2020, 10 billion vaccine doses had already been reserved, mainly by high-income countries.
Jenny Luna: At the time these commitments were made, the efficacy of the different vaccines was unproven, so these countries were hedging their bets to ensure they got a vaccine that worked. So, a country like Canada already had the rights to enough confirmed and potential dose purchases to inoculate its entire population six times over. The U.S. had enough to vaccinate 442 percent of its population, and the EU, 246 percent of its people.
Kelsey Doyle: This was not a surprise, though. The WHO had foreseen this buying spree. They developed a fair allocation framework recommending distribution to all countries in proportion to their population size. Under the plan, countries would first receive enough vaccines to immunize 3 percent of their population, starting with frontline workers, and then enough additional doses to vaccinate 20 percent of their population, starting with those at highest risk. Then in a second phase of the plan, countries would receive vaccines based on how fast the virus was spreading and the vulnerability of their healthcare system.
Jenny Luna: Many countries, totaling more than half of the world’s population, signed on the WHO plan, but the United States and China did not.
Kelsey Doyle: There was another vaccine distribution plan put together by a group of medical ethicists from around the world. They created what they called a fair priority model based on three ethical values: benefiting people and limiting harm, prioritizing the disadvantaged, and equal moral concern.
One of that group’s members, University of Pennsylvania bioethicist Ezekiel Emanuel, argued that countries with the biggest need should top the list from the outset. The metaphor he used was when an emergency room was overflowing, the doctor doesn’t say, “I’m giving three minutes to everybody sitting in the waiting room.” The doctor says, “All right. Who’s got the most serious illness? I’m going to attend to you first.”
Jenny Luna: The fair priority model was intended to proceed in three phases. The idea was to use vaccine distribution as an engineering tool to gradually put society back on track one phase at a time.
Kelsey Doyle: The first phase would aim to use vaccines to reduce premature deaths and other irreversible health impacts. The second would reduce serious economic and social deprivations, including the closure of schools and businesses. And a third phase would reduce community transmission, which would in turn mitigate spread and enable the restoration of pre-pandemic freedoms and activities which we missed so much.
Jenny Luna: But when the first vaccines were finally approved and distribution began, equity models didn’t achieve their goals because decision-makers simply ignored those equity models.
Most of the Pfizer vaccines were precommitted to wealthy nations, and most of the Moderna vaccines initially were committed to the U.S.
Kelsey Doyle: Purchase contracts also didn’t always work out as anticipated. Canada invested in vaccines produced in Europe because it feared the U.S. might implement export bans after President Donald Trump issued an executive order promising Americans first priority for vaccines produced in the U.S. But European factories suffered delays, and an arrangement Canada made with the Chinese vaccine producer fell apart.
The EU also suffered delays with supply and distribution. European Commission President Ursula von der Leyen acknowledged that, “We were too optimistic when it came to massive production and perhaps too confident that what we ordered would actually be delivered on time.”
Jenny Luna: COVAX helped fund the AstraZeneca vaccine and arranged for the Serum Institute of India, the world’s largest vaccine manufacturer, to produce 1 billion doses to be distributed in India and 63 other low-income countries. But as India’s COVID situation became increasingly dire in early 2021, deliveries of vaccines to COVAX for the other lower-income countries were delayed.
Kelsey Doyle: In February 2021, when COVAX began distributing vaccines to its 145 participant countries, the initial doses were enough for about 3.3 percent of the population. But WHO head Dr. Tedros, who you heard earlier, noted in an op-ed:
Male Voice: “Rich countries with just 16 percent of the world’s population had bought up 60 percent of the world’s vaccine supply, aiming to vaccinate up to 70 percent of their adult population by midyear in pursuit of herd immunity. But COVAX is struggling to purchase enough doses to cover just 20 percent of the population of lower-income countries by the end of 2021.
“Vaccine nationalism is not just morally indefensible. It is epidemiologically self-defeating and clinically counterproductive. Allowing the majority of the world’s population to go unvaccinated will perpetuate needless illness and deaths and the pain of ongoing lockdowns, but also spawn new virus mutations as COVID-19 continues to spread among unprotected populations. Unchecked spread can result in the emergence of more contagious variants, leading to a steep rise in cases. It is a vicious cycle.”
Dr. Tedros Adhanom Ghebreyesus: Using vaccines as a global public good is in the national interest of each and every country. Vaccine nationalism will prolong the pandemic, not shorten it.
Jenny Luna: That’s Dr. Tedros, speaking at the WHO in September of 2020.
Dr. Tedros Adhanom Ghebreyesus: Priority must be given to vaccinating essential workers and those most at risk — including older people and those with underlying conditions. In other words, the first priority must be to vaccinate some people in all countries, rather than all people in some countries. This is not just a moral imperative and a public health imperative, it’s also an economic imperative. In our interconnected world, if people in low- and middle-income countries miss out on vaccines, the virus will continue to kill, and the economic recovery globally will be delayed.
Jenny Luna: In March 2021, Doctors Without Borders staged a protest at WTO headquarters and unfurled a giant banner that read “No COVID monopolies. Wealthy countries, stop blocking TRIPS waiver.” Their media campaign featured the group’s president, Dr. Christos Christou.
Dr. Christos Christou: If approved, this waiver would help remove certain legal barriers to production. This could facilitate governments and companies to take action that would boost increased production and diverse supply of lifesaving COVID-19 medical tools. We would not solve in an instant the challenges of unequal access that people face around the world to COVID-19 vaccines, medicines, and other medical supplies. But this would be an important first step to open up opportunities for companies to collaborate and share technology and boost global supplies.
Jenny Luna: Proponents of a waiver argued that it would enable multiple facilities to produce vaccines, without which the developing world would continue to be devastated, even as rich countries began to emerge from the pandemic. Dr. Tedros from the WHO tweeted support, saying, “If a temporary waiver to patents cannot be issued now during these unprecedented times, when will be the right time?”
Kelsey Doyle: Others backing a waiver noted that many companies had already benefited from billions of dollars in public funding through research and development in advance purchase agreements, and the IP protections could be restored when the pandemic ended. In April, an editorial in the journal Nature came out in support of a waiver, noting that poorer nations, which account for 80 percent of the world’s population, so far had access to less than one-third of the available vaccines. The editorial argued:
Male Voice: “Patents were never designed for use during global emergencies such as wars or pandemics. A patent rewards inventors by protecting their inventions from unfair competition for a limited time.”
Kelsey Doyle: The editorial made the case that competition and pandemics are incompatible. As it states:
Male Voice: “A pandemic is not a competition between companies, but a race between humanity and a virus. Instead of competing, countries and companies need to do all they can to cooperate to bring the pandemic to an end.”
Jenny Luna: In April 2021, Nobel Prize-winning economist Joseph Stiglitz and Lori Wallach, director of Public Citizen’s Global Trade Watch, published a Washington Post op-ed in which they argued:
Male Voice: “Had WTO members agreed to waive aspects of its agreement on trade-related intellectual property for COVID-related medicines when some countries proposed it last October, poor nations might not wait until 2024 for vaccines, as projected. Waiving intellectual property rights so developing countries could produce more vaccines would make a big difference in reaching global herd immunity. Otherwise, the pandemic will rage largely unmitigated among a significant share of the world’s population, resulting in increased deaths and a greater risk that a vaccine-resistant variant puts the world back on lockdown.”
Jenny Luna: Critics of the suggestion that IP rights should be waived argued that patents were not a barrier to vaccine access. And as an article in The Lancet summarized, “Equitable access can be achieved through voluntary licensing, technology transfer arrangements, and the donor-funded COVAX Advance Market Commitment for vaccines.” In December 2020, a spokesperson for the EU said, “There is no evidence that IP rights in any way hamper access to COVID-19–related medicines and technologies.
Kelsey Doyle: The U.K. government stated that a strong and robust multilateral IP system was actually vital in order to develop new products that could help fight the pandemic. And Pfizer CEO Albert Bourla also strongly objected to a waiver, saying, “The intellectual property, which is the blood of the private sector, is what brought a solution to this pandemic, and it is not a barrier.”
In general, arguments against a waiver center on the notion that temporary relief from patents won’t necessarily speed up manufacturing or supply. And it isn’t clear whether the world even has any spare manufacturing capacity. Philanthropist and COVAX funder Bill Gates initially sided with critics of IP waivers. Here is he talking to Sky News in April 2021:
Bill Gates: The thing that’s holding things back in this case is not intellectual property. There’s not like some idle vaccine factory with regulatory approval that makes magically safe vaccines. You’ve got to do the trials on these things. And every manufacturing process has to be looked at in a very careful way.
Kelsey Doyle: After widespread criticism of this stance, the Gates Foundation changed its mind about a month after that interview and came out in support of a narrow IP waiver.
There’s no doubt that the development of COVID-19 vaccines was a crowning achievement of modern science, a truly astonishing success, both in terms of speed and effectiveness.
Jenny Luna: For vaccine developers, innovation and tight control of intellectual property were foundations of their core business strategy and profitability. But in their statements of corporate purpose, they often talked about making the benefits of their innovations available to people all over the world. AstraZeneca’s website says they want to transform healthcare, change the lives of billions of people for the better, and address some of the biggest healthcare challenges facing humankind.
Kelsey Doyle: BioNTech’s corporate social responsibility statement says, “The aim of the company and its core business model is to provide these novel therapies to patients worldwide, and thus help to improve their lives.”
Jenny Luna: Johnson & Johnson’s credo states, “We are responsible to the communities in which we live and work and to the world community as well. We must help people be healthier by supporting better access and care in more places around the world.”
Kelsey Doyle: Pfizer’s description of its mission includes the claim that “from scientific discovery to breakthrough products to our essential partnerships around the world, we’re committed to quality healthcare for everyone. Because every individual matters.”
Jenny Luna: And Moderna’s mission statement is to “deliver on the promise of mRNA science to create a new generation of transformative medicines for patients.”
As the pandemic entered its second year, with millions dead and billions still at risk, companies, governments, and societies around the world faced difficult decisions about how to handle intellectual property for the miraculous COVID-19 vaccines.
Kelsey Doyle: Is there a right amount of profit for companies to make on their vaccines? If so, what is it? Suppose you’re running a company that developed a COVID-19 vaccine, and your only goal was to maximize long-run profits. How would you handle pricing of your vaccine and intellectual property?
Jenny Luna: Should government funding for a vaccine’s development affect how intellectual property rights are granted to private industry? Are there other approaches governments can take rather than supporting patent waivers?
Kelsey Doyle: And looking forward, what approach to handling intellectual property for COVID-19 vaccines will leave the world best prepared for the next major pandemic?
We hope the information in this podcase helps you better understand the development of COVID vaccines and how they’ve been distributed. Our goal is to spark conversations and ideas about business ethics and business’s role in society. This podcase was based on the original written case titled “Intellectual Property in a Time of Pandemic: The COVID-19 Vaccines,” written by Ken Shotts, professor of [political] economy at Stanford Graduate School of Business, and case writer Sheila Melvin. It was produced by Kelsey Doyle and Jenny Luna. Associate producers were Andrew Stelzer, Hoi Shan Cheung, and Pablo Woythaler. Thanks for listening.