Will patent waivers hurt COVID-19 vaccine companies?

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In this video by Motley Fool Live, registered on May 10, Fool.com contributors Brian Orelli and Keith Speights discuss the potential for the Biden administration to waive patent rights to vaccines manufactured by Moderna (NASDAQ: ARNM), Johnson & johnson (NYSE: JNJ), and Pfizer (NYSE: PFE) and BioNTech (NASDAQ: BNTX). While the risk may seem daunting, investors should keep the big picture in mind: patent rights may never be canceled, and even if they do die, other companies may be unable to manufacture the vaccine. off patent.

Brian Orelli: Last week, the Biden administration approved a proposal to waive patent rights to the COVID-19 vaccine. How much of a problem is this for current vaccine makers like Moderna, BioNTech, Pfizer, and Johnson & Johnson?

Keith Speights: I really don’t think it’s as important as some people claim. Certainly not as bad as the inventory declines showed last week.

I noticed that Moderna’s CEO has publicly stated that he hasn’t lost a minute of sleep over this news. I think that he is right; he shouldn’t have lost sleep. His reasoning was that there were other companies that, if they had access to the technology, would not have the expertise to make the messenger RNA vaccines that Moderna makes. He thought, “Listen, even if that happens, we won’t be too threatened.” I suspect he’s right.

Now Pfizer CEO Albert Bourla has expressed some concerns. He wrote in a statement that this proposed waiver of intellectual property rights may in fact create more problems than it solves. Bourla noted that infrastructure is really not the bottleneck for Pfizer; it is the availability of raw materials. He believes this intellectual property waiver would trigger a global rush for these raw materials. Companies that don’t have a lot of expertise in developing these vaccines could potentially disrupt the supply chain for companies like Pfizer that have the expertise.

It wouldn’t surprise me if this scenario described by Bourla happened to some extent. However, I think companies like Pfizer and Moderna would probably be able to pay a lot more for these raw materials and find the suppliers they need and severely disadvantage other companies trying to make these vaccines on their own. But if that were to happen, I would think Pfizer, Moderna would probably have to increase their prices to countries like the United States that could pay.

Bourla also expressed some concerns that the move could deter companies from taking risks in the future. My thought on this, though, if it’s just a temporary thing, it probably wouldn’t be too much of a problem. But I think the big story [laughs] here it is probably a lot of ado about nothing, because Germany has already declared itself against the granting of this temporary exemption and that it is a member of the World Trade Organization, and according to this As I understand it, Brian, they have veto power like other WTO members. If Germany opposes this, then all this talk is a waste of time. [laughs] So I don’t think it will be a big deal. I don’t think it’s going to pass, but even if it does, I just don’t think it’s a big deal for Pfizer and Moderna and some of the other big vaccine makers.

Orelli: If it passes, do you think it’s a slippery slope? It’s a pandemic; that makes sense. But then when do you start doing it for cancer drugs that are really expensive or insulin because people need it to live? That sort of thing.

Speights: I think it could be. I don’t think it will. The Biden administration is giving way here, I think, to some pressure within the Democratic Party. I don’t think they would – I think no presidential administration in the United States – would be in favor of almost [laughs] willy-nilly patent rights. I think they realize that it would undermine the foundation of our whole drug development structure and cause a lot more problems than it solves. Maybe I’m too optimistic, Brian. I don’t know what you think, but I just don’t think it’s going to happen.

Orelli: Yes. I guess it just depends on the state of Congress and who the president is. I think right now we’re so divided that I don’t think anything will go through Congress in its current state and possibly in its future state. I think you are right, but I fear setting a precedent. Although I think we have already had this one. They rocked the patent rights on anti-HIV drugs, and that hasn’t caused a major patent inactivation storm in the last 20 years or as long as it’s been happening since they’ve been. did. I think we’re probably fine, but I just wanted to talk about it.

Speights: Yes. Personally, I don’t think this is a good decision. I think it is better to respect all intellectual property rights and find a better solution. I agree that more vaccines need to be made available to third world countries and developing countries. I think there is probably a better way.

Orelli: Yes. I think they just let the companies increase their production. Moderna is planning 3 billion doses next year. I think if we just let them go on [laughs] theirs and maybe even support them financially, I think that should be enough to get us where we need to be.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.



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