In December, the Biden administration asked the International Trade Commission to conduct a study. In her instructions to the agency, Katherine Tai, the U.S. trade representative, said she wanted a “robust record” of the pros and cons of waiving intellectual property rights to help developing countries fight COVID.
Sadly, Tai’s instructions shine a spotlight on everything except intellectual property. The ITC’s challenge will be to refocus the study on a counterfactual: would diagnostics or therapeutics be available today were it not for the intellectual property the administration is thinking of waiving?
Here’s the backstory. Last June, members of the World Trade Organization agreed to suspend patents on COVID vaccines for five years. They left the decision to expand this waiver to diagnostics and therapeutics for six months, meaning December 17. But on December 16, WTO members chose to delay this decision again. This was primarily because of opposition from several countries but also because serious questions remain about which technologies would count as COVID diagnostics and therapeutics.
The administration has already canvassed stakeholders on both sides of the debate, summarized in a three-page review of consultations with the U.S. trade representative. Proponents of expanding the waiver told the trade representative they “have longstanding critiques” of the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights, and they oppose intellectual property as “a matter of principle.”
Critics of expanding the waiver countered that they don’t see intellectual property as a “barrier to accessing” diagnostics and therapeutics and that poor countries can already use voluntary and compulsory licenses to access COVID-related patents, and this is assuming that their intellectual property regimes are in effect, which is generally not the case.
Interestingly, while proponents and critics of an expanded waiver focused on intellectual property in their comments to the trade representative, Tai’s instructions to the ITC do not. She asks for a list of diagnostics and therapeutics “covered by patents,” including those in development, and she raises a single question about the “relationship between patent protection and innovation in the health sector.”
And that’s it for intellectual property. The questions are primarily about market trends, pricing and the relative efficacy of compulsory licenses. These are essential questions, but they presume the existence of technologies that wouldn’t be available were it not for intellectual property.
In other words, they miss nearly all the action.
To see why, consider the dramatically different worldviews of those in favor of, and those against, intellectual property. Those in favor focus on the need to incentivize innovation, their argument being that there wouldn’t be COVID diagnostics and therapeutics if patents didn’t promise at least some appropriable return on investment for the innovator. By contrast, those against focus on questions about how to price diagnostics and therapeutics that already exist, and thus abstract away from the challenge of incentivizing innovation in the first place.
This debate is about whether the action is ex ante or ex post. Without intellectual property, diagnostics and therapeutics wouldn’t be around to price. Only once these technologies come to market is it meaningful to discuss pricing them. The problem with Tai’s questions is that they play into the hands of those who oppose intellectual property, black-boxing the challenge of innovating life-saving technologies.
Other countries have already surveyed these issues and offered their assessment. For example, in a communication to the WTO, Mexico and Switzerland found that there is no global shortage of COVID diagnostics or therapeutics and that the remaining challenges “are not IP-related.” Accordingly, they argue that “no adjustments to the IP system seem to be required.”
The administration is correct to ask the ITC for a study, though it’s hard to believe that talk of waiving American intellectual property has progressed this far without one. Still, the ITC should be instructed to look carefully at the ex ante questions about innovation, and less time on the ex postquestions about how to price technologies that wouldn’t exist if not for the intellectual property that the administration may soon waive.
