There are times when politics seems silly just because people are arguing from a different starting point, a different set of values. There are also times when political demands are silly simply because they are silly. Such is the case with this European Union call for patent pools on coronavirus drugs and vaccines. The silliness – the idiocy would not be too harsh – being that patents and not pools of them are the very solution for the problem being diagnosed.
We would indeed like to have the public good of a useful treatment for this pandemic. Patents are the way we gain such public goods. Obviating the method of gaining the public good is not, therefore, a good method of gaining the public good.
But then, you know, economics, the European Union and public policy:
As some countries buy up drugs thought to be useful against the coronavirus, causing global shortages, and the Trump administration does deals with vaccine companies to supply America first, there is dismay among public health experts and campaigners who believe it is vital to pull together to end the pandemic.
While the US and China face off, the EU has taken the lead. The leaders of Italy, France, Germany and Norway, together with the European commission and council, called earlier this month for any innovative tools, therapeutics or vaccines to be shared equally and fairly.
“If we can develop a vaccine that is produced by the world, for the whole world, this will be a unique global public good of the 21st century,” they said in a statement.
The sole resolution before the assembly this year is an EU proposal for a voluntary patent pool. Drug and vaccine companies would then be under pressure to give up the monopoly that patents allow them on their inventions, which means they can charge high prices, so that all countries can make or buy affordable versions.
It’s entirely true that the knowledge of how to treat or prevent Covid-19 would be a public good. A public good being something that is non-rivalrous and non-excludable. Once we know how to treat it and the knowledge gets out then we can’t stop someone from using it nor does someone using it mean there’s less left over for others. Cool, public goods are really lovely things.
However, as economists have been pointing out for a century now public goods are things that it’s very difficult to make a profit from. Or even, actually, any revenue. For if anyone can do it, there’s no scarcity, then how can you charge? Knowledge being one of those exemplars of public goods.
Then, well, if you can’t make a profit, why would you invest? Given that it takes $ a billion at least to find, test, produce and get approved a new drug where’s that billion going to come from if everyone gets to use it the moment it is approved? The answer we use being to produce, out of thin air, something that makes the new drug not a public good. That patent says that for the first 20 years – usually 10 after approval as that takes a decade – it isn’t free to everyone to use. At which point investors back the hunt for new drugs and we get – after that 20 year delay – our public goods. Without the patent investors wouldn’t and nor would we.
So, patents are our method of calling public goods into creation. They’re the solution to our basic economic problem – where’s the money coming from to do the development? At which point the dunderheads say that we really, really, want to have this new development therefore no one should make a profit.
Even, Conan O’Brien doing a facepalm
We want the cure. To gain the cure people will have to invest a lot. Therefore we must let them make a profit from their investments. Because next time some lurgy leaps at us out of a Chinese lunch we want people to invest again. What is so difficult to understand about this?