Government May Attempt to Steal COVID Vaccine

As we all try to move past COVID-19 and learn and progress from the racial tensions tearing at the heart of our society – there is one thing that we are all waiting for, one thing that brings us together, and one thing that will help us all move on and attempt to recover – A vaccine that will help protect us from the Coronavirus.

While other treatments or solutions might be a part of our eventual recovery, a vaccine is what really help our families return to normal, help the economy return to full speed ahead, and allow us to focus on racial tensions instead of when and where people should wear masks.

But, in part because of this unanimity and impart because of ignorance of the innovation system and process – there is likely going to be a public policy fight over the vaccine when it finally does come to fruition. The problem is that some of our leaders are going to want to steal it from whichever company ends up winning the race to produce a vaccine.

There are currently several promising vaccines, with multiple companies working together in an effort to get these vaccines developed, tested, and manufactured. They have been able to rush this development because they have large Research and Development arms. They have years of data and experience working in these areas. These innovative companies have invested millions and millions to get the point that they can rush a project like this – and fortunately they are all racing to win the race.

The race is the point – we always want these companies racing to beat each other to market. The winner of the race gets a patent. The patent awards the winner the rights to their innovation for limited time, and it is during this limited time that they can both recoup the money they risked in this race and build up their war chest to risk on the next race. This model has worked amazingly well. US Research and Development in the pharmaceutical space is second to none, and because of that the rest of world routinely lags behind in its access to the newest drug molecules.

However, leaders are already discussing using several different tactics to steal the Intellectual Property of the winner of the COVID-19 Vaccine race. They are looking at possibly using March-In rights or possibly even the more destructive – and lesser known 28 U.S.C 1498(a).

March-In rights, which are in the Bayh-Dole Act which passed 40 years ago, state that when the government manufactures – or has a subcontractor manufacture – an innovation that is patented that the patentee has recourse and can recover reasonable compensation. In fact, recipients of March-In rights are to be granted license terms that are “reasonable”. But under 28 U.S.C 1498 the only recourse is litigation.

And, while March-In rights only apply to inventions that were developed with the support of the federal government and only intended to be used in extremely rare situations such as a company who is unwilling or unable to commercialize or license their innovation.  – 28 U.S.C 1498 pertains all innovations regardless of the source of funding.

Use of either of these provisions is a bad idea for the long-run – the problem is that the short-run politics might be too inviting for far too many legislators. In the short-run politicians will see a development that we are all waiting for, and feel the urge to steal it from some amorphous large pharmaceutical company and hand it out like Santa Claus at the Mall hands out cheap candy canes.

Innovators need to be rewarded for innovating – and if the government steals the innovation – then that award is being stolen. There aren’t many times when we can actually point to the constitution in public policy issue, but this is one of those. Article I, Section 8 of the Constitution actually lays out the rights for inventors – and their isn’t a footnote in the constitution as laid out by our founders that states “unless the invention is really important”.

The problem is that short-run or short-sighted public policy is almost always bad long-run economics – and in this case short-sighted politics would also mean bad long-run public health. The problem is that we are almost sure to face another COVID-like pandemic. And, when we face that pandemic it will be obvious to all of the companies involved that racing to solve the problem isn’t worth the risk or the money.

The development of a vaccine for the Coronavirus is already well underway for COVID-19, and confiscating COVID patents through March-In or 28 U.S.C 1498(a) would irreparably damage the innovation ecosystem. While politicians would do well to make sure that development of a vaccine isn’t hampered by red tape – they should also start looking out to the future and how we are going to deal with the next pandemic. That means celebrating the innovation – not stealing it.

Charles Sauer is the President of the Market Institute, and the author of Profit Motive: What Drives the Things We Do.