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Vaccine patents complicate efforts to scale manufacturing

Open-source the vaccines. That's the message being sent by the People's Vaccine Alliance, a coalition that includes Amnesty International, Oxfam, and UNAIDS.

Why it matters: Manufacturing capacity needs to be scaled up dramatically — and cutting out the need for laborious, expensive and secretive negotiations with vaccine patent holders could help.

What they're saying: "None of the manufacturers today are remotely capable of meeting demand on a timely basis," says Knowledge Ecology International's Jamie Love. "Vaccine manufacturers are currently hoarding technology, for commercial reasons."

By the numbers: Pfizer, Moderna and AstraZeneca are only expected to produce enough vaccine in 2021 to cover about 1.5% of the world's population.

  • Of the 108 million people vaccinated so far, only 4% have been in developing countries. Nearly all of those have been in India, where Oxford University ensured that the Serum Institute of India would be licensed to produce its vaccine at the same time that AstraZeneca received control of the intellectual property.
  • The global economy will lose $9 trillion if the developing world fails to receive timely access to vaccines, according to a study from the International Chamber of Commerce. Half of that cost will fall on rich countries.
  • According to the Alliance, there are at least 20 more facilities in India alone that could start producing vaccine, and many more in other countries such as Argentina, South Africa, Brazil, Mexico, and Indonesia.

The big picture: While Operation Warp Speed helped to stand up new manufacturing facilities in the U.S., there has been little to no such investment in most of the rest of the world.

  • "We need to build new capacity," says Oxfam's Niko Lusiani. "Even if it takes two years it will still be useful. For COVID-19, for future pandemics, and for future strains."
  • "Freeing up IP will unlock a lot of public and private investment into vaccine production."

Pfizer CFO Frank D'Amelio said on the company's earnings call this month that while "pandemic pricing" in the U.S. is $19.50 per dose, "a normal price that we typically get for a vaccine" would be $150 to $175 per dose.

  • The pandemic pricing gives Pfizer a profit margin of well over 20% — but D'Amelio said that "there's a significant opportunity for those margins to improve once we get beyond the pandemic environment" — when pricing will free up and factories become more efficient.

How it works: While international trade law does allow countries to overrule patent protection for vaccines, countries tend to be very reluctant to do so, because they fear retaliation and also because they need help with the technical knowhow involved in manufacturing the vaccines.

The other side: Opening up manufacturing to a point where the patent holders have no oversight could lead to quality-control issues.

  • Opponents of open-sourcing vaccines also say there's no evidence that there's a lot of spare manufacturing capacity.
  • China and Russia are also big unknowns. Both of them are likely to try to distribute their vaccines globally as a form of soft power.

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