The Grubby History of How Vaccines Became Intellectual Property
Not long ago, life-saving medical know-how was viewed as belonging to everyone. What happened?
by Alexander Zaitchik, illustrated by Sarah Wilson-Austensen
Even within the walls of the World Trade Organization, the Trade-Related Aspects of Intellectual Property Rights agreement, or TRIPS, is a paradox and a freak: a temple to monopoly inside the church of free trade.
The Biden administration’s announcement on May 5 that it supports an emergency waiver of intellectual property rules by the WTO has been rightly heralded as a major event. Even if the White House statement was vague on the details, the news jolted to life a seven-month stalemate inside the WTO over how to overcome a supply crisis that has seen only three-tenths of 1 percent of vaccines go to low-income countries. The European Parliament may push the needle further in June when it votes on a resolution calling on European capitals to join Washington on the side of more than 100 countries that support lifting intellectual property restrictions from products used to treat and contain Covid-19.
One thing that hasn’t changed is the tone of ridiculous solemnity around the intellectual property regime in question. Listening to the most stalwart defenders of TRIPS, it’s possible to confuse the proposed waiver with a particle accelerator of unfathomable and experimental power. To hear the trade associations and their political allies tell it, meddling with TRIPS jeopardizes your job, your safety, and the global economy, as much as or more than SARS-CoV-2, as well as any hope of future innovation and progress. In announcing the White House decision, U.S. Trade Representative Katherine Tai gravely described the waiver as an “extraordinary measure.”
In truth, there is nothing extraordinary about suspending TRIPS to address what the WTO’s director-general calls “the moral and economic issue of our time.” There can’t be, because there is nothing extraordinary about TRIPS itself. Its backstory is almost impossibly shallow and grubby; its founding documents younger than Justin Bieber. TRIPS is not the expression of a universal post–Cold War consensus, in the way the U.N. Declaration on Human Rights gave voice to human aspirations after World War II. It was born as a brute and profoundly undemocratic expression of concentrated corporate power—the work of “less than 50 individuals,” according to a U.S. trade official present at the creation. One of that official’s reluctant Indian counterparts, Prabhat Patnaik, has described the TRIPS affair as “a parody of the wildest conspiracy theory.”
The negotiations that led to the creation of TRIPS were less held over a table than conducted on a rack. It was the only way to enforce the peculiar and nearly universally rejected concept of medical monopoly, an American innovation that cut hard against centuries of moral, economic, and legal tradition, including those of the wider West.
In 1951, Jawaharlal Nehru, the first president of the newly independent India, decided to build a penicillin factory. None of the big commercial producers, however, liked the idea of transferring the needed technology and know-how to a large developing country like India. They instead offered to export the antibiotic in bulk, then bottle it in Indian factories for local distribution and sale. Only Merck agreed to build an actual factory. Knowing it was the only company to make this offer, it attached onerous long-term royalty demands and placed limits on Indian control of the technology.
Nehru was leaning toward accepting Merck’s offer when a delegation from the young World Health Organization arrived in New Delhi. The officials presented Nehru with another option: UNICEF and the WHO would provide grants to cover the full cost of building a penicillin factory, as well as United Nations technicians to oversee tech transfer and train native staff. As part of the deal, the U.N. representatives offered to set up a research center affiliated with the factory, with the goal of developing India’s scientific and technical capacity to make other antibiotics and essential medicines.
It can be difficult to imagine today, but for much of the Cold War, U.S. foreign and trade policies didn’t track with the interests of the U.S. pharmaceutical industry.
The U.N. deal came with only two strings: India must promise to keep the factory fully in the public sector and share relevant research or discoveries with a network of similar projects the U.N. was establishing across the global south. Nehru accepted. The result was Hindustan Antibiotics, the cornerstone of India’s emergent generics industry.
It can be difficult to imagine today, but for much of the Cold War, U.S. foreign and trade policies didn’t track with the interests of the U.S. pharmaceutical industry. Truman’s State Department backed the U.N. penicillin project in India over Merck, and generally supported an internationalist agenda of building up native medicine capacity in the decolonizing countries of Africa, Asia, and Latin America. Washington understood that the drug industry’s attempts to protect its knowledge and markets abroad not only lacked legal or moral bases but also threatened to undermine America’s image and Cold War objectives by turning a potent form of soft power into a symbol of capitalist greed and inhumanity.
The day after Salk’s polio vaccine was declared a success, Dwight Eisenhower offered to share all information and know-how with every country that requested it, including the Soviet Union. A month before John F. Kennedy’s assassination, he enraged the drug companies by issuing a memorandum that restricted private monopoly claims on government science—especially federal research in “fields which directly concern the public health.” The country’s interest, wrote Kennedy, is “served by sharing of benefits of government-financed research and development with foreign countries to a degree consistent with our international programs and with the objectives of U.S. foreign policy.” Kennedy wanted to keep worldwide rights to public science under public control so it could be shared and licensed broadly, rather than claimed by a private actor hoarding and profiting from exclusive claims on intellectual property.
Intellectual property is not like other property. If you possess a cow, and someone steals it, you have lost your cow. If you discover a process that makes cow’s milk safer to drink, the possession of that knowledge by others does not reduce your store of it. In economic terms, knowledge is a “nonrivalrous” good. In Jefferson’s famous formulation, “He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me.”
Because of this, the concept of intellectual property was resisted in Europe into the twentieth century. As late as 1912, Holland rejected patents and maintained what it called a “free trade in inventions.” This was consistent with the classical liberal doctrine established by Adam Smith and John Stuart Mill, both of whom were suspicious of patents. The nineteenth century’s most withering attacks on intellectual property were found not in left-wing journals but in the pages of The Economist, which advocated for the abolishment of the English patent system. “Before [inventors] establish a right of property in their inventions, they ought to give up all the knowledge and assistance they have derived from the knowledge and inventions of others,” suggested the magazine in 1850. “That is impossible, and the impossibility shows that their minds and their inventions are, in fact, parts of the great mental whole of society, and that they have no right of property in their inventions.”
In accord with the prevailing view in Europe, The Economist understood state-protected monopolies as vestiges of competition-squelching royal privilege. The first patent system arose in Elizabethan England not to “drive innovation” but to limit Crown-dispensed monopolies. Hatred of these monopolies played a starring role in the American Revolution, whose leaders were understandably unenthusiastic about patents. Thomas Jefferson and Ben Franklin thought them impediments to progress and mockeries of what they considered the incremental, cumulative nature of all “invention.”
The phrase intellectual property was coined in post-Revolutionary France to obscure the royal origins of monopoly and deflect attention from the true subject of intellectual property claims, which is not knowledge but markets. Since markets do not fit easily into modern theories of rights and property, “those who started using the word property in connection with inventions had a very definite purpose in mind,” wrote the Austrian economist Fritz Machlup:
They wanted to substitute a word with a respectable connotation, “property,” for a word that had an unpleasant ring, “privilege.” [They] knew that there was no hope of saving the institution of patent privileges except under an acceptable theory … and in deliberate insincerity “construed the artificial theory of the property rights of the inventor” as a part of the rights of man.
When medicines were added to this debate, there was no debate at all. Only in the early to middle decades of the twentieth century did the United States abandon an entrenched global taboo against exclusive property claims on medicines. In Europe, this taboo lasted another half-century. Switzerland, a pharmaceutical powerhouse, did not issue drug patents until 1977. As with every country before the advent of the WTO in 1995, it had little power to enforce these patents outside its own borders. Internationally, something like a Dutch-style free trade in medicines still reigned in the 1970s. But not for long.
Feeling betrayed by their own government, the drug companies watched the rise of the generics industry in India and elsewhere with alarm. With help from the U.N., developing countries during the 1950s and ’60s began to invest in native scientific and manufacturing capacity. The pacesetter remained Nehru’s India, whose alternative drug economy was perceived by U.S. drug companies as a threat, not just to its profits in developing countries but to the fledgling legitimacy of monopoly medicine, especially inside the U.S., where the real money was made.
Between 1959 and 1962, an Arkansas Democrat named Estes Kefauver oversaw an investigation into the postwar pharmaceutical industry. The high-profile hearings run by Kefauver, chair of the Senate subcommittee on monopoly, focused on the core of the industry’s business model: patents, cartelization, and monopoly pricing. The hearings pulled back the curtain on a post-taboo drug industry that Americans and the rest of the world now saw clearly for the first time: markups as high as 7,000 percent on patented drugs whose creation involved natural processes discovered in publicly funded labs.