A week ago, the Biden administration announced support for waiving intellectual property protection for Covid-19 vaccines. In response, Bio, a trade association representing biotechnology companies, issued a statement saying, “The United States has unfortunately chosen to set a dangerous precedent with these actions.”
This week on Intercepted: Intercept investigative journalists Sharon Lerner and Lee Fang discuss how the pharmaceutical industry has ruthlessly fought to maintain IP protection from the beginning of the pandemic despite global calls to share knowledge and know-how to end the crisis as quickly as possible. By claiming the same monopoly IP rights on Covid-19 therapeutics and vaccines as other drugs, the industry has perpetuated a market of scarcity and profiteering when a collaborative global response is needed.
Jeremy Scahill: This is Intercepted.
Laura Flynn: I’m Laura Flynn, supervising producer at The Intercept.
At this point in the U.S., more than 50 percent of people have received at least one Covid-19 vaccine shot. While there are still hotspots in some parts of the country, the overall number of new infections and deaths are precipitously declining.
After a fall and winter surge in hospitalizations and deaths in Los Angeles County, the region is now on track to vaccinate 80 percent of adults by the end of July. On Monday, the Food and Drug Administration authorized the Pfizer-BioNTech vaccine for 12- to 15-year-olds, further expanding vaccine access in the U.S.; however, worldwide infection rates are still rising in 30 countries. India and Brazil are reporting the most new infections each day. India has reported consecutive daily death tolls above 4,000, as hospitals run out of oxygen, beds and life-saving drugs.
ABC7: This morning, India’s healthcare system is completely overwhelmed as the country grapples with the world’s largest Covid crisis.
Sky News Australia: India’s daily Covid-19 death toll has hit a record high, with more than 4,000 people succumbing to the virus in a single day; 4,187 deaths have been confirmed in the past 24 hours.
Audie Cornish: This second wave of the coronavirus in India has also been breaking records for new infections. But scientists say the country’s official numbers are almost certainly a vast undercount.
LF: From the beginning of the pandemic, The Intercept’s investigative journalists Sharon Lerner and Lee Fang have reported on how efforts to maintain intellectual property rights from life-saving drugs to vaccines have hindered the global response. I spoke to them about the need for a global warp speed.
Sharon Lerner: Just as soon as Covid was coming down the pike and people around the world started realizing that we were heading into a true pandemic, the major pharmaceutical companies began gearing up to profit from that pandemic.
Lee Fang: It’s been clear that a relatively small but very influential number of leaders on Wall Street, people who represent investors, have seen this as a golden opportunity.
SL: I’m Sharon Lerner. I’m an investigative reporter at The Intercept. I’ve been covering vaccine and Covid-related profiteering since the beginning of the pandemic.
Lee Fang: I’m Lee Fang. I’m an investigative reporter for The Intercept, I cover the confluence of money and politics and, like Sharon, I’ve been writing a lot about some of the corruption issues, some of the inequality issues that have arisen out of this pandemic.
Reporter: — a waiver at the WTO, are you going to back that? Is the U.S. government going to back that?
President Joseph R. Biden: Yes. I’m going to be talking about that later today. Yes.
SL: So the big news last week is that Katherine Tai, the U.S. Trade Representative, issued a statement saying that the Biden administration is now supporting waiving IP protections for vaccines.
Lee Fang: The Biden administration surprised a lot of observers by coming out in favor of this waiver proposal proposed last year by a coalition of countries led by India and South Africa, asking for a suspension, a temporary suspension of IP and patent enforcement on certain medications related to the Covid-19 pandemic. Basically saying that corporations that own the IP or patent rights to vaccines, to therapeutics, to other medical treatments, there should be no enforcement so that other countries can allow their homegrown industries, their pharmaceutical companies, to produce generic vaccines and other medical products to end the pandemic as fast as possible.
SL: The Trump administration, not surprisingly, was against this, along with Brazil, the EU, Australia, several other countries that were opposing the TRIPS waiver.
The basic importance of this waiver, which is only supposed to last during the pandemic, is that it can free up companies to make vaccines. And obviously, we still need that. The vast majority of the world isn’t vaccinated, particularly the low-income countries where less than 1 percent of the population has been vaccinated.
Right now, the way that wealthier countries — the U.S. and others — are confronting this crisis for the developing world is through voluntary agreements. The largest of such is an organization called COVAX; that’s kind of an initiative charter from a nonprofit founded by the Gates Foundation, by Bill Gates, called Gavi. It’s also sanctioned through the World Health Organization.
Gavi (COVAX): The COVAX Pillar aims to ensure that every country gets fair and equitable access to eventual Covid-19 vaccines. It does this by acting as an insurance policy, with the largest portfolio of vaccine candidates in the world.
Lee Fang: Basically, this is a voluntary effort where wealthier countries can donate their excess vaccines, wealthy individuals and corporations can make donations to this group to make purchases of vaccines, and then those vaccines can be distributed on a not-for-profit, or free basis to the developing world. And that’s been the international effort. And so far, it’s kind of fallen short.
SL: So right now, COVAX has delivered about 54 million doses, which is way better than not delivering 54 million doses, but it’s nowhere near what the world needs. And their goal is really to reach some of it. It’s not even designed to reach everybody.
Lee Fang: And it relies just simply on pharmaceutical companies cutting their own voluntary agreements with each country through COVAX or wealthier countries making voluntary donations. It can’t force the transfer of vaccines. It can’t allow the transfer of technology to produce generics. It’s really just kind of a gigantic charity effort that, although well intentioned, has come incredibly short in terms of ending the pandemic.
And that’s where we’re at today, a question of: Do we continue the approach led by COVAX in getting the vaccine to the developing world or do we try some new approaches? That’s where the waiver comes in. Do we start leapfrogging the demands of these pharmaceutical companies and sharing the technology, sharing the formulas, getting more capacity out there, so there can be more competition in this market and more vaccines to developing countries?
SL: The head of the WHO tweeted that it was a monumental moment in the fight against Covid. It really is. Almost immediately you saw the stock prices of vaccine-makers tumble.
CNBC: Vaccine makers taking a hit in the last hour of trading after the Biden administration said it supports waiving patent protections for Covid vaccines. That would effectively hand over the secret recipe for these life-saving vaccines to other manufacturers, possibly in other countries, to make them.
SL: Moderna, Novavax, Pfizer, even the Chinese vaccine-makers, their prices just started to fall. And you saw industry begin to freak out.
Lee Fang: BIO, which is a trade group that represents Moderna, Pfizer, and other large pharmaceutical companies claim that this decision will act, “as a disincentive for companies to respond to the next pandemic.” They’ve claimed that this is an unprecedented step that will decrease the ability for pharmaceutical companies to create innovative products in the future.
SL: And then they got even uglier. And they started warning that this is going to undermine the global response to the pandemic, and that it’s dangerous. And this is echoing these arguments that the pharmaceutical industry has been making from the beginning about this, that it will destroy the intellectual property system, it’s gonna discourage innovation, and it’s really dangerous because other countries and other companies don’t have the capacity to do this safely.
Lee Fang: There are really two ways to combat this crisis. There’s a way to do it in a sense that maximizes profit for the healthcare companies, the pharmaceutical companies. And then there’s the more collaborative, nonprofit approach that really brings people together and solves this crisis as fast as possible in a collaborative way, that brings government, corporations, and NGOs together at the same table. And early on, pharmaceutical companies were fighting this more collaborative approach tooth and nail.
SL: From the very beginning, there were plans to capitalize on the desperate need for medicines, for vaccines, for test kits, for protective gear.
Lee Fang: We’ve reported very early on, on banks pressuring health care distributors, healthcare companies to raise prices on ventilators, on masks, and other kinds of therapeutics used to treat people infected with this virus.
SL: So we thought members of the House would begin to try to guard against this a year ago, February, so February 2020. Jan Schakowsky, who’s a Democrat in the House:
Rep. Jan Schakowsky: Last week, 45 of my colleagues and I sent a letter to President Trump. And what we were talking about is: Are we going to be guaranteed affordable treatments or vaccines that are developed? We’re concerned that private pharmaceutical companies may end up having a role in this and raising the costs beyond the point that people could well afford it.
U.S. Health Secretary Alex Azar: We absolutely share your passion around ensuring affordable access to medicines, but the private sector must have a role in this. We will not have a vaccine, we will not have therapeutics without the private sector candidates that they and we will have to invest in.
SL: That request was opposed by many Republicans who actually opposed adding language to a House bill that would have made sure that there wasn’t obscene profiting. And the final aid package, the coronavirus aid package that was passed, did leave out that language.
Tedros Adhanom Ghebreyesus: Today, we are joining 37 countries and numerous partners to launch the Covid-19 Technology Access Pool or C-TAP. C-TAP was first proposed by His Excellency President Carlos Alvarado of Costa Rica.
Lee Fang: Last year, the president of Costa Rica proposed a special idea — and technology — and patent-sharing initiative, so that leading companies and scientists could all pitch in and share the latest vaccine and therapeutic technologies and research so, as a global society, we could come up with the most efficient ways to treat this disease.
President Carlos Alvarado: Gracias, Dr. Tedros —
Translator: Thank you, Dr. Tedros, my brother. In recent weeks, this joint effort has helped us to put together this call for solidarity and action, to give us a platform so we can share openly — on a voluntary basis and in a collaborative way — the data and the intellectual property that will be generated throughout the world in order to make it a public, global good.
Lee Fang: And as soon as that was proposed, a body that represents the international pharmaceutical industry — a lobbying body — immediately held a press conference and hosted the CEOs of major pharmaceutical companies, and really blasted this proposal, at least implicitly, saying that any effort to share this technology was “nonsense and dangerous.” That’s the CEO of Pfizer, Albert Bourla.
Albert Bourla: I want to say that I’m very respectful of the opinions of many people, of everyone. And, as such, I think I’m hearing all the people that are speaking about IP. But I have to say at this point of time, it’s, I think, is nonsense. And, at this point of time, it’s also dangerous.
Lee Fang: The CEO of AstraZeneca, similarly attacked this effort and said:
Pascal Soriot: I think IP is a fundamental part of our industry. And if you don’t protect IP, then essentially there is no incentive for anybody to innovate. Now, what is important is that companies volunteer to provide their products at no profit, like we are doing right now in case of pandemic or crisis, when it’s needed.
Lee Fang: So from a very early stage of this pandemic, there’s been a push and pull, a push by investors and CEOs of healthcare companies, health care distributors, pharmaceutical companies, to maximize profit during the course of this pandemic and a pushback from countries and NGOs, activists and politicians, to say: Look, this unprecedented crisis requires an unprecedented level of collaboration and not this kind of typical profit-seeking we’ve seen in the healthcare sector.
SL: The companies that are lobbying for this, we already know that Pfizer, who we just talked about, are on track to, I believe, make $24 billion in profits in 2021 from the vaccine. And then you look at Moderna, which was almost entirely funded by the U.S. government, and they’re also on track to make huge — I believe it’s around $18 billion — this year.
President Franklin Delano Roosevelt: It is for the dedication of these noble buildings to the service of man that we are assembled here today. The National Institute of Health speaks the universal language of humanitarianism.
SL: When a product gets made, there are lots of stages of development, and often, at the very earliest stages, and sometimes throughout its development, that science is funded by the National Institutes of Health. And government funding is the big spark for research. And so all the vaccines have some U.S.-funded science in them.
JS: Taxpayers have provided nearly $10 billion to Operation Warp Speed, but have no knowledge of how these resources are being spent.
For the companies receiving taxpayer funding for your vaccines: Have any of your contracts or agreements with the federal government included provisions to ensure affordability in pricing or vaccines — affordable pricing of vaccines or treatments?
Let me start again with Dr. Hoge, about the agreements, what’s in ’em?
Dr. Stephen Hoge: No, we don’t have a supply agreement with the U.S. government, Congresswoman. We have a research and development agreement.
SL: Even though we pay for this development — either it’s a portion or all of it — the American taxpayers don’t go on to own the product or hold the patent to the product, but what the U.S. does is fund it and then the companies often go on to have these exclusive ownership, with patents.
Lee Fang: That publicly funded science, through a law called the Bayh–Dole Act, is then transferred to pharmaceutical companies.
Rep. Ted Poe: The act establishes the rules of the road governing patent rights when the federal government and private entities participate in joint research that produces patentable inventions.
Lee Fang: This law basically codified this rapid transfer of publicly funded technology, publicly funded science into commercial monopoly rights for private industry. And, you know, one kind of failsafe for this law, so it doesn’t get exploited by private industry, was this provision basically allowing march-in rights is what they’re known as, basically saying if a company is exploiting a pharmaceutical product that was financed by the taxpayer, the government has a right to march-in, and then revoke that license, and then issue it to a competitor, allow another firm to use that technology create a generic or competing product.
One kind of wrinkle here is that the pharmaceutical companies have really pushed back against any effort to use march-in rights to invoke this provision of the Bayh–Dole Act. And in a twilight maneuver, as the Trump administration was leaving office in early January 2021, they issued a new rule basically revoking and redefining that one provision of the Bayh–Dole Act, allowing the government to march-in and set prices. So this was a kind of a goodbye, farewell wet kiss from the Trump administration to the pharmaceutical industry.
SL: Pharmaceutical companies defend their right to profit and to fend off march-in rights and also the use of another provision under the law, section 1498, which is similar, allows the government to take over in these kinds of cases. And what they say is that they need exclusivity because that’s how they innovate, right? That they’re not going to do this critical, life-saving work unless they can profit from it and reap the benefits.
Lee Fang: You know, what’s interesting about this debate is that what the pharmaceutical industry has always argued is that they’re doing the research and development, they’re putting up the risk, so to speak, raising money from investors so, of course, they should have monopoly rights on the price and the distribution of these drugs so that they can reap a profit and then pay back their investors after taking this risk.
But what’s interesting about Operation Warp Speed, this program approved by Congress and initially managed by the Trump administration, awarding something like $10 billion — and then they increased it to something like $18 billion — of money to fund the development of therapeutics, and vaccines, and to expedite that process to solve the pandemic, is that here’s the taxpayer taking all the risk and providing the public money for the research, the development, the clinical trials, even the pre-purchases of these vaccines.
President Donald J. Trump: Its objective is to finish developing, and then to manufacture and distribute, a proven coronavirus vaccine as fast as possible.
Lee Fang: The pharmaceutical industry, despite not having to do the type of risk-taking that typical business people or corporations have to do, they’re saying that they still deserve those monopoly rights on the pricing, the distribution of this product that was guaranteed by the taxpayer, by the U.S. Treasury.
Lee Fang: Maybe we could be solving cancer or other kinds of public health issues by just having many Operation Warp Speeds, just putting up the public money, taking the public risk, and then solving these problems, and perhaps maybe adjusting the rights then given to the pharmaceutical companies forcing these medicines to be at lower price and more public access.
SL: Right after the announcement came, AOC had this great tweet that was a screenshot of the falling vaccine-maker prices and stock prices, and it said “Let’s do insulin next.”
There is no difference in the ethics, right? It is equally horrific that companies are using their exclusive protections to set exorbitant prices for other life-saving drugs.
I think we need to remember what happens with those exorbitant profits, right? So some of it goes into executive compensation, and bonuses, and to stock dividends. But some of it goes right back into lobbying, right? And the pharmaceutical industry spends more on lobbying than any other sector. And that lobbying is used to perpetuate this very system. The exclusivity of drugs, which is what they’re fighting for, right? These exclusive protections are inextricable from the obscene prices and it is inextricable from the fact that these drugs don’t get to the people that need them.
This is a problem that needs to be addressed not just right now, and not just temporarily, which is how the TRIPS waiver does it, but in the longer term. It’s also a problem for people to die from treatable conditions or preventable conditions when it’s not Covid.
Lee Fang: Going into the pandemic, pre-pandemic, in 2019, opinion polls pretty consistently showed that the pharmaceutical industry was the most unpopular industry in America ranking below the oil industry, below automakers, below some of these other companies that have been criticized in the past. And this pandemic has been used by lobbyists representing the industry to really reposition the industry as this global leader that cares about human health, that is not putting profits first, it’s putting the people first. If you turn on CNN or MSNBC, you see these reputation ads; they don’t actually sell a product, but they’re sponsored by the industry and their lobbyists to try to increase public opinion and discourage further regulation. They’ve got people in lab coats, pouring beakers, [laughs] and vials on conveyor belts. They say: “Oh, look, the pharmaceutical industry is doing everything they can to fight this pandemic! We care about the American people.”
PhRMA “Our Part” ad: While you do your part to beat coronavirus, America’s biopharmaceutical companies are working around the clock to do ours: testing existing medicines, developing new treatments and vaccines, and collaborating with the FDA, NIH, and CDC. We’re working with doctors and hospitals on over 235 clinical trials and ramping up production capabilities to ensure these medicines are available, because science is how we get back to normal.
Lee Fang: They’re really utilizing this pandemic to reposition themselves as totally concerned about public health and they’re not an industry that puts profit over people. Meanwhile, behind closed doors, the pharmaceutical industry has mobilized an army of lobbyists, poured massive amounts of dark money into the last election to ensure that they can really capitalize on this pandemic and make the most money possible and early in the Biden administration we saw a little peek of this, the U.S. trade representative, that’s the kind of sub-cabinet or cabinet-level position that represents the American government in these trade negotiations, the pharmaceutical industry and its allies submitted proposals — submitted comments, basically — to this office saying: Hey, Biden administration, when you set your trade priorities for the year, what you should do is not only oppose any effort to provide a waiver for IP or patent enforcement around vaccines or therapeutics to solve the crisis, in fact, you should actually punish any country that produces a generic, you should go out and provide trade-related sanctions and go after countries.
SL: We have had more than 3 million deaths already from Covid around the world and here in the U.S., we already have more than enough vaccine, right? Anyone who’s an adult can already get it if they want it. And, so far, more than half of the U.S. population has had at least one dose of the vaccine. But, around the world, it’s totally different. Less than 1 percent of the populations of low-income countries have been vaccinated.
What I think has been compelling to many people in the U.S. and in the pharmaceutical industry is that that’s not just not viable for those people, but it’s also, ultimately, going to come back and bite wealthier countries in the butt too, because that’s how variants are going to come back. None of us are going to be safe until all of us are safe. And you see that, as the pandemic is allowed to go on, people are going to die in huge numbers in developing countries. But it’s also going to mean that that pandemic keeps going everywhere.
Lee Fang: What’s undergirding all of this policy making, all this debate around the waiver is the potential for massive profits.
The pharmaceutical companies, despite — again, their public posture of donating vaccines and working to save the world — privately, their investors have been incredibly clear about how they plan to hike prices when the opportunity presents itself. If you listen to these recent investor calls from Johnson & Johnson, Moderna, Pfizer, they have spoken to banks and other investors and said, they’re hoping to make lots of money from these vaccines.
Frank A. D’Amelio: If you look at how current demand and current pricing is being driven, it’s clearly not being driven by what I’ll call normal market conditions, normal market forces. It’s really been driven by kind of the pandemic state that we’ve been in, and the needs of governments to really secure doses from the various vaccine suppliers.
So what we believe, what I believe, is as we move from a pandemic state, from a pandemic situation, to an endemic situation, normal market forces, normal market conditions, will start to kick in.
Lee Fang: Right now they’re selling the vaccine, at least in the U.S., at a deeply discounted price. They’re concerned about the optics around increasing the price. But, when the time comes, they plan to dramatically commercialize this product. And, right now, many of the vaccines are reimbursed by the government, but sold between $20 and $40 — that’s much lower than the list price of, for example, the flu vaccine, which is closer to $170 or $200. Even with the deeply discounted prices, Pfizer is taking their vaccine and basically made it one of the highest grossing pharmaceutical products of all time. As Sharon mentioned earlier, they’re making record profits from the vaccine and that’s at the lower price.
The pharmaceutical companies, in addition, have said they plan to increase prices once the pandemic quote-unquote ends. But as Johnson and Johnson told investors recently, they get to determine the end of the pandemic, they get to just simply unilaterally declare the pandemic over, and increase prices. AstraZeneca — similar situation. There were leaked documents showing that AstraZeneca has promised to sell the vaccine at a not-for-profit basis during the pandemic. But these leaked documents show that they get to declare the end of the pandemic as early as July 1 of this year.
So these companies are eagerly awaiting the opportunity to increase prices. They are fighting every effort to allow competitors to enter the field, the production of generic vaccines, and that’s why they’re fighting this TRIPS waiver.
SL: We easily could have seen Biden go another way and I think a lot of people expected that. That said, it’s this incremental step, right? So we see that we’ve committed to waiving intellectual property protections for vaccines in that temporary way, right? Beyond that, we’re going to need investment.
Lee Fang: There needs to be an effort to increase capacity, to share technology, to share manufacturing know-how so that generic vaccines are produced very quickly. There’s some talk that these mRNA vaccines could be produced and factories could be retrofitted very quickly to produce them. And we need global leadership, whether it’s Biden or others, leaning on these companies, or Congress passing new laws that compel them to share the manufacturing know how.
SL: So I think it’s the time to ramp up pressure. And it’s such an opportunity for the world and for the U.S. to do good. That’s a rare opportunity, right? This is actually a really solvable problem — making enough vaccine — we know how to do it now. And we have the money, right? So now we just have to do it. Yes, there are wrinkles to be figured out, and we’re ironing them out. But, let’s go! You know? Here we go.
LF: That’s The Intercept’s investigative journalists Sharon Lerner and Lee Fang.
LF: And that does it for this episode of Intercepted. You can follow us on Twitter @Intercepted and on Instagram @InterceptedPodcast. Intercepted is a production of First Look Media and The Intercept. Our lead producer is Jack D’Isidoro. Supervising producer is me, Laura Flynn. Betsy Reed is editor in chief of The Intercept. Rick Kwan mixed our show. Our theme music, as always, was composed by DJ Spooky.
Until next time.