President Biden, say no to the WTO
President Biden recent executive order committed more than $2 billion to support biotech innovation. That’s good news for Pennsylvanians. The Keystone State life sciences industry supports more than 330,000 jobs. Hundreds of research institutions and companies are conducting biotech research in Pennsylvania, and the number of clinical trials conducted by Pennsylvania companies rose by 50% in the three years ending in 2021.
But unfortunately, the White House may be about to undermine the industry Biden says he wants to support and grow, with a detrimental effect on Pennsylvania companies and jobs.
This story begins back in June, when the World Trade Organization (WTO) — with U.S. support — decided to waive patent protections for Covid19 vaccines. The language of the waiver allows companies in developing countries to use U.S. intellectual property without compensation. It permits them to manufacture and sell products that, but for the waiver, would have infringed on U.S. companies’ patent rights.
Among many other U.S. inventions, the waiver would affect the mRNA technology pioneered at the University of Pennsylvania. Only after billions of dollars in public and private investment could companies turn that research into highly effective Covid-19 vaccines. They could not have done so without the promise of an economic return on their investment.
This is a situation whose economic effects I know from the inside, as the founding partner of a venture capital company that invests in medical research. And the situation could get much worse unless Biden stands up to other voices at the WTO.
The 164-member WTO, which makes decisions by consensus, is now debating whether to expand the patent rights waiver to include pharmaceutical and diagnostic products. If that happens, the blow to U.S. biotech would be severe.
Currently, the United States holds a commanding global lead in biotechnology. U.S. companies develop more than 80% of the drugs in clinical trials worldwide, according to a paper published by the National Academy of Sciences. And a full two-thirds of biopharmaceutical venture capital investment is made in America. Thirteen of the world’s largest biotech companies by market capitalization are based in the U.S.
Allowing companies in developing countries to use U.S. patent rights without compensation on a wide range of diagnostic tests and treatments may cause U.S. companies and venture investors to rethink investment decisions, costing jobs and dampening innovation.
In Pennsylvania, we’ve seen too many jobs exported overseas too many times over too many years. If the WTO patent waiver is expanded, that’s exactly what will happen again -- this time in biotechnology.
Not surprisingly, some of the staunchest supporters of the WTO patent waiver are countries that in past years have benefited from offshoring American jobs, like India and China. When U.S. Trade Representative Katherine Tai announced the administration’s support for the waiver in 2021, government-affiliated media in China praised the news. Should we really be helping Chinese and Indian companies export more of our jobs, take more of our patent rights, and compete unfairly?
Yes, it is in all our interests to make Covid-19 vaccines and treatments widely available at reasonable costs to redress inequalities in global distribution and help end the pandemic. But, today, a global surplus of both Covid-19 vaccines and treatments exceeds global demand. Indeed, WTO DirectorGeneral Tedros Adhanom Ghebreyesus declared months ago the end of the pandemic is in sight.
Developing countries have faced real obstacles to equitable distribution, among them a lack of infrastructure and robust healthcare systems. Unfortunately, slashing intellectual property protections won’t solve their problems.
It will, however, hurt the biotech industry, its employees, and patients needing innovative medicines. Companies would not have taken the billion dollar investment risks to discover and develop these innovative diagnostics and treatments without the protection IP rights afford.
Biden’s executive order in support of biotechnology shows his determination to foster a critical 21st century industry. But if he wants to grow the sector, safeguard American jobs, and protect patients who need innovative medicines, he must say no to the WTO.