[CTC] Pfizer and Moderna Mock Biden, Raise Vaccine Prices

Fri Aug 6 09:43:00 PDT 2021

https://mattstoller.substack.com/p/bidens-failure-on-covid-vaccine-monopolies <https://mattstoller.substack.com/p/bidens-failure-on-covid-vaccine-monopolies>
Pfizer and Moderna Mock Biden, Raise Vaccine Prices
Chinese strategists think the West is in permanent decline. Have Joe Biden and Angela Merkel proved them right?
      Aug. 6, 2021   Matt Stoller,  BIG    

The Shadow Public Health System

Public health agencies globally are wrestling with the contagious Delta variant of Covid, which is far more easily transmissible than earlier types of the disease. Different countries are attempting different strategies to address the problem, from loose lockdowns to accelerated vaccination campaigns to travel restrictions.

But another set of health agencies - which we call pharmaceutical firms - are taking an entirely different approach. Earlier this week, Pfizer/BioNTech and Moderna, who make vaccines  <https://cdn.substack.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fb9b20d4a-4a5b-44ca-b4b0-bd5bd8301b30_890x534.jpeg>that are effective against the Delta variant of Covid, raised prices <https://www.ft.com/content/d415a01e-d065-44a9-bad4-f9235aa04c1a> on their vaccines. According to the FT, the European Union must now pay an extra 25% than it did for the Pfizer vaccine, and 10% more for Moderna’s.

The extra revenue is purely a result of market power, not higher costs. Pfizer has already raised estimates to investors, telling them it will generate $33 billion this year selling the vaccine. At the same time, these vaccine monopolists are not making enough doses to vaccinate the world, because they are focused on production to sell to rich countries, rather than ending a pandemic.

In the 19th century, America began chartering for-profit corporations to let private citizens come together and pool capital and labor for public purposes, such as building bridges, factories, and railroads. We created patents, copyrights, contracts, subsidies and a nest of legal arrangements to foster the development of scientific and natural resources, extending and rebalancing property rights to ensure social order. Today, however, the for-profit corporation has a logic all its own, entirely divorced from any public purpose. On the one hand, public health agencies and governments are trying to use the tools they have to deal with a breakdown of normal social capacity in the context of this pandemic. On the other hand, the single most important tools we have - vaccines - are controlled by corporations that have no public obligations whatsoever.

This doubleness of public health - run by governments but controlled by private monopolists - is evident in more than just price hikes and profiteering. The vaccines produced by Pfizer/BioNTech and Moderna are still highly effective against the Delta variant. And while the U.S. is seeing a spike in cases, 70% of U.S. adults have gotten at least one shot. America’s path is similar to that of most wealthy countries. But generally speaking, there isn’t enough supply, and this makes it much harder to bring the pandemic under control for everyone because poorer countries just can’t get vaccines.

Joe Biden’s Follow-Through Problem

Back in May, the Biden administration sought to avoid just such a situation, putting forward a proposal <https://mattstoller.substack.com/p/why-joe-biden-punched-big-pharma> to seize control of Covid vaccine monopolies from Moderna and Pfizer/BioNTech. The lead official on this policy was U.S. Trade Rep. Katherine Tai, who is known as a deeply knowledgeable trade expert, and well-respected by progressives. On a policy level, it was an important path to get these firms to allow more production of a critical resource.

While the U.S. has enough vaccines for our citizens, that’s not the case globally. We need 10 billion plus doses, and can’t make nearly that many. Beyond that, Covid will mutate, and eventually variants will get around vaccines, as we’re seeing with the Delta variant. That makes it important to get manufacturing capacity for the vaccine spread out globally, not just because there isn’t enough manufacturing to produce all the shots we need, but also so that countries can produce vaccines and booster shots as outbreaks occur. If that doesn’t happen, then we’ll just keep having waves of new Covid variants hitting us, over and over and over.

To put a plan into action to avoid this scenario, Biden and Tai supported a waiver of intellectual property at the World Trade Organization for the vaccines produced by Moderna and Pfizer/BioNTech, which use what is called mRNA technology. The waiver would apply to other vaccines, but the mRNA vaccines are the best and most flexible. Such a waiver would suspend monopoly rights, and let third party companies use industrial designs, patents, or copyrights without needing permission from Moderna and Pfizer/BioNTech, though any producer would still pay royalties to these firms. After this waiver is adopted by the WTO, the Biden administration would then have to use the Defense Production Act to force these firms to divulge manufacturing methods and do technology transfers

With these two steps, mRNA vaccine technology would get out into the world, and Moderna and Pfizer/BioNTech would make tens of billions of dollars. They wouldn’t, however, be able to control who got to manufacture the vaccines. In addition, the pandemic would be more likely to be brought under control, meaning their market for vaccines would eventually shrink. It’s no surprise that the pharmaceutical industry opposed Biden’s plan vehemently. (For those who think such a plan would give access to secrets to China, it’s worth noting that BioNTech has already licensed its mRNA vaccine to China, and China will soon have mRNA technology.)

Biden’s plan made sense. It was also consistent with many other aspects of Biden’s domestic agenda, such as his nascent attack on monopolies. Even Jake Sullivan, the National Security advisor, has made competition <https://mattstoller.substack.com/p/bidens-national-security-advisor> part of our national security strategy. The problem is, Germany and the EU are blocking Biden’s request for a TRIPS waiver, and that waiver has to be adopted unanimously.

Normally, when the U.S. wants something, we do cajoling, we bully, we bargain, we wheedle. None of that has happened. A few weeks ago, for instance, there was a summit between Biden and German Chancellor Angela Merkel, and Biden poured on the praise, even giving in on Merkel’s desire for a Nord Stream 2 pipeline that would undermine Eastern European security interests. The U.S. got virtually nothing out of the summit. And when asked about the waiver, the White House was noticeably unenthused.

When I first wrote about the TRIPS waiver, I waxed eloquently about Biden’s announcement. Some skeptics mused that Biden wasn’t serious, but I was open-minded. The skeptics, though, have been proven right. In the last three months, Tai has been completely silent and the Biden administration has done nothing to even indicate to Germany or anyone else that this is even a priority.

Today, most informed policymakers believe that Biden didn’t really mean it when he put forward a TRIPS waiver. I don’t agree with that view; Biden and Tai were not lying when they made this promise, mostly because it wouldn’t make sense to do so. If you promise something like this and then don’t deliver, you anger the pharmaceutical industry, upset progressives, and demonstrate weakness on the global stage. Still, if this situation doesn’t improve, it means Tai - who I was initially optimistic about - lacks the ability to follow through on important policy announcements.

But this failure isn’t American alone, but European as well. During the negotiations over prices, European officials were angry that Moderna treated them with contempt. And yet, what Pfizer/BioNTech and Moderna are doing is nothing more than following the policy framework laid out by Germany’s Angela Merkel, who has been highly supportive of ensuring that these monopolists maintain control of key public resources during a pandemic.

Regardless of who is at fault, the complete failure, so far, of Western democracies to engineer a wide distribution of vaccine capacity is highly noticeable. And it’s not because there’s a lack of fairness, but because of what China and Russia are doing.

The Chinese and Russian Vaccine Strategy

Over the past year, China and Russia have been putting together exactly the strategy that Biden outlined and Merkel blocked. They are cutting financing and tech transfer deals all over the globe to produce vaccines they helped develop. The Chinese and Russian vaccines aren’t as good as the mRNA ones, but the sad reality is that these authoritarian states are delivering, and democratic ones aren’t.

Here’s a partial short list.

(Argentina) Argentina Produces Russia's Sputnik V Vaccine in Regional First <https://www.usnews.com/news/world/articles/2021-04-20/argentina-produces-russias-sputnik-v-vaccine-in-regional-first> (US News)

(Bangladesh) Bangladesh OKs local production of Chinese, Russian vaccines <https://www.aa.com.tr/en/asia-pacific/bangladesh-oks-local-production-of-chinese-russian-vaccines/2223951> (Anadolu Agency)

(Brazil) Chinese vaccine draws demand across Latin America, say Brazilian officials <https://www.reuters.com/article/health-coronavirus-brazil-idUSKBN28K1IK> (Reuters)

(Egypt) Egypt to produce Chinese COVID-19 vaccines locally <https://www.arabnews.com/node/1776341/middle-east> (Arab News)

(India) Russia’s Sputnik V vaccine finally has manufacturing muscle <https://fortune.com/2021/04/13/sputnik-v-vaccine-russia-manufacturing-india-approval/> (Fortune)

(Italy) Russia turns to China to make Sputnik shots to meet demand <https://apnews.com/article/middle-east-europe-russia-china-coronavirus-b041b3ad9d699de25a05c8f7ebcb4eb9>
(Morocco) Morocco’s Sothema to produce China’s Sinopharm vaccine <https://www.reuters.com/business/healthcare-pharmaceuticals/moroccos-sothema-produce-chinas-sinopharm-vaccine-2021-07-05/>
(Serbia) Serbia to produce 24 mln doses of China's Sinopharm vaccine annually <https://seenews.com/news/serbia-to-produce-24-mln-doses-of-chinas-sinopharm-vaccine-annually-deputy-pm-734789>
(South Korea) Russia turns to China to make Sputnik shots to meet demand <https://apnews.com/article/middle-east-europe-russia-china-coronavirus-b041b3ad9d699de25a05c8f7ebcb4eb9>
(Turkey) Russia turns to China to make Sputnik shots to meet demand <https://apnews.com/article/middle-east-europe-russia-china-coronavirus-b041b3ad9d699de25a05c8f7ebcb4eb9>
(United Arab Emirates) China’s COVID vaccines are going global <https://www.nature.com/articles/d41586-021-01146-0>
The Unraveling of the West

In American strategist Rush Doshi’s important book “The Long Game: China's Grand Strategy to Displace American Order,” <https://www.amazon.com/Long-Game-Strategy-Displacement-American/dp/0197527914> Doshi shows that Chinese strategists believe that western democracies America and Germany are in irreversible decline. Their argument is that we cannot deliver for our people, and our states are weak. On a global level, we can no longer deliver the public goods that other countries need, whether that’s PPE during an acute pandemic or even our own knowledge about how to make medicine when that is necessary.

So far, these strategists are correct. Covid is a geopolitical catastrophe for democracies. It’s not just that China delivered masks and medical equipment. Even when we have the best vaccines, our own political leaders are unable to force Pfizer/BioNTech and Moderna to turn them into public goods. The best we can do is PR nonsense, like Pfizer grandly announcing <https://www.nytimes.com/2021/07/21/business/pfizer-will-turn-to-a-plant-in-africa-to-help-supply-the-continent-with-vaccines-next-year.html> it will deign to allow one corporation in South Africa bottle and warehouse vaccines produced in Europe.

Global orders don’t unravel due to great conflicts, they unravel because a hegemonic power stops delivering the mix of favors, coercion, and public goods that other nations rely on, such as stopping pirates, protecting global trade, or containing trans-national crime. Being able to step up in a pandemic and offer treatment and protective equipment is one such public good - the U.S., for instance, coordinated the global response to Ebola. The inability to offer these kinds of public goods leads to a loss of legitimacy, and gradually countries globally begin to reorient their choices towards a different order.

A collapse of liberal democracy isn’t inevitable. Democracy is a better system than Chinese authoritarianism, but democracies are right now dominated by monopolists who overwhelm our sovereign capacity. To address this problem, we must decide that we want real democracy more than we want BioNTech’s or Pfizer’s CEO to get a new yacht. And so far, we haven’t made that choice.

Arthur Stamoulis
Citizens Trade Campaign
(202) 494-8826

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