The Biden administration is working with global organizations and other countries on an agreement that will erode the intellectual property (IP) of American companies. This will hurt both American workers and businesses, and be a giveaway to geopolitical rivals like communist China and Russia.
Intellectual property is important to the American economy. It includes patents on inventions, copyrighted books and films, and computer software. The added value of new products is largely intellectual property and millions of jobs depend on it. So allowing other nations to steal it is economic suicide.
The World Trade Organization (WTO) will soon consider a proposal to “repeal” or remove IP protection for COVID-19 vaccines that exists under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). If approved, foreign countries would be allowed to seize patents and clinical data from American companies.
This would set a dangerous precedent worldwide that foreign countries, with the backing of the United States government, could steal American intellectual property. This would threaten American innovation and the millions of high-paying jobs that depend on that manufacture, and would certainly undermine the development of vaccines and treatments for future deadly pandemics.
Thanks to American medical innovation, several highly effective COVID-19 vaccines were quickly developed and distributed. A key reason for this success is the existence of strong intellectual property rights that encourage manufacturers to innovate, ensure medicines are safe and effective, and invest in the next generation of cures.
Developing new drugs is a costly, risky and time-consuming process. According to the Tufts Center for the Study of Drug Development, a manufacturer has to invest an average of $2.6 billion. Overall, only 10 to 20 percent of drugs that begin clinical trials are approved.
The abandonment of American manufacturers’ IP rights will undermine this system and endanger the next generation of vaccines. There is no reason for this suggestion. There is no shortage of vaccines thanks to heavy investments in production, increased competition and falling demand. In India, manufacturers have slowed production of new vaccines because they have created an overproduction of 200 million doses – far more than was needed.
IP supports millions of high-paying jobs across the country. According to the United States Patent and Trademark Office (USPTO), IP-intensive industries generated $7.8 trillion in GDP in 2019; 41 percent of the economy. These industries accounted for 47.2 million jobs, or 33 percent of total US employment.
Medical innovation is no exception – according to a study by TEconomy Partners, LLC, they are directly or indirectly responsible for over 4 million jobs in the US and in all states. The average annual wage for a pharmaceutical worker was $126,587 in 2017, more than double the average private sector wage of $60,705.
While this will hurt US workers and businesses, it will help America’s rivals like communist China, who could use this proposal to seize intellectual property and trade secrets. China has an extensive record of property rights violations that cost the US $225 billion to $600 billion each year in counterfeit goods, pirated software and trade secret theft.
The WTO proposal does nothing to stop further IP theft – although the draft proposal “encourages” countries like China to opt out of the waiver if they don’t need vaccines, any country would be eligible to participate in the waiver if it did this wishes . Even if a geographically restricted waiver were implemented, China would still acquire US trade secrets and technology through other countries.
Given that this proposal is hurting American businesses and workers and helping foreign rivals, it should be alarming that the Biden administration was so hasty in pushing it through. In fact, the administration has even failed to consult Congress properly, as noted by a bipartisan group of senators including Senate Finance Committee Chairman Ron Wyden (D-Ore.), senior member Mike Crapo (R-Idaho ) and Sens. Bob Menendez (DN.J), Chuck Grassley (R-Iowa), Catherine Cortez Masto (D-Nev.), and Ben Sasse (R-Neb.).
They recently sent a letter to the US Trade Representatives (USTR) urging the office to improve transparency and consultations with Congress on upcoming trade negotiations, including the proposed WTO intellectual property waiver.
The Biden administration should withdraw its support for a proposal to undermine IP rights of COVID-19 vaccines. This would undermine American innovation efforts and high-paying intellectual property-based jobs. Instead, it would help foreign governments like China and serve as an implicit endorsement of rampant theft of American intellectual property.
Grover Norquist is the President of Americans for Tax Reform.