How a reliance on market forces undermines US attempts at vaccine diplomacy

The Biden administration has not pressured firms to share their intellectual property and technical know-how, contributing to vaccine inequality
This undercuts Washington’s foreign policy messaging and its complaints about countries such as China and Russia sharing expertise with developing countries

Amalina Anuar

Published: 2:30am, 24 Nov 2021

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As countries race to deliver their populations from the jaws of the Covid-19 Delta variant, the US is holding fast in its endorsement of vaccine donations and voluntary technology transfer as the solution for global recovery. But, with unequal procurement contracts and a reliance on market altruism impeding Washington’s foreign policy goals, is it time for a rethink?

US vaccine diplomacy harnesses public- and private-sector efforts. Health infrastructure financing aside, Washington is focusing on no-strings-attached vaccine donations. Companies so inclined are free to share their vaccine intellectual property and technical know-how.

Support for the World Trade Organization’s patent waiver notwithstanding, however, the Biden administration has not fully pressured domestic businesses to share technology. In particular, mRNA vaccines have become a flashpoint over their effectiveness and scalability, with Moderna thrust into the spotlight because of its taxpayer-funded shot.

American mRNA manufacturers have been reluctant to enter licensing agreements where idle capacity exists. Pfizer-BioNTech’s partnership with South Africa’s Biovac only covers “fill and finish”, while Moderna has chosen to build new regional factories rather than work with local manufacturers.

This reluctance could be chalked up to insufficient human resources, which hampers companies’ ability to share technical expertise. However, the World Health Organization’s technology transfer hub initiative aims to address this by marshalling mRNA experts and transmitting that knowledge.

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To date, the hubs have met the same fate as the earlier Covid-19 technology access pool, sitting bereft of contributions. Some degree of technology transfer has occurred via voluntary licensing. Whether these contracts significantly generate more vaccines for equitable distribution is debatable.

Technology transfer through these means has conditions, such as limiting exports of produced goods to specific territories or the licensee’s domestic market. This approach is questionable when mass, transnational inoculation is necessary.

Conditions in purchase agreements similarly apply to donations, impeding short-term vaccine distribution. Pfizer’s contract with Brazil, for instance, reportedly stipulates that Brazil must obtain permission to initiate or receive donations. Major donors such as the European Union are subject to similar terms.

The vaccine crunch is laying bare the limits of market dependency. Market actors do not serve human needs and national security, but merely profit maximisation.

Acts of accelerated, inclusive technology transfer fall outside the corporate interest. Retaining technical know-how and extending first-mover advantages make sense because market dominance keeps competitors at bay for Covid-19 vaccines and future mRNA products.

For instance, Sanofi withdrew its vaccine candidate because Pfizer and Moderna had cornered the mRNA market. Likewise, while unblocking vaccine donations via more flexible contracts would expedite global recovery, the emergence of new vaccine-resistant variants could have benefits by sustaining the market for booster shots.

US and Germany’s reluctance to encourage technology transfer undermines foreign policy messaging on human-rights-centred democracies. China is active in this space, equipping developing countries with technology to produce Sinovac. These initiatives have their own downsides, though, such as a tricky second-dose production process.

Complaints about authoritarian countries’ vaccine diplomacy are tone-deaf when developing countries have few options because wealthy democracies hoard alternatives and purchase agreements obstruct donations.

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Some countries have pledged to share their expertise, and other Covid-19 vaccine candidates and antiviral medicines are emerging. These factors seemingly reduce the need to pressure mRNA vaccine manufacturers into transferring technology or relaxing donation-related contractual terms.

A new Biden administration initiative to outfit new factories and production lines for domestic vaccine manufacturers might also increase output without addressing these thorny issues. Yet, it is unclear whether more supply would go to poorer, less-vaccinated states or be prioritised as boosters in wealthy countries. Earmarked donations, meanwhile, could still be contractually stonewalled.

Technology transfer to boost regional production and relaxing contractual conditions would better guarantee equitable vaccine access. Washington should make domestic businesses cooperate on these fronts, given the exigency of the moment, in particular working with the WHO on technology transfer to coordinate regional vaccine production and minimise duplication or wastage.

Selectively applying the principle of equating US multinational profits with national interests would better serve the Biden administration’s pandemic response and foreign policy goals. How could Washington go about this?

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In terms of technology transfer, writing in conditions during the vaccine development stage would pre-empt this situation, exchanging public funding for research and innovation with duties to share data and technology. In Moderna’s case, however, reports suggest such clauses were limited.

Alternatively, Washington could use financial incentives or pay companies to transfer technology, though this could be inappropriate given the public funding already put into these vaccines. Sticks such as taxes, threats to legally revoke patents or issuing executive orders under the Defence Production Act are other means to prod vaccine manufacturers into action on donations and technology transfer.

Encouraging technology transfer and contractual flexibility should occur alongside other policies. A trade agreement among vaccine producers could boost coordinated production of inputs, and the US should expand its support for WTO patent waivers beyond vaccines to unblock supply shortages of other essential goods.

In the long term, governments must further finesse broader intellectual-property-related flexibilities and systems. With artificial intelligence increasingly part of health initiatives, trade secrets in medicine and technology could hurt the public interest.

Checks on corporate power aside, there is no substitute for moving towards more socially embedded markets that balance profits with serving other interests. Without these shifts, it will be harder for all countries to herald a more sustainable post-pandemic era.

Amalina Anuar is a senior analyst with the Centre for Multilateralism Studies at the S. Rajaratnam School of International Studies, Nanyang Technological University, Singapore