Welfens, P.J.J.: National and Global Vaccine Procurement in a Pandemic Situation: Rational Patent Replacement Option

Welfens, P.J.J.: National and Global Vaccine Procurement in a Pandemic Situation: Rational Patent Replacement Option

JEL classification: H12, H51, I10, I18

Key words: Vaccination, Pandemic, Corona, Patent, Open Innovation

Summary:

A standard epidemic challenge requires the development of appropriate new vaccines - with patent-protected active ingredients if necessary - whereby price and innovation competition on the market and contractual agreements between health insurance providers and those in the medical professions essentially determine the costs of vaccinations, for example in the context of a national vaccination campaign. Contributions to the economic literature on vaccine procurement issues have been available since about 2000, including market design approaches – findings that appear to have been ignored by the EU in 2020. Beyond the EU procurement issues, the following is true: with the coronavirus pandemic, a fundamentally new situation is at hand, as it would be insufficient to achieve herd immunity through vaccination only in the North of the global economy. People in developing countries would also have to receive a Corona vaccination as matter of urgency, whereby herd immunity would have to be achieved in all of the nearly 200 countries of the world: Otherwise, the danger of virus mutation is great, and Sars-Cov3 could develop as a new pandemic. In the corona pandemic, there is a special challenge concerning vaccine procurement and vaccine production that should be addressed sensibly by appropriate economic incentives for vaccine development and production. Market design approaches can be complemented analytically by economic-medical pandemic aspects, including open innovation perspectives. While there is a good case to be made for moving somewhat faster vaccine-wise in the North of the global economy than in the developing world, coordinated action within the G20 framework is necessary for a successful pandemic response. To the extent that several countries want licensed production of new vaccines for companies in their country, the option of patent disclosure should be considered, and appropriate compensation for the patent value of the companies concerned should be agreed multilaterally in the event of such disclosure. If a new pandemic results from rapid critical virus mutations, the global economic recovery will collapse in the medium term.

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