In May the Biden Administration announced an about-face in U.S. negotiations at the World Trade Organization (WTO). The U.S. now supports waiving all patent protections for COVID-19 vaccines and allowing generic companies to start making these vaccines as soon as possible.
There are 164 countries that belong to the WTO, and no agreement is binding unless all 164 countries agree to it. So what will the WTO actually do? And will this speed up distribution of the COVID-19 vaccines into the rest of the world? Plus, if the patents are dissolved, how will it affect the stocks of the biotech companies who created these vaccines?
In this video clip from a Motley Fool Live episode, recorded on May 14, Fool.com writer Taylor Carmichael discusses the financial ramifications to vaccine makers from what the WTO might do.
Taylor Carmichael: We don't know what the World Trade Organization is ultimately going to say. Again, 164 countries have to agree to it. The only way that it would affect pharmaceutical companies, I think, it would not be in the next year, it would be down the road. So there could be, theoretically, it could limit profits in 2023, 2024. It depends on what the WTO agrees to and what they say. The whole point of the Biden administration and their announcement was that this is an emergency situation right now, but it's not going to be an emergency situation in two years and three years. And if there are no patent protections in two years to three years, that will cost the companies quite a lot of money. This next year, this next two years, it won't at all.
They've already got contracts with the governments, they're already going to get paid. They just have to manufacture the drug and distribute it. In terms of an emergency, lawyers are not real good with emergencies. That's not a lawyer thing. The lawyers take their time and it's going to take a few years. I don't think it's going to help anything in the emergency situation, and there is an emergency, a lot of people are dying in India right now. It is an emergency but taking the intellectual property from AstraZeneca (AZN 1.39%), Novavax (NVAX -1.92%), and Moderna (MRNA 1.30%) is not going to speed up anything. You're still going to have the bottlenecks of the supply. It might make it worse actually, if you have more companies who are trying to manufacture these drugs.