Tim Wood Powell     The value of knowledge

The value of knowledge was in the news again this week. Not my book by that name — but (even better) the thing itself.

The world’s knowledge haves and have-nots

A heroic and near-miraculous push has been made to get Covid vaccines designed, produced, and delivered within one year of the realization that we were in a global pandemic. There were many instances of cooperation, alliances, and network leverage that brought knowledge together globally to make this happen.

But, as you might expect, this knowledge is highly asymmetric. As of March 2021, only eight countries (counting the EU as one) manufacture Covid vaccines. (See the accompanying chart from Axios.) Of those, the top four (China, the US, the EU, and India) produce 92.4% of the world’s current supply.

Patent-waiving proposal

One of the main obstacles to the speed of knowledge is an intentional, man-made one — intellectual property rights (IPR) laws designed to protect proprietary knowledge from unauthorized (i.e, non-paid) distribution.

The World Trade Organization (WTO) is considering a proposal that would waive IPR temporarily for covid vaccines, with the goal of achieving greater distribution globally, much faster. In effect, it would allow non-IPR-owning companies to produce the vaccines from public patent data, without fear of being challenged in court.

The value of knowledge

The proposed IPR waiver would presumably reduce or eliminate any licensing fees and royalties that could otherwise have been generated from the patents — the potential value of which is huge. Two US manufacturers alone, Pfizer and Moderna, have 2021 revenues anticipated from signed non-US government contracts of $26B and $19.2B, respectively. It’w worth noting that these two, along with Pfizer’s development partner BioNTech SE, are pioneers in a new vaccine technology called Messenger RNA.

Overall, the response of the industry (as represented by the trade group PhRMA) to the proposal has been negative. And shareholders of both firms traded the stocks down upon hearing news of the potential waiver.

The recipe is not the cake

Pfizer chief executive Albert Bourla’s response was essentially that, in addition to the patent filings, there are other knowledge resources needed:

• knowledge of raw materials sourcing,
• knowledge of manufacturing processes,
• knowledge of logistics

— plus adequate “hard” (i.e., non-knowledge) resources — those tangible production resources described by that knowledge. The patent knowledge alone in such cases is not only not sufficient — it could be meaningless, or even dangerous, without these other resources.

Bourla’s argument sums to, “The recipe is not the cake.” The recipe is not even the knowledge of how to make the cake. The recipe (i.e., the patent) contains the foundational information on which production-ready knowledge can be built — the experiential learning based on “trial and error.”

How is “value” defined?

Moderna, on the other hand, has issued a statement that, “Moderna will not enforce our COVID-19 related patents against those making vaccines intended to combat the pandemic. Further, to eliminate any perceived IP barriers to vaccine development during the pandemic period, upon request we are also willing to license our intellectual property for COVID-19 vaccines to others for the post pandemic period.”

If the value of knowledge is defined in purely economic terms, it appears one way. If it’s defined in terms of societal benefits, it can appear quite another way. The business of Covid vaccines seems to be an ideal opportunity to combine economic and social benefits — to “Do well by doing good.”

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