Saturday, February 4, 2023
  • Login
  • Register
  • Home
  • Culture
    • All
    • Food and Travel
    • Literature
    • Popular Culture
    A view of Varanasi, during the dusk hours.

    Legal Dimension to Altering Places of Worship and ‘Secularism.’

    Book Review- The Khalistan Conspiracy

    Book Review- The Khalistan Conspiracy

    Book Review-The Execution of Bhagat Singh: Legal Heresies of the Raj

    Book Review-The Execution of Bhagat Singh: Legal Heresies of the Raj

    chessboard game

    Censorship: The Trojan Horse Method in Art

    What You Should Not Expect at a Village Wedding

    What You Should Not Expect at a Village Wedding

    A picture of Mother Theresa in Kolkata

    Religious Fetishisation of Love: Hélder Câmara and Mother Teresa

  • Politics
  • Business
  • Identity
  • Events & News
  • Science & Tech
No Result
View All Result
Converciti
  • Home
  • Culture
    • All
    • Food and Travel
    • Literature
    • Popular Culture
    A view of Varanasi, during the dusk hours.

    Legal Dimension to Altering Places of Worship and ‘Secularism.’

    Book Review- The Khalistan Conspiracy

    Book Review- The Khalistan Conspiracy

    Book Review-The Execution of Bhagat Singh: Legal Heresies of the Raj

    Book Review-The Execution of Bhagat Singh: Legal Heresies of the Raj

    chessboard game

    Censorship: The Trojan Horse Method in Art

    What You Should Not Expect at a Village Wedding

    What You Should Not Expect at a Village Wedding

    A picture of Mother Theresa in Kolkata

    Religious Fetishisation of Love: Hélder Câmara and Mother Teresa

  • Politics
  • Business
  • Identity
  • Events & News
  • Science & Tech
No Result
View All Result
Converciti
No Result
View All Result
Home Business

Finanomics – Economics of Patents

The argument for Patents

May 9, 2021
Reading Time: 5 mins read
Scientists opening a briefcase in the lab

Scientists opening a briefcase in the lab

In last week’s edition of Finanomics, I wrote about the need for the waiver of patents for vaccines as well as other covid-related innovations, as that could help end the covid-19 pandemic sooner. Since the last week’s post went up the United States Trade Representative (USTR) Katherine Tai, announced that the Biden administration was now willing to support a temporary waiver of TRIPS (Trade-Related Intellectual Property Rights). When this news broke out, various intellectuals and experts joined the discussion and said that it was not patents that were denying access to vaccines and drugs for poor/developing countries, but it is the fragile supply chain.

Lifting vaccine patents would have zero impact of the speed of vaccine ramp. The challenge in biomanufacturing is finding the HUMANs that have the knowledge to make the plants run. More scare than even facilities. Supply chains matter hugely as well.

— Robert Nelsen (@rtnarch) May 3, 2021

Alex Tabarrok, a professor of economics at George Mason University (GMU) and also the founder of a very famous economics website called Marginal Revolution wrote an article titled ‘Patents are not the problem’ in this article he writes, and I quote “I am indeed angry that the people in power think they can solve real problems on the cheap and at someone else’s expense. This is not serious. I am also angry that they are sending the wrong message about business, profits and capitalism.” He writes that plastic bags are a bigger bottleneck than patents.

Google Ad: Indie Stylery Google Ad: Indie Stylery Google Ad: Indie Stylery

Pointless, virtue signaling that won't actually increase supply. https://t.co/IQnCcy2fPE

— Alex Tabarrok (@ATabarrok) May 5, 2021

Before we understand his argument, let me try and explain what patents are and why they are so important. Economic theory holds patents to be an efficient tool that allows innovation to foster. When an individual or a firm come up with an innovation, by patenting the innovation, the innovator becomes a monopolist over that product. Being a monopolist gives exclusive rights for the innovator to profit out of the innovation that he/she has created. But this profit is not permanent as it acts as an incentive for other innovators to come up with new innovations in order to take the monopoly status away from the original monopolist and create a new monopoly.

Let us take an example, ‘Blockbuster’ in the United States had a huge market share of the video rental service and had a valuation of $8.4 billion at their peak in 1995. Netflix started in 1997 as a similar video rental service that would deliver the DVD to your house. In 2007, Netflix started the video on demand platform online, which became the origin of Netflix that we know now. This innovation of over-the-top (OTT) video streaming service killed previous innovations such as blockbuster, putting them out of business. This process is called is ‘creative destruction,’ which Joseph Schumpeter In 1942 considered ‘the essentials fact about capitalism.’ And more recently, this is being called the ‘Netflix effect’ by some and in the tech industry it is called as being the ‘market disruptor.’

It is this role that Patents play in protecting innovations as well as incentivising future innovators to become a monopolist in their field is why patents are considered an important economic tool in fostering growth and innovation.

This is why in this article, Alex Tabarrok argues that it is not the patents that are a bottleneck in supplying vaccine to everybody and making sure there is equitable access of vaccines to everyone, but it is the supply chain that has been the bottleneck preventing equitable access to vaccines. For example, he links an article by news 18 which talks about bioreactor bags and how those were in shortage for Indian manufacturers of vaccine. This was one of the key raw materials that we found ourselves in short of and had asked the US government to lift the export ban for us to be able to get those.

The US had used the ‘Defence Production Act,’ DPA, earlier in the pandemic to make sure such shortages of important raw materials do not occur. This act prevents hoarding, limits exports, and increases the production of critical supplies. Using this act, the US federal government has the authority to control domestic industries and direct companies to prioritize orders from the federal government. The Biden administration by using DPA prioritised things like bioreactor bags and filters to the US manufacturers of vaccines.

This is just one example, but we need to understand that there is a limited supply of the raw materials and by lifting patents on vaccine and drugs it will not help create equitable access but create more bottlenecks as countries may not have access to the raw materials and for countries that have good production lines of vaccines may be denied the access to key raw materials, all of them resulting in disruption of supply chains and may delay the inoculation process.

The solution he proposes is the need for government to step in and create a conducive environment for improving the supply chain and improving the supply of raw materials to the key manufacturers.

“What can we do to increase supply? Sorry, there is no quick and cheap solution. We must spend. Trump’s Operation Warp Speed spent on the order of $15 billion. If we want more, we need to spend more and on a similar scale. The Biden administration paid $269 million to Merck to retool its factories to make the J&J vaccine. That was a good start.” writes Alex Tabarrok

As the title of the popular movie, there are indeed fifty shades of grey between black and white, but black and white happen to be the loudest, flashiest and have great social media managers. Getting rid of patents completely as well as the argument of keeping patent restrictions, both do not seem like sustainable solutions in this crisis, there is a need to understand the complexities of the situation and act accordingly.


This post is part of the weekly newsletter on economics, finance and public policy – Finanomics by Phani Datta. You have reached the end of the thirteenth edition of finanomics, thank you for reading. Please do let me know your thoughts, suggestions, feedback, or comments on the newsletter as well as the content in it. Thank you, happy Sunday! See you next week!

Share6Tweet4Share1Send
Phani Datta Surampudi

Phani Datta Surampudi

I am Phani Datta, an M.A. Economics student at O.P. Jindal Global University from Hyderabad, Telangana. I follow closely and write about Economics, Finance, Technology, Business and Public Policy.

Related Posts

casino
Business

Legal Impediments in Legalizing Gambling in India

July 20, 2021

The recent headlines in the newspapers that the two men were apprehended by the Delhi police. These men were found to have illegally entered the Arun Jaitley Stadium during the match of Rajasthan Royals versus Sunrisers Hyderabad. This has...

Online shopping and e commerce
Legal Environment

Online Shopping – Infringement of Right of Equal Opportunity to carry on trade

May 8, 2021

The Covid-19 pestilence has ushered in an era of digital boom. All our activities ranging from studying in the classroom to meeting with our friends have all become digital. In order to evade the deadly virus, people are now...

What are you looking for?

No Result
View All Result

Popular

Plugin Install : Popular Post Widget need JNews - View Counter to be installed

Our Instagram

Follow Us

  • An eight-time MLA, Yediyurappa became the Chief Minister for the first time in 2007 but had to resign after a week when JD(S) refused to support his government. A year later he was elected Chief Minister after leading the BJP to victory in the 2008 assembly elections. However, he had to resign after he was indicted in a corruption case in 2011. He had also formed his own party, Karnataka Janata Paksha, after he fell out with the BJP leadership. In 2014, he merged his party with the BJP and went on to win the parliamentary elections from the Shimoga constituency. He was later acquitted in 2016.  He was sworn in again in 2018 as the Chief Minister of the State but resigned two days later as he could not muster enough support to continue in his post. A year later, he was back as the Chief Minister after the earlier Chief Minister, H D Kumaraswamy lost the majority in the assembly. In the December by-elections, the BJP won 12 out of 15 seats and managed to get the full majority of 117 seats.
  • The BJP hit back at the Congress and claimed "there is not a shred of evidence" to link either the ruling party or the Modi dispensation with the matter. BJP leader and former IT minister Ravi Shankar Prasad questioned the credentials of those behind the story as well as its timing, coming a day before Parliament
  • ‘Pegasus’ is a spyware used to snoop into handsets. It has been claimed that even a missed video call on WhatsApp could give Pegasus complete access to users
  • The Centre on Monday dismissed reports of illegal surveillance through the Pegasus software. A huge row has erupted after media outlets reported that the phone numbers of Indian ministers, journalists, activists and others were listed on a leaked database of potential targets of cyber surveillance.  “There is no substance whatsoever behind this sensationalism,” Minister of Electronics and Information Technology Ashwini Vaishnaw said during the Lok Sabha session.  The Lok Sabha and Rajya Sabha will convene at till 11 am on Tuesday. They were both adjourned amid uproar by Opposition MPs.  Prime Minister Narendra Modi introduced the newly inducted Union ministers to the Lok Sabha as he addressed the Lower House of Parliament. On July 7, as many as 43 leaders were inducted into the Cabinet, taking the number of members in the Union Council of Ministers to 78.  The Monsoon Session of Parliament began on Monday with proceedings in both the Lok Sabha and the Rajya Sabha starting at 11 am. The session will conclude on August 13.  #parliament #modi #nda #debate #discussion #opposition #loksabha #rajyasabha #pm #monsoon #season #congress #inc

  • About Us
  • Terms Of Service
  • Privacy Policy

© Copyright 2020 Indraprastha Design Co. - Converciti

No Result
View All Result
  • Home
  • Culture
  • Politics
  • Business
  • Identity
  • Events & News
  • Science & Tech
  • Login
  • Sign Up

Welcome Back!

Sign In with Facebook
Sign In with Google
OR

Login to your account below

Forgotten Password? Sign Up

Create New Account!

Sign Up with Facebook
Sign Up with Google
OR

Fill the forms below to register

*By registering into our website, you agree to the Terms & Conditions and Privacy Policy.
All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In