As of this writing, there are 14 vaccines identified for further investigation and development to stop COVID-19. That is great! What is not great is that politicians are starting to chirp about the patentability of these breakthroughs. In fact, instead of granting a patent for these innovative breakthroughs, the idea has been floated to award a prize instead of a patent.
As any inventor can tell you, prizes instead of patents are a bad idea. (A Nobel Prize and a patent would probably be fine.) But prizes alone have always been a bad idea, they will always be a bad idea, and now might be one of the worst times for a prize instead of a patent.
Patents grants inventors authority to secure, for limited time-frames, the exclusive right to their discoveries. This “right” is one of the unsung heroes of rights granted in the Constitution and has allowed and incentivized the innovative high-growth economy that we have in the United States. That means that anybody can invent the next best mousetrap, hardware, medical device, or vaccine and profit from that during the limited time granted by the government. And, after the limited time, others can use the innovation in their products without paying the inventor.
The patent system in the U.S. is amazing, and it has acted as a great equalizer, allowing small garage inventors to compete with mega-corporations. It has also created an incentive in other industries, such as cellular communications, to race to the next generation of technology, meaning that we all benefit by a product coming out sooner rather than later.
Because some people (mainly politicians and failed innovators) are jealous of the limited time of exclusivity granted in the Constitution, other ideas have been floated. Patent prizes are at the forefront and are a favorite of Bernie Sanders.
The basic idea is that instead of a patent, a company would receive a prize for developing a novel innovation. As many of Bernie Sanders’s proposals mimic, the idea might sound good when you hear it. The problems start when you begin to think about the implications. Would every innovation receive the same award? That would put “onion goggles” on the same level as 5G. Or, what happens when multiple solutions, such as multiple vaccines, are developed to solve the same problem? Do they all get prizes? Has the Academy ever awarded multiple prizes for best picture?
The answer to these questions and all of the others surrounding a “prize” system is that the government would need to step in to decide what prizes are awarded, how big those prizes are, and to whom they would be awarded. That invites cronyism, slower innovation, and misguided awards. (See the cars that were developed in the Soviet Union.)
But, the government’s involvement as the judge, jury, and sponsor is just the tip of the iceberg when thinking through a prize system.
A prize system also skews the way that labs work by lowering the incentive to continue innovating in any area where a prize has already been awarded. Prizes would also change the way that companies would consider the risk of participating in the research and development race, increasing the number of free riders.
Now is a good time to look at the issues with prizes. Because with 14 vaccines in the running, how many of them would receive awards? Would there be a different award for the one that can be produced faster? Would there be a different award for the solution with the fewest side effects? If a bill is passed today to award a prize instead of a patent, how many would just stop development and keep their money in the bank?
The people making these decisions shouldn’t be the government.
But, there is a place that these decisions are made every day already, and there is no prize needed. The place that decisions such as these are made every day, where they should be made, is the free market. If we assume that all 14 vaccines work, and all are novel, then doctors would get to decide which is best for their patient, and patients can decide which one to take. Is one cheaper? More effective? Safer? Fewer side-effects?
The government doesn’t need to get involved.
The best role that government has performed amid this pandemic is working as a force multiplier to the private sector, as when they sent Navy ships to help in New York City. Government officials should continue to stay in the government lane and allow pharmaceutical companies to move. Big Pharma will find a COVID-19 vaccine, and hopefully shut up a lot of ignorant, persistent critics along the way.
Charles Sauer (@CharlesSauer) is a contributor to the Washington Examiner’s Beltway Confidential blog. He is president of the Market Institute and previously worked on Capitol Hill, for a governor, and for an academic think tank.
