Interview with Margaret Kyle, Professor of Economics, MINES ParisTech

28.05.20

Margaret Kyle is Professor of Economics at the Center for Industrial Economics (CERNA), MINES ParisTech (Ecole des Mines). Her research covers (among other areas) R&D in the pharmaceutical industry and the effect of trade policies upon it, as well as how policies impact the dissemination of new products.

Here she discusses how trade policy impacts efforts to develop new treatments and vaccines for COVID-19 and how things may progress.

“Every country must now worry about its position in the queue for any new treatment or vaccine.”

“Drug development efforts depend on a number of key inputs (the drugs being tested as well as materials), many of which may be imported. Any friction in that supply chain risks increasing costs.

That said, I think the more important effect of increased protectionism is the doubt it creates for future supply. Every country must now worry about its position in the queue for any new treatment or vaccine. One positive aspect of this is, perhaps, more willingness by governments to invest in R&D rather than to free ride on the subsidies provided by other governments. However, while it’s great to have many different candidates in development, not every country is in a position to enrol patients in sufficient numbers for the development to be feasible or efficient. It would be better if countries could agree on contributing to development as well as to sharing information about what works and what doesn’t, in addition to any candidate that turns out to be successful. So far, however, efforts to coordinate have not been hugely successful.” 

A number of countries have been eliminating import duties on medical products due to the COVID-19 pandemic. There have also been a number of protectionist moves to ensure supplies remain in country. Norway, the UK, Belgium, Hungary, France, Brazil and others have banned the export of some COVID-19 related pharmaceutical or hospital products. The EU has asked member states to refrain from doing so where it could cause a shortage in others. India has banned the export of hydroxychloroquine (the drug used to treat malaria that Trump has admitted to taking preventatively) as well as sanitizers and certain ventilators, though is starting to relax other export bans, such as on the active pharmaceutical ingredients of paracetamol.

“Any new treatment or vaccine will be in limited supply initially. In a typical situation, letting “the market” work means that supply will flow to those with the highest willingness and ability to pay. That may not be ideal, as the pandemic may vary across countries (in a way unrelated, or negatively correlated, to the ability to pay). Even within countries, we might want to prioritize access for healthcare workers and others regardless of their ability to pay.

It’s clear that many governments are willing to intervene, for better or worse globally. If the treatment is developed in country A with financial help from country A, it’s very likely that country A will prioritize access for its domestic population. If the treatment passes through ports in country B, the government in country B may try to requisition it.” 

“Some governments have already raised the possibility of compulsory licensing (granting licenses to public agencies or a generic drug makers that allow them to copy patented medicine without the consent of the company who owns that patent). This would be an effective strategy only where there is the manufacturing capacity. If an existing drug is found to be effective against Covid-19, that may be the case, but for a vaccine, it’s less likely. That kind of skilled manufacturing is harder to find, and will almost certainly be used to produce the vaccine under a non-compulsory license first.”

“Unfortunately, the pandemic has exacerbated the mistrust between the US, EU, and China and undermined faith in global institutions like the WHO and WTO.

“the pandemic has exacerbated the mistrust between the US, EU, and China and undermined faith in global institutions like the WHO and WTO”

That said, if I were leading a country in Latin America (for example), I would be negotiating with pharma firms and governments in the global North to run trials in my country, where the virus is still spreading quickly, in exchange for priority access to any successful treatments. It’s a sensitive issue (a doctor in France found himself in trouble after proposing that trials be run in Africa, because it gives the impression that people in poor countries can be experimented on without consequence), but the problem now is that in countries where the lockdown has mostly controlled the spread, it’s hard to “power up” vaccine trials.

More generally, I think there are opportunities for win-win outcomes — sharing of research funding, data, manufacturing capacity, and risk — but these require some trust in the leadership of the interested countries.”