Rallying Innovation in the Age of COVID-19
IN THE EARLY DAYS OF THE GLOBAL PANDEMIC LOCKDOWN that saw so many of us working from home, my thoughts turned to how we can innovate our way out of this and future crises. The movie Mission Impossible 2 soon came to mind. Released in 2000, the antagonist is an Australian-based biotech company (Biocyte Pharmaceuticals, if you must know) with a rather unique commercialization plan. It has developed a virus, Chimera, that could start a very bad pandemic. It lies dormant for 20 hours before destroying the carrier’s red blood cells. One plan might have been threatening to release the virus and be paid not to do so. But the folks at Biocyte go one step further. They plan to release the virus itself because they have also developed the cure. And, get this, they hold the patent on it.
Suffice it to say, I suspect some venture capitalists would call this one ‘fundable’. The movie’s plot involves the chase to stop the virus from being released but also to secure the cure in case it is. But I wonder, did they have to do that? The plan was to release the virus and then charge for the cure. Drugs normally, once made available, are easy to copy and so have patents. The plan here was to use the patent to extort world governments to pay up much of their global wealth.
But herein lies the problem: the patent is granted by those governments. Surely in this situation, they would just invalidate the patent and take the cure? The point is that when it comes to innovations in the face of global pandemics, business as usual for our innovation system is unlikely to apply. The reason is that once an innovation has been created, there are strong pressures to make it freely available, and in the process, push down the return to any R&D that has been conducted. Anticipating this, businesses may not invest in R&D in the first place.
This is not a hypothetical and , professors at Harvard and Stanford, respectively, write in their 2010 article “Incentivizing Innovation” (published in ):
