Michael Kremer: belief

Transcript context

…Now, your current work on advance market commitment — why do you think that advance market commitment is more politically popular than patent buyouts? Maybe it’s useful for me to give a little bit of background on this. I had written an academic article many years ago, proposing a particular way that the public sector or the government could buy out patents and then put the intellectual property in the public domain. The idea is, this would provide a way of rewarding innovators without some of the distortions accompanying monopolies. I liked the idea academically, but it didn’t really go anywhere politically. I was thinking very much about pharmaceuticals. This is speculation, but I think the pharmaceutical firms — they’re obviously very attached to the current system of intellectual property. They may have felt that if they sold their patents and put them in the public domain, that would weaken the legitimacy of that system, where it was just very different than what they were used to, whereas the idea of selling their products wasn’t so much. You can avoid some of the distortions of monopoly. One of the key distortions of monopoly is that when the price is high, when there’s monopoly pricing, less of this gets sold. When less of this gets sold, that’s harmful for many products, but in the case of pharmaceuticals, that can be very harmful to human health. So the approach was, commit in advance to buy the efficient quantity for some products, in particular vaccines. It’s fairly easy to know roughly what the efficient quantity is in advance. Commit to buy that in advance, and then that can both create an incentive for vaccine development and the efficient quantity to be purchased. In the case of many childhood vaccines, the efficient quantity is enough to vaccinate pretty much the entire birth cohort, obviously. In practice, you can’t reach quite everybody. That idea did turn out to be politically acceptable, and a number of countries, together with the Gates Foundation, pledged $1.5 billion to finance the purchase of a vaccine against a disease called pneumococcus. In particular, there was already a vaccine for the strains of pneumococcus that were common in the developed world. But no firm had yet developed a vaccine against the strains of pneumococcus that are common in the developing world. So they pledged that if firms did develop that, they would purchase it or they would help finance the purchase. That led to three different pneumococcus vaccines that have now been developed against the strains that are common in the developing world. Hundreds of millions of people have been vaccinated, and 700,000 lives are estimated to have been saved by those pneumococcus vaccines. I think that’s a tremendous example of a success. Often, when we think about founding, we think about founding organizations. That wasn’t the case of founding an organization, but it was a case where a lot of issues had to be thought through — the economics issues, but many other issues as well. I don’t want to say the policy took off after that. f founding an organization, but it was a case where a lot of issues had to be thought through — the economics issues, but many other issues as well. I don’t want to say the policy took off after that. The policy was adopted in the case of pneumococcus, and then there’s been additional work to try to use this in other settings as well, and a few other examples.…

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