US Trade Representative Katherine Tai made the announcement on Wednesday afternoon in light of the ongoing global health crisis and the need for a much more robust rollout of vaccines around the world.
“The extraordinary circumstances of the Covid-19 pandemic call for extraordinary measures,” she said in a statement.
Pfizer, Moderna, BioNtech, and Novavax share prices all plunged to session lows on the news as investors worried that the waiver, proposed by South Africa and India, could dent business.
Moderna was down more than six per cent, BioNtech more than three per cent, Novavax almost five per cent, but Pfizer much less so.
Despite the news, the Dow Jones closed at a new record high of 34,230.
While the administration believes strongly in intellectual property protections, Ms Tai argued that in the service of ending the pandemic, the US government supports the waiver of those protections for Covid-19 vaccines under the rules of the World Trade Organization.
The statement only mentions vaccines and not other Covid-related products as was originally proposed. Further to that, passing the waiver requires consensus from all 164 members of the WTO, including jurisdictions home to the pharma giants – namely the UK, EU, and Switzerland.
This may take some time, but making the agreement a temporary arrangement may help them strike a deal.
Those opposed to the deal say it could harm the incentive to innovate in the future if governments feel they can allow for the IP rights of companies to be waived.
Those in favour point out the particular circumstances under which this decision was reached, the rise of variants as the virus continues to spread, and the mounting death toll around the world.
While vaccine rollouts have exceeded expectations in the US, UK, Israel, and a number of other countries, the global distribution and delivery of doses from the major pharmaceutical companies – in addition to those from Russia and China – needs a major boost.
Surges in the number of cases in India and Latin America have left health officials concerned that the world may be living with the pandemic for a long time to come, as the new variants prove harder to contain.
According to data from Johns Hopkins University, there have been 3.23 million officially recorded deaths worldwide from the virus, and 154.6 million confirmed cases.