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German Chancellor Angela Merkel weighed in against a U.S. proposal to waive patent protections for Covid-19 vaccines, casting doubt on whether the idea has enough international support to become a reality.

The U.S. plan would create “severe complications" for the production of vaccines, a German government spokeswoman said Thursday in an email. Without the incentive of profits from research and development spending, drugmakers might not move as aggressively to make vaccines in the future, the industry has argued.

Pharmaceutical stocks that had sunk on the news of the U.S. proposal rebounded on Merkel’s stance. Moderna Inc. was down 2.1% after falling as low as 12% earlier. CureVac NV fell 5.4%, an improvement from its earlier 13% decline, while BioNTech SE was down 3.5% after earlier dropping 15%.

The U.S., Germany and other countries will take up debate over the idea in the coming weeks via the World Trade Organization, pitting the idea of sharing proprietary know-how against the need to boost global supplies, especially in developing countries that have struggled to get their populations inoculated. Merkel’s position shows she’s sympathetic to the argument of drugmakers such as Mainz, Germany-based BioNTech, whose vaccine with Pfizer Inc. uses cutting-edge messenger RNA technology.

“The limiting factor for the production of vaccines are manufacturing capacities and high quality standards, not the patents," the German government spokeswoman said. “The protection of intellectual property is a source of innovation and this has to remain so in the future."

Officials and diplomats in Brussels cautioned that such discussions will take months and will likely result in partial waivers only, as there’s little chance the EU and the U.S. will agree to cede intellectual property for the revolution of its mRNA technology with China. In any case, most poor countries in the world have neither the capacity nor the expertise to produce such advanced treatments. A more immediate solution to the problem, the officials said, would be for the U.S., the U.K and others to follow the EU’s lead and lift their effective restrictions on vaccine exports to those who need it.

The U.S. and Europe have been strong supporters of IP protections at the WTO, particularly as a way to enforce problems like Chinese patent infringement. As the pandemic leads to some of the world’s more monumental and lucrative scientific discoveries, defenders of IP rights are warming to some exceptions on ethical grounds even though the drug companies argue it’ll do more harm than good.

As the U.S. inoculations advanced and outbreaks diminished in recent weeks, the White House came under pressure from progressive Democrats and public-health advocates to take a stance while India in particular suffers from surging deaths and infections.

“In terms of how soon the WTO can deliver -- that literally depends on the WTO members, collectively, being able to deliver," U.S. Trade Representative Katherine Tai said in an interview Wednesday. “I am the first one to admit that what we are leaning into is a process that is not going to be easy."

WTO Director-General Ngozi Okonjo-Iweala welcomed the U.S. decision to support the waiver and wants countries to come to a decision by the time of the organization’s ministerial meetings in December, spokesman Keith Rockwell said.

Many WTO members see the issue as important, and the U.S. and EU have “taken note" of U.S. support, Rockwell said in an online press briefing Thursday after the second day of a general council meeting in Geneva.

(Updates with more German government comments, details from fifth paragraph)

For more articles like this, please visit us at bloomberg.com

©2021 Bloomberg L.P.

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