It’s been about three years since Americans first rolled up their sleeves to get the jab. For most of us, the COVID vaccine was available at no cost through insurance or local government vaccination programs. But one vaccine-maker was raking in record profits.
Moderna racked up peak vaccine sales of $18.4 billion in 2022 — up from $17.7 billion in 2021. In 2023, with the pandemic having largely run its course, Moderna sales were still $6.7 billion.
In total, Moderna banked more than $42 billion over three years from buyers worldwide. Not a bad haul.
Right now, though, Moderna is embroiled in a multibillion-dollar patent infringement battle over technology it used to develop its vaccine. And believe it or not, the Biden administration has intervened in the lawsuit to say that if Moderna loses, as it very well may, taxpayers should pay the damages.
That’s right: if Moderna did the infringing, it’ll be taxpayers who do the paying.
Moderna obviously thinks the administration’s proposal is swell. But it’s a complete rip-off to taxpayers and it’s completely unfounded in law.
Here’s the backstory:
In December 2020, Moderna unveiled its mRNA vaccine under an FDA emergency use authorization. Behind the scenes, though, was the unsavory business of exactly how Moderna was creating its vaccine.
Moderna needed a way to transport the vaccine to cells without damaging them. That’s where lipid nanoparticle technology (LNP) comes in. It’s a delivery system that effectively coats the mRNA molecules with fat to deliver them to cells unharmed. No mRNA vaccine can work without this technology.
But rather than license the LNP technology from its owner, Arbutus, Moderna is alleged to have simply stolen the technology and used it in its vaccines without permission — in direct opposition to a pre-COVID court ruling. Arbutus has since sued Moderna for infringing on six patents.
Moderna is doing everything it can to get itself out of this mess, but it’s not looking good.
The company tried to annul two of Arbutus’ patents, but the United States Patent and Trademark Office deemed them valid. So the court case is ongoing — and Moderna could be on the hook for up to $3 billion, according to Leerink Partners, a financial research firm.
Unless, of course, Biden’s Department of Justice gets its way.
Though the government is not a party to the lawsuit, the Justice Department filed a highly unusual “statement of interest” in the case, suggesting that if Moderna is found liable for infringement, U.S. taxpayers should be on the hook for the damages.
This claim is legally dubious. And quite odd.
The government’s claim rests on Section 1498 of Title 28 of the U.S. Code, a law dating to 1910 that promises Washington will make patent owners whole if the government needs to infringe on their patents. It was designed to accelerate wartime production — essentially to enable mass manufacturing in a time of crisis without worrying about finalizing the details of a licensing agreement beforehand.
This statute obviously does not apply here. The Moderna vaccines were not manufactured for government use. They were made for millions of Americans, who acquired them in various ways, typically through insurance coverage. And they were also manufactured for millions of foreigners at the same time — a far cry from the typical military use case. Yes, the government supported vaccine development through Operation Warp Speed and bought some vaccines directly, but that doesn’t meet the Section 1498 test.
By the Department of Justice’s logic in this case, the government could authorize a generic drug maker to simply copy any brand name drug that’s purchased by Medicare — and then swoop in and absorb the patent infringement damages. If bureaucrats go any further down this road, Washington might as well be actively encouraging rampant infringement by government vendors. Government will assume all the risk, and taxpayers will assume the financial burden, while private companies reap all the rewards.
Here’s a better idea: if the courts find Moderna infringed, let the company take the hit for its theft. Leave taxpayers out of it.
Drew Johnson is a government watchdog and taxpayer advocate who researches tax, budget, and healthcare policy as a scholar at several free market think tanks. He is a candidate for Congress in Nevada’s 3rd congressional district.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller.