Examining the Necessity of the TRIPS Waiver Proposal

Introduction

The pandemic has highlighted the existing inequalities between the Global North and South. While several countries have begun vaccine administration on a large scale, others are still struggling to get their hands on a vaccine. India and South Africa recently requested the Council for Trade-Related Aspects of Intellectual Property Rights (‘TRIPS’) to suspend Intellectual Property (‘IP’) rights related to COVID-19 technologies to ensure equitable access to vaccines among other things.[i] Although the proposal has garnered the support of many Low- and Middle-income Countries (‘LMICs’) and the Biden administration, it is currently being opposed by other High-Income Countries (‘HICs’), such as the European Union, United Kingdom, Japan and Canada, and leading pharmaceutical companies.

I argue for the necessity of this waiver by responding to the arguments raised by those opposing it. The first section demonstrates how IP and unrestrained contractual freedom of HICs have impeded vaccine access, thus necessitating a waiver. The second section demonstrates why alternative mechanisms to the waiver such as voluntary arrangements, compulsory licensing, and advanced market commitments are insufficient. The third section addresses claims regarding the waiver’s impact on medical innovation.

Barriers to Access: Intellectual Property and Vaccine Nationalism

To understand the necessity of this waiver, we must begin by discussing how IP and vaccine nationalism have affected the distribution of vaccines.

Those opposing the waiver maintain that IP is not a barrier and the absence of infrastructural capacity is the real cause of unequal access.[ii] Although manufacturing capacity shortfalls have caused unequal access, IP has further exacerbated this inequality by granting exclusive rights over vaccine distribution to a few companies.[iii] The TRIPS Agreement ensures that patent protection has global reach. Art. 27(1) mandates members to grant patents to all inventions, including products and processes, provided that they fulfill the technical requirements of patentability. Patent owners have the exclusive right to make, use, and sell vaccines, thereby preventing others from making or selling the same vaccine.[iv] In addition to vaccines, information relating to the vaccine production process is also protected under the trade secrecy framework of TRIPS.[v] Thus, TRIPS provisions confer exclusive control over the production of vaccines to a few pharmaceutical companies thereby limiting its supply and impacting prices.

Exclusive control of pharmaceutical corporations over vaccine production becomes problematic due to the emergence of vaccine nationalism. Several countries have secured a bulk of the vaccines for their population by entering into Advanced Purchase Agreements (‘APA’). APAs are legally binding contracts where one party commits to purchasing a specific number of a potential vaccine at a negotiated price.[vi] Unrestrained use of APAs has allowed countries with greater financial resources to reserve early supply of the vaccine for themselves, leaving nothing for LMICs.[vii] Therefore, it is no surprise that although more than 700 million vaccine doses have been administered globally, HICs have received more than 87 percent, while Low-Income Countries (‘LICs’) have received only 0.2 percent.[viii] Reports indicate that while poor nations will be able to vaccinate a maximum of 20% of their population in 2021, rich countries have secured enough doses to immunize their population multiple times.[ix]

The Waiver

The waiver becomes relevant against this backdrop. It requests a temporary suspension on the enforcement of TRIPS Agreement provisions concerning patents, copyrights, industrial designs, and trade secrets.[x] The waiver would help reduce the existing gap between rich and poor nations by allowing the production of generic versions of vaccines. Instead of concentrating production with a few pharmaceutical companies, the waiver would allow generic manufacturers to start production sooner, thereby increasing global supply.  Countries like India and South Africa have been at the forefront of supplying generic affordable medicines and can play a key role in supplying generic versions of the vaccine to LMICs.[xi]

Alternative Mechanisms to the Waiver

Opposition to the waiver has been justified by characterizing it as an ‘extreme’ measure that is unnecessary due to existing alternative arrangements.[xii] Three alternative mechanisms are most commonly identified: voluntary arrangements, compulsory licensing, and COVAX. However, all of these mechanisms have limitations.

Voluntary Arrangements

Voluntary licenses are agreements through which a patent-holding pharmaceutical company allows a third party to produce a generic version of the patented product in exchange for royalty.[xiii] Until now, four major pharmaceutical companies—AstraZeneca, Sanofi, Johnson & Johnson, and Novavax—have agreed to license their vaccines to developing countries.[xiv]

Patent pools similarly facilitate licensing by multiple patent owners to third parties.[xv] The most prominent example is the Medicines Patent Pool (’MPP’), whose mandate was recently expanded to cover COVID health technologies.[xvi] The COVID-19 Technology Access Pool (‘C-TAP’)[xvii] and Open COVID-19 Pledge[xviii] are other pooling arrangements established for the voluntary sharing of COVID-19 related IP.

While these initiatives are laudable, they are insufficient due to two key limitations. First, voluntary mechanisms rely entirely on the willingness of pharmaceutical companies, thus resulting in limited participation. No leading vaccine producers such as Pfizer and BioNTech have taken action to license to developing countries. These corporations, along with other pharmaceutical leaders, have expressed their opposition to initiatives such as C-TAP and MPP.[xix] Therefore, it is no surprise that not a single vaccine originator has shared technologies with LICs through C-TAP.[xx]

Second, licenses are often accompanied by restrictive conditions that limit the benefits of competition due to the asymmetry in bargaining power between patent-holding companies and generic manufacturers.[xxi] Most voluntary licenses impose geographical restrictions by listing countries where the licensee can distribute the product. High and middle-income countries are often excluded to preserve the most profitable markets for the licensor itself.[xxii] For example, the licensing agreement between Serum Institute of India and AstraZeneca bars the former from selling to upper-middle-income and high-income countries.[xxiii]

Compulsory Licensing

Due to the impact of IP on the availability of pharmaceutical products, TRIPS Agreement provides certain flexibilities. Compulsory licensing is one such flexibility where the government allows a third party to produce a patented product or process without the patent holder’s consent.[xxiv] Art. 31 confers members with broad discretion to issue compulsory licenses provided certain requirements are met.

For years, compulsory licensing has been the primary mechanism to circumvent the impact of patents on pricing and supply. Studies have shown that compulsory licensing reduced prices of patented drugs,[xxv] helped LMICs gain access to antiretroviral drugs for HIV/AIDS patients,[xxvi] and has been used as leverage for price reduction in negotiations with pharmaceutical companies.[xxvii] However, compulsory licensing under the TRIPS mechanism suffers from various limitations.

First, compulsory licensing remains extremely complicated for countries that do not have the manufacturing capacity to produce vaccines. Art. 31(f) mandates for compulsory license to be used predominantly for supply of the domestic market. Thus, countries that did not have the manufacturing capacity to domestically produce the pharmaceutical product could not make use of this flexibility. Recognizing this lacuna, the TRIPS Agreement was amended to create a waiver for this requirement. This waiver was included as Art. 31bis which now allows countries that lack manufacturing capacity to import a specific pharmaceutical product.[xxviii] Despite this amendment, compulsory licensing is of little practical use due to the complex and time-consuming procedure. It requires a special production line from the exporter, technical expertise from the importer, and extensive documentation from both.[xxix] The procedure’s overly complex nature is evidenced by the fact that it has been used only once—by Rwanda to import HIV/AIDS drugs from Canadian manufacturer Apotex. Due to the cumbersome procedure which took more than two years, Apotex complained it would not use the system again.[xxx]

Second, pharmaceutical companies and developed nations frequently retaliate against the use of compulsory licensing using trade sanctions, political pressure, and criticism.[xxxi] For instance, Thailand issued a compulsory license for Abbott’s HIV drug Kaletra in 2010. In response, Abbott immediately ceased the introduction of new drugs in Thailand and the US Government threatened trade sanctions.[xxxii] Fear of such retaliation is bound to discourage countries from using compulsory licensing.

The limitations of voluntary arrangements and compulsory licensing make these mechanisms insufficient in providing access to LMICs. The waiver proposed addresses all of these limitations by waiving IP rights entirely.

COVAX

This pandemic has led to the largest vaccine procurement scheme in history. Led by Gavi, the Coalition for Epidemic Preparedness Innovations (‘CEPI’) and the World Health Organization (‘WHO’), COVID-19 Vaccine Global Access Facility (‘COVAX’) is a platform for participating countries to access COVID-19 vaccines. Gavi allows participants to place advance commitment orders for specified doses of COVID-19 which it then procures from pharmaceutical companies.[xxxiii] Participating countries are divided into two categories: self-financing and funded states. While self-financing states are required to pay for the doses ordered, the World Bank and other donors such as the Bill and Melinda Gates Foundation finance vaccine doses for funded states.[xxxiv] After procurement, vaccines are distributed according to WHO’s ‘fair allocation framework’, as per which countries progressively receive doses until they reach 20% of their population.[xxxv]

Having delivered around 38 million doses to over 100 economies, COVAX has been fairly successful.[xxxvi] COVAX’s success, however, must not be taken to mean that the TRIPS waiver is no longer necessary or that there has been equitable distribution of vaccines. The 38 million doses fall significantly short of the 100 million doses that were expected from COVAX by the end of March.[xxxvii] HICs are undermining COVAX plans by purchasing vaccines through COVAX while simultaneously securing doses through APAs to immunize their population multiple times. For instance, the EU had secured 1.3 billion doses for a population of 450 million and the US and Britain had secured enough doses to vaccinate their populations four times over.[xxxviii]

A waiver of TRIPS provisions will supplement the contributions of COVAX by increasing global supply. There is a difference between using financial contributions to increase supply provided by a limited number of manufacturers and increasing the number of manufacturers itself. While COVAX has increased the share of the pie for LMICs, a waiver would provide for a bigger pie.

Re-evaluating Incentives for Vaccine Development

Some argue that a waiver would set a dangerous precedent by undermining the IP regime, thereby compromising medical innovation.[xxxix] This argument assumes that IP is necessary for the development of socially desirable innovation as it incentivizes investment by granting exclusive rights. But is an IP regime conducive for medical innovation, particularly the development of vaccines?

Some have argued that it is not. Ana Santos Rutschman, for instance, argues that the characteristics of vaccines and vaccine markets make them unsuitable for patent-drive innovation.[xl] Unlike other pharmaceutical products that require multiple uses or lifelong use, vaccines require single use, thus limiting the potential for monetization. Vaccines also involve significant logistical costs such as maintenance of cold chain. Further, savings generated by the effective deployment of a vaccine are generally hard to quantify and do not translate into direct economic returns. Due to these reasons, vaccines are generally unappealing to investors in the biopharmaceutical industry. This misalignment between the patent-based incentives becomes even more salient with diseases endemic to LMICs.[xli] There are several infectious diseases prevalent in the Global South (Ebola, chikungunya, Lyme disease) for which vaccines are desperately needed but have not been developed due to a lack of incentives.[xlii] This shortcoming in the IP regime has led to the rise of public-private partnerships in vaccine development and procurement. The two non-state actors spearheading COVAX—Gavi and CEPI—have been at the center of funding vaccine R&D and improving access to vaccines.[xliii]

A similar trend can be seen with the current pandemic as well. Several vaccine candidates have received significant contributions from the public sector. Take the three leading vaccine candidates as examples: Pfizer received a $455 million grant from the German government;[xliv] Moderna’s vaccine was developed in collaboration with the National Institutes of Health using US federal funds;[xlv] AstraZeneca also benefitted from public funding.[xlvi] Thus, the claim that vaccine development was driven by IP-based incentives is misleading. Considering the devastating impact of the pandemic and the key role played by the public sector in the development of the vaccine, vaccines must be regarded as public health goods.

Conclusion

The pandemic has exposed the deepening inequalities that exist across the globe. IP and untamed use of APAs has exacerbated already existing asymmetries across the Global North-South divide. In this context, the waiver proposed by India and South Africa becomes necessary to ensure equitable access to the vaccine. A waiver on the enforcement of IP would allow the production of generic vaccines, thereby ensuring access to affordable vaccines for LMICs.

WTO Members are divided over the proposal and have failed to reach consensus at a meeting of the TRIPS Council on 30 April. Those co-sponsoring the proposal have will soon issue an amended version of their waiver proposal to further clarify its scope and the period during which it will apply.[xlvii] It is expected that the TRIPS Council will hold a meeting to discuss the revised proposal before its next regular meeting scheduled for 8-9 June 2021.[xlviii] With HICs such as Canada, the UK, and the EU currently opposing the proposal, it is unlikely there will be consensus anytime soon. The Biden Administration’s decision to support the proposal is a step in the right direction and may serve as an example for other developed nations to follow.

[i] Communication from India And South Africa, Waiver from Certain Provisions of The Trips Agreement For The Prevention, Containment and Treatment of COVID-19 IP/C/W/669 (2020).

[ii] John Miller and Stephanie Nebehay, ‘Patent protection barriers not holding back vaccine production: drug groups say’ Reuters (10 March 202) <https://www.reuters.com/article/us-health-coronavirus-who-vaccines-idUSKBN2B12EO&gt;.

[iii] Frederick M. Abbott and Jerome H. Reichmann, ‘Facilitating Access to Cross-Border Supplies of Patented Pharmaceuticals: The Case of the COVID-19 Pandemic’ (2020) 23 Journal of International Economic Law 535.

[iv] TRIPS, art. 28(1)

[v] Sara Eve Crager, ‘Improving Global Access to New Vaccines: Intellectual Property, Technology Transfer, and Regulatory Pathways’ (2014) 104(11) American Journal of Public Health e85, e86.

[vi] Alecandra Phelan and others, ‘Legal Agreements: Barriers and Enablers to Global Equitable COVID-19 Vaccine Access’ (19 September 2020) 396(10245) The Lancet 800 <https://www.thelancet.com/article/S0140-6736(20)31873-0/fulltext#seccestitle10&gt;.

[vii] Bridget M Kuehn, ‘High-Income Countries Have Secured the Bulk of COVID-19 Vaccines’ Jamia Network (16 February 2021) <https://jamanetwork.com/journals/jama/fullarticle/2776341&gt;.

[viii] Jake Verzosa, ‘Low-income countries have received just 0.2 per cent of all COVID-19 shots given’ (UN News, 9 April 2021) <https://news.un.org/en/story/2021/04/1089392&gt;.

[ix] Megan Twohey and others, ‘With First Dibs on Vaccines, Rich Countries Have ‘Cleared the Shelves’ New York Times (15 December 2020) <https://www.nytimes.com/2020/12/15/us/coronavirus-vaccine-doses-reserved.html&gt;.

[x] Communication from India And South Africa (n 1).

[xi] See Sonja Babovic and Kishore M. Wasan, ‘Impact of the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement on India as a Supplier of Generic Antiretrovirals’ (2011) 100(3) Journal of Pharmaceutical Sciences 816.

[xii] For instance, see Vivek Dehejia, ‘A WTO Waiver on Patents Won’t Help Us Against COVID’ (Livemint, 28 April 2021) <https://www.livemint.com/opinion/online-views/a-wto-waiver-on-patents-won-t-help-us-against-covid-11619625719625.html&gt;.  Also see UK’s response to the proposal – Government of UK, ‘Statement to the TRIPS Council: Item 15 waiver proposal for COVID-19’ (16 October 2020) < https://www.gov.uk/government/news/uk-statement-to-the-trips-council-item-15&gt;.

[xiii] Tahir Amin, ‘Voluntary Licensing Practices in The Pharmaceutical Sector: An Acceptable Solution to Providing Access to Affordable Medicines?’ (Oxfam Gb, 2007) <https://www.i-mak.org/wp-content/uploads/2017/10/Oxfam-VoluntaryLicensingResearchIMAKWebsite.pdf&gt;.

[xiv] Thomas Cueni, ‘The Risk in Suspending Vaccine Patent Rules’ New York Times (10 December 2020) <https://www.nytimes.com/2020/12/10/opinion/coronavirus-vaccine-patents.html&gt;..

[xv]Ana Santos Rutschman, ‘The Intellectual Property of COVID- 19’ in Elizabeth Kirley and Deborah Porter (eds.) Outsmarting Pandemics (2021) (forthcoming)

[xvi] Medicines Patent Pool, ‘The Medicines Patent Pool and Unitaid respond to access efforts for COVID-19 treatments and technologies’ (31 March 2020) <https://medicinespatentpool.org/news-publications-post/the-medicines-patent-pool-and-unitaid-respond-to-access-efforts-for-covid-19-treatments-and-technologies/&gt;.

[xvii] World Health Organisation, ‘COVID-19 Technology Access Pool’ <https://www.who.int/emergencies/diseases/novel-coronavirus-2019/global-research-on-novel-coronavirus-2019-ncov/covid-19-technology-access-pool&gt;

[xviii] ‘Open COVID Pledge’ <https://opencovidpledge.org/&gt;.

[xix] ED Silverman, ‘Pharma leaders shoot down WHO voluntary pool for patent rights on Covid-19 products’ Stat (28 May 2020) <https://www.statnews.com/pharmalot/2020/05/28/who-voluntary-pool-patents-pfizer/&gt;.

[xx] Joseph E. Stiglitz and Lori Wallach, ‘Preserving intellectual property barriers to covid-19 vaccines is morally wrong and foolish’ Washington Post (26 April 2021) <https://www.washingtonpost.com/opinions/2021/04/26/preserving-intellectual-property-barriers-covid-19-vaccines-is-morally-wrong-foolish/&gt;.

[xxi] MSF, ‘Voluntary Licenses and Access to Medicines’ (October 2020) < https://msfaccess.org/sites/default/files/2020-10/IP_VoluntaryLicenses_full-brief_Oct2020_ENG.pdf&gt;.

[xxii] ibid.

[xxiii] MSF, ‘WTO COVID-19 TRIPS waiver proposal: Myths, realities and an opportunity for governments to protect access to lifesaving medical tools in a pandemic’ (03 December 2020) <https://msfaccess.org/wto-covid-19-trips-waiver-proposal-myths-realities-and-opportunity-governments-protect-access&gt;.

[xxiv] ‘Compulsory licensing of pharmaceuticals and TRIPS’ (WTO) <wto.org/english/tratop_e/trips_e/public_health_faq_e.htm>.

[xxv] Eduardo Urias and Shyama V. Ramani, ‘Access to medicines after TRIPS: Is compulsory licensing an effective mechanism to lower drug prices? A review of the existing literature’ (2020) 3 Journal of International Business Policy 367, 372.

[xxvi] Hilary Wong, ‘The Case for compulsory licensing during COVID’ (2020) 10(1) Journal of Global Health.

[xxvii] Donald Harris, ‘TRIPS After Fifteen Years: Success or Failure, as measured by Compulsory Licensing’ (2011) 18(2) Journal of Intellectual Property Law 368.

[xxviii] Dina Halajian, ‘Inadequacy of TRIPS & the Compulsory License: Why Broad Compulsory Licensing is Not a Viable Solution to the Access Medicine Problem’ (2013) 38(3) Brooklyn Journal of International Law 1192.

[xxix] Caroline Freund and Christine McDaniel, ‘Three Steps to facilitate global distribution of a covid-19 vaccine’ in Simon Evenett and Richard Baldwin(eds.) Revitalising Multilateralism: Pragmatic Ideas for the New WTO Director-General (CEPR Press 2020).

[xxx] Harris (n 27).

[xxxi] Halajian (n 28).

[xxxii] ibid.

[xxxiii] Phelan and others (n 6).

[xxxiv] Armin Von Bogdandy and Pedro Villarreal, ‘The Role of International Law in Vaccinating Against COVID-19: Appraising the COVAX Initiative’ (MPIL Research Paper Series No. 2020-46).

[xxxv] World Health Organisation, ‘Allocation Mechanism for COVAX Facility Vaccines’ (12 November 2020) <https://www.who.int/publications/m/item/allocation-mechanism-for-covax-facility-vaccines-explainer&gt;

[xxxvi] WHO, ‘COVAX reaches over 100 economies, 42 days after first international delivery’ (8 April 2021) <https://www.who.int/news/item/08-04-2021-covax-reaches-over-100-economies-42-days-after-first-international-delivery&gt;?

[xxxvii] Verzosa (n 8).

[xxxviii] Twohey and others (n 9).

[xxxix] Cueni (n 14).

[xl] Ana Santos Rutschman, The Intellectual Property of Vaccines: Takeaways from Recent Outbreaks’ (2020) 118 Michigan Law Review 170.

[xli] ibid

[xlii] Stanley Plotkin and others, ‘Establishing a Global Vaccine Development Fund’ (2015) New England Journal of Medicine 373 <https://www.nejm.org/doi/full/10.1056/NEJMp1506820&gt;.

[xliii] Rutschman (n 40).

[xliv] Riley Griffin and Drew Armstrong, ‘Pfizer Vaccine’s Funding Came From Berlin, Not Washington’ Bloomberg (10 November 2020) <https://www.bloomberg.com/news/articles/2020-11-09/pfizer-vaccine-s-funding-came-from-berlin-not-washington&gt;.

[xlv] Eric Sagonowsky, ‘After nearly $1B in research funding, Moderna takes $1.5B coronavirus vaccine order from U.S’ (Fierce Pharma, 12 August 2020) <https://www.fiercepharma.com/pharma/after-nearly-1b-research-funding-moderna-takes-1-5b-coronavirus-vaccine-order-from-u-s&gt;

[xlvi] Michael Safi, ‘Oxford/AstraZeneca Covid vaccine research ‘was 97% publicly funded’ Guardian (15 April 2021)<https://www.theguardian.com/science/2021/apr/15/oxfordastrazeneca-covid-vaccine-research-was-97-publicly-funded&gt;.

[xlvii] Joe C Mathew, ‘COVID-19 crisis: 62 WTO members say TRIPS waiver proposal to be amended’ Business Today (18 May 2021) <https://www.businesstoday.in/current/economy-politics/covid-19-crisis-62-wto-members-say-trips-waiver-proposal-to-be-amended/story/439386.html&gt;.

[xlviii] WTO, ‘DG Okonjo-Iweala underlines urgent need to address equitable access to vaccines’ (5 May 2021) <https://www.wto.org/english/news_e/news21_e/gc_05may21_e.htm&gt;.