31 Aug 2021

Is the proposed IP waiver to help combat Covid-19 all it seems?

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Will the Delta variant, currently ripping its way across the world, and the many other unknowns in relation to Covid-19 now justify the ‘exceptional circumstances’ needed for a waiver of certain intellectual property (IP) rights under the TRIPS Agreement? Well, this will probably not be necessary, even in the current circumstances.

The argument for an ‘IP waiver’ is straightforward enough: public health interests must prevail over IP rights during the Covid-19 pandemic. Yet, the waiver proposal is based on a firm hypothesis that may not so easily translate into reality.

The trouble with the IP waiver proposal

The IP waiver proposal was first submitted to the WTO TRIPS Council by India and South Africa in October 2020 (and revised in May 2021). It seeks to waive certain provisions of the TRIPS Agreement on health products and technologies for the prevention, containment and treatment of Covid-19 for a practical and flexible duration. This proposition gives the impression that once IP is waived, an effective response to Covid-19 would be achieved. This is unlikely to be the case.

Firstly, IP rights have not yet been enforced in the WTO least developed countries and some developing countries, because of the ‘transitional arrangements’ provided by the TRIPS Agreement (Articles 65.2, 66.1). This means that some of the 92 ‘COVAX Advance Market Commitments countries’ worst hit by the present Covid-19 vaccine shortages, are not subject to IP protection prescribed the Agreement (except Articles 3-5).

Neither have Covid-19 related patents been applied in the majority of developing countries. This means that within these countries, pharmaceutical companies are free to manufacture and market the patented vaccines or to export them to other countries where the relevant patents have not yet been granted.

But the sticking point of the waiver proposal is that it has not been proved that IP (or patents in particular), have stifled COVID-19 vaccine innovation, technology transfer/technical coordination or manufacturing, and by extension, caused the vaccine shortages that the IP waiver proposal aims to address. In short, the proposal may just be eager to solve a problem that doesn’t actually exist.

Technology transfer/technical coordination has taken place since the very beginning of the pandemic. The best example to highlight this is that the current crop of approved Covid-19 vaccines were developed within 12 months, instead of 10 years as is usually the case. Additionally, the world’s biggest patent offices in China, Europe, Japan and the US have provided open access to patent databases, including medicine search and patent analysis, to enable scientists to monitor state-of-the art innovation and develop it further.

Compulsory licensing for global access to vaccines

For sure, the WHO and Costa Rica renewed their call for voluntary licensing of Covid-19 related products in May 2021. If this is not forthcoming, a compulsory licence may be authorised on public health grounds to enable the generic version of patented vaccines to be manufactured and sold, without the patent holder’s consent, on a non-exclusive basis, on payment of royalties (Article 31).

Contrary to the conventional belief advanced as one justification for patent waiver, compulsory licensing is used more frequently than is commonly assumed. Between 2001 and 2016, for example, 176 instances of its possible usage by 89 countries were identified, covering products to treat 14 different diseases. The decision laid down by the German Federal Court of Justice in Merck Sharp and Dohme v. Shionogi (2017) upheld the authorisation of a compulsory licence and illustrated that the ‘public health’ argument can be applied even to a relatively small group of patients for potential health risks.

Naturally, under normal circumstances, a compulsory licence may only be authorised if the licensing efforts on ‘reasonable commercial terms and conditions’ ‘within a reasonable period of time’ fail. These prerequisites may look burdensome, but they are exempted in “a national emergency or other circumstances of extreme urgency or in cases of public non-commercial use” (Article 31(b)).

Indeed, since the outbreak of the pandemic, many countries have amended their legislation to facilitate compulsory licence application. Israel, Hungary, Russia and Ecuador have in effect authorised compulsory licences for Covid-19 treatments and vaccines.

Furthermore, within the remit of compulsory licensing, in relation to manufacturing capacity, TRIPS provides countries with “insufficient or no manufacturing capacity” the flexibility to make a declaration to this effect and import patented vaccines, without being subject to any challenges (Article 31bis). This ‘flexibility’ is applicable to whatever patented pharmaceutical products (such as active ingredients and diagnostic kits) and processes are needed to remedy a particular public health situation.

Suffice to say, there is little evidence to dispute the efficiency of compulsory licensing,  although some clarifications may be required and the notification procedure be further simplified, as the EU has recently proposed.

At the end of the day, it’s not just all about IP…

Vaccine manufacturing is a complex process that typically involves 9,000 different raw materials from 300 suppliers across 30 countries. Increasing efficiency, the repurposing of existing capacity, and adding new capacity are the key solutions to scale up manufacturing to meet the vaccine shortages that the ‘COVAX countries’ are now facing. The free flow of goods, public-private partnerships, coordinated buying/pooled procurement, financing and efficient product allocation, etc. are the true enablers, not IP waiver.

With the onslaught of the Delta variant currently being experienced worldwide, the World Intellectual Property Organisation (WIPO), the IMF, and several pharmaceutical companies, such as Pfizer/BioNTech, have stepped up their efforts in capacity-building, financing, and manufacturing to achieve global equitable access to Covid-19 vaccines.

Therefore, an ‘IP waiver’ should only be considered if it is proved that IP does impede public health. As for ‘global access to vaccines’, in the absence of voluntary licensing, compulsory licensing should be applied to ensure that COVAX countries receive the affordable vaccines they need to help finally bring this pandemic to an end.