Friday, July 30, 2021

What’s happening with proposals for a WTO waiver of COVID-related IP?

By Nicholson Price, Rachel Sachs, Jacob S. Sherkow, and Lisa Larrimore Ouellette

If COVID-19 were a pandemic movie, we’d be very close to the end since we’ve identified several excellent vaccines; the conventional biomedical innovation narrative often ends with the product being fully developed. But we’ve still got a long way to go with COVID-19, and the biggest challenge is getting the vaccines to billions more people (and getting them to take the vaccines, but that’s a separate topic). Only 0.3% of global doses have been administered in low-income countries, many of which are confronting severe outbreaks. A staggering 1 million infections were reported in Africa in just one month, with few vaccines in sight. By some estimates, much of the world’s population won’t be vaccinated until well into 2023. Amid pledges of sharing vaccines, perhaps the most prominent policy debate today is about waiving intellectual property rights to COVID-19 technologies, including vaccines. In this post we explain what’s being proposed, what’s happening with the waiver negotiations, and what impact these negotiations might have.

What does TRIPS require at baseline? 

Negotiations over the intellectual property rights supporting COVID-19 technologies are taking place against the backdrop of the World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). The TRIPS Agreement creates obligations for WTO member states (with exceptions for least-developed countries). For example, member states must provide inventors with the opportunity to obtain patents that last for 20 years from the date of filing, and must provide for patent protection for pharmaceutical products, rather than processes alone.

Only member states can enforce TRIPS obligations. Members who wish to initiate dispute resolution proceedings against other countries they believe are violating TRIPS may do so through the WTO’s dispute resolution mechanism, with possible trade sanctions as a remedy. But since December 2019, the WTO’s Appellate Body—charged with hearing appeals and resolving inconsistent settlement panel rulings—has lacked a quorum. As a result, the WTO’s ability to resolve disputes and engage in enforcement is now limited, as dispute resolutions are only binding if neither party appeals or the appeal is resolved. The Trump Administration spent years blocking any potential nominees to the appeals panel, and thus far, the Biden Administration has done the same.

TRIPS Article 31 and 31bis do permit member states to engage in compulsory licensing, permitting either “use by the government or other third parties authorized by the government,” as long as certain conditions are met, including “adequate remuneration” paid to the rightholder. Originally, TRIPS only permitted compulsory licensing for domestic production—and although many countries did have the ability to produce their own pharmaceuticals, not all did. In the COVID-19 context, for instance, most countries currently lack facilities with capacity to produce COVID-19 vaccines. Africa, for example, currently only has three existing facilities with vaccine substance manufacturing capacity, one each in Egypt, Tunisia, and Senegal, though others are planned. None currently make mRNA-LNP vaccines.

In 2005, an amendment to the TRIPS Agreement was approved (though it was first agreed to in 2003 and not formally ratified until 2017) that would enable member states to produce a pharmaceutical product subject to a compulsory license solely for purposes of export to another eligible member state. In theory, this provision would allow a country with current capacity to manufacture COVID-19 vaccines to issue a compulsory license for the production and export of the vaccines to developing countries. But the procedures established by the amendment were complicated, and the amendment has only been used once—in 2007, when Rwanda used it to import HIV medications manufactured in Canada.

To be sure, formal WTO sanctions are not the only deterrent to compulsory licenses. Countries who engage in compulsory licensing also may worry about unilateral action outside WTO procedures—such as pressure exerted by the United States through its Special 301 Report—as well as retaliation from companies who are the subject of those licenses. In 2007, after Thailand issued compulsory licenses on a number of HIV-AIDS medications, Abbott Laboratories—the manufacturer of one of those drugs—retaliated by declaring that it had “elected not to introduce new medicines” into the country. 

How would the IP waiver proposal work and how are negotiations progressing?

In October 2020, two WTO members, India and South Africa, proposed a waiver of certain provisions of the TRIPS Agreement, namely, Sections 1 (copyrights), 4 (industrial designs), 5 (patents), and 7 (trade secrets) of Part II of TRIPS. The stated aim of the waiver was to “meet the growing supply-demand gap” of COVID-19 related medical products through the “unhindered global sharing of technology and know-how in order that rapid responses for the handling of COVID-19 can be put in place on a real time basis.” That is, by removing TRIPS requirements for domestic IP enforcement, affected countries could—according to the proposal—more easily manufacture COVID-19 related medical products. The basis for such a proposal was stated as stemming in part from “several reports about intellectual property rights hindering or potentially hindering timely provisioning of affordable medical products to the patients,” namely, two newspaper articles (one from Bloomberg, the other from the Louisville Courier Journal) about N95 mask shortages early in the pandemic. (Both articles focused on the N95 mask shortage early in the pandemic and whether the Defense Production Act could have been invoked to increase their supply. We previously wrote an explainer about the Defense Production Act and the mask shortage.) 

The biggest surprise in subsequent IP waiver discussions, perhaps, is the support from the U.S. Trade Representative, the agency responsible for negotiating trade agreements. On May 5, the USTR announced the Biden Administration’s support for waiver of WTO rules for vaccine-related IP and the U.S.’s participation in “text-based negotiations” at the WTO. India and South Africa’s broader IP waiver proposal, as of May 18, had 62 co-sponsors, and an amended version of the proposal was submitted to the WTO on May 25. 

India and South Africa’s waiver, as currently proposed, is expansive. It is not limited to vaccines, but includes any “health product technologies” used for the “prevention, treatment or containment of COVID-19.” The waiver would last for 3 years, although termination would not be automatic but instead require an agreement of the General Council, i.e., WTO consensus to end the waiver period. (This would make ending the waiver just as difficult as enacting it.) Mechanically, the waiver would not automatically end covered IP rights in any given country; rather, it would allow member states to engage in certain IP practices—diminishing of trade secrets, issuing compulsory licenses—or change their domestic IP laws without the threat of being haled into a WTO dispute. The extent to which countries would change their domestic laws remains unclear. But countries could not use WTO enforcement mechanisms to curtail such practices.

Implementing a WTO waiver is easier said than done. WTO decision-making normally involves the consensus of all 164 members. Currently, consensus seems unlikely given the opposition by Germany (home to CureVac and BioNTech), South Korea, Switzerland, Japan, the UK, and Australia, among others. Theoretically, if consensus cannot be reached, WTO rules permit waiver proposals based on a vote by three-fourths of all members (i.e., 123 countries) if floated by the WTO’s Ministerial Conference, but this is exceptionally rare: “[I]n practice, almost no matter has been decided by voting.” And even if the voting option were pursued, as of this writing, the number of WTO members supporting IP waiver is only about half of the votes needed. 

Negotiations also take time. TRIPS Council members have been negotiating the waiver proposal in June and July, with plans to report to the WTO General Council July 27-28—but the informal negotiations paused without obvious progress as the negotiators recessed until September. It seems unlikely that negotiations will be concluded before the next Ministerial Conference (November 30 to December 3 in Geneva). And even if some version of IP waiver makes it through the WTO in December, national-level implementation would take additional time.

What impact would a WTO IP waiver have?

The importance of the waiver proposal has been contested by academics. Over 180 IP faculty signed a letter in support of the waiver, stating that “existing provisions within the TRIPS Agreement are not sufficient in a pandemic context, whereby global access to vaccines produced at speed and scale is in all our interests.” If the costs of negotiating licenses with separate IP rightsholders or seeking compulsory licenses is deterring firms with manufacturing capacity, an IP waiver could reduce these problems (assuming national action to subsequently alter IP rights). On the other hand, a different group of IP faculty have argued that “IP rights might so far have played an enabling and facilitating rather than hindering role in overcoming Covid-19, and that the global community might not be better off by waiving IP rights, neither during nor after the pandemic.” 

As we have explained, for COVID-19 vaccines, a waiver of patent rights alone would likely have little impact. Jorge Contreras has argued that “the main benefit of the waiver could be in the area of non-patent IP,” such as a country attempting to “mandate that foreign companies operating in the country disclose their proprietary manufacturing, storage, and testing information to local producers under a compulsory license.” To be clear, waiving trade secret laws related to COVID-19 vaccines would not automatically lead to sharing of manufacturing information, training of personnel, or access to scarce raw materials. These are significant barriers, as detailed by Christopher Rowland in his Washington Post account of Pfizer’s manufacturing troubles. Nor is it clear how a mandatory disclosure obligation would work against a recalcitrant manufacturer; there are few, if any, guides. As Contreras notes, mandatory trade secret transfer “would be unprecedented in the international arena.”

An IP waiver is not the only international proposal for expanding access to COVID-related technologies. The G20 has floated a voluntary IP licensing scheme. The EU has issued its own WTO proposal that focuses on limiting export restrictions, expanding domestic manufacturing production, and operationalizing the sharing of manufacturing information and licensing. Wealthy countries like the United States can also donate excess supply—and help purchase additional doses for the rest of the world (though some barriers exist). As we stated in August of last year: “[T]he economic and public health impact of COVID-19 counsels that whatever risk exists from payers overpaying for a patent-protected COVID-19 vaccine is a mere rounding error compared to the enormous harm—both economic and human—from the pandemic. If Pfizer stands to reap $2 billion to end a scourge that has already claimed 700,000 lives and stands to cost $82 trillion globally, it’ll be worth it.” Since then, the number of lives claimed has increased nearly six-fold, and vaccine distribution has become an international tragedy. Expanding global access to effective COVID-19 vaccines should be an urgent priority for policymakers in the United States and abroad—no matter which policies end up helping us get there.

This post is part of a series on COVID-19 innovation law and policy. Author order is rotated with each post.

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