Over a year has passed since the coronavirus pandemic uprooted our way of life globally, and it does not seem to be stopping. In India, for example, the virus is making a resurgence. Reports of the virus mutating to become far deadlier have also been reported. The result of all of this has been millions of deaths, and massive damage to our economies and social structure, with no end in sight.
Despite the fact that the virus has affected all nations and all people uniformly, there is still a wide gap between developed and developing countries in one aspect: vaccinations. Developed countries have been actively securing vaccines for their citizens, by placing advanced orders and striking exclusivity deals with several companies. A large number of doses – often enough to vaccinate their populations many times over – have been secured by developed countries. This leaves developing countries in a very vulnerable position since they do not have the financial capacity to compete with developed nations. The net result is that billions of people in developing countries do not, and will not, receive access to vaccines in the near future. This actually affects developed nations as well: the pandemic is global, not local. The longer the coronavirus is allowed to survive, the more time it gets to mutate. Once it mutates, it has the chance to render earlier vaccines nugatory and prolong the destruction of the crisis. Developed countries will inevitably also be affected by any mutations since international travel is virtually impossible to stop in the 21st century.
Nevertheless, developed countries have stood firm in claiming the maximum number of doses for themselves. There needs to be a way to ensure that the developing world also receives access to vaccines. One key holdup has been identified as the Intellectual Property (“IP”) regime that promotes benefits to the developers of coronavirus vaccines. This acts as a financial barrier to developing countries that want to purchase vaccines. In this light, India and South Africa made a joint proposal to the World Trade Organization (“WTO”) to grant a temporary waiver of the IP rights of COVID-19 vaccines and drugs. This move has been opposed by developed countries and the pharmaceutical industry.
This piece will examine the proposal to waive IP rights, the reactions of other countries and the other touted alternatives from a legal perspective. It will then discuss whether the waiver of IP rights meets the goal it sought to achieve. Finally, issues in the current framework and required modifications will be discussed.
India And South Africa’s Proposal At The WTO
On the 2nd October, 2020, India and South Africa made a joint proposal to the WTO to waive IP protections provided to coronavirus vaccines temporarily, at least till a majority of the developing world had been vaccinated. The result of this would be that WTO member states would not need to enforce patents or IP rights arising from the development of patented technology. The proposal has been discussed at the WTO. Developing nations and the group of Least Developed Countries (“LDC”) have co-sponsored the proposal. On the other hand, there has been stiff resistance from developed countries. These nations argue that the waiver of IP rights will chill innovation within the pharmaceutical industry, and is further not the silver bullet envisaged by the proposal’s supporters. Further, they argue that the legal regime of the WTO provides exceptions – such as compulsory licensing – that is sufficient to meet the desired outcome without sacrificing the vaccine’s IP rights.
Before any further discussion, it is necessary to study the legal structure of the WTO with respect to intellectual property. The Marrakesh Agreement establishes the WTO. Article IX.3 of the Agreement states that “In exceptional circumstances, the Ministerial Conference may decide to waive an obligation imposed on a Member by this Agreement or any of the Multilateral Trade Agreements…”. Such a waiver must be supported by three-quarters of the member states. The waiver can be granted either to an individual country or collectively.
What constitutes an “exceptional circumstance” is not defined, but the collective waiver has been granted on two previous occasions. The first was a waiver relating to the certification process of diamonds and the second was regarding the accessibility of medicines in LDCs.
It cannot be seriously challenged that the pandemic is an “exceptional circumstance” – a medical crisis of a comparable scale has not been observed in over a century. There has been unrivalled economic and social turmoil. Considering the two earlier circumstances were arguably less serious than a global pandemic, there can be no serious legal challenge that a waiver can be granted.
However, much of the debate does not contest this legal fact. The opposition to the proposal is three-fold. First, waiver of these IP rights will chill innovation for future vaccines in case of a future pandemic or even smaller but deadlier health emergencies. Second, the waiving of IP rights will not solve the actual problem of scale and manufacturing capacity. Third, the destruction of IP rights is unnecessary as the same result can be achieved by the built-in exceptions in the Trade-Related Aspects of Intellectual Property Rights (“TRIPS”) Agreement.
The following section will examine all three arguments, starting from the argument on the exceptions, especially compulsory licensing.
Compulsory Licensing And Special Exceptions Within Trips
Much of the opposition to India and South Africa’s proposal stems from the idea that waiving IP rights is superfluous and the same goal can be achieved by compulsory licensing. In 2001, the Doha Declaration clarified that each member state “has the right to grant compulsory licenses and the freedom to determine the grounds upon which such licenses are granted.” Further, LDC countries that do not have the infrastructure to produce pharmaceutical products were allowed to import generic drugs from other countries, which are usually less expensive. Hence, compulsory licensing seems to be entrenched in the TRIPS legal regime.
The moot question is whether compulsory licensing is sufficient to address the current coronavirus pandemic. A compulsory license essentially grants power to a country to enable its companies to produce the product by paying only a reasonable fee. Hence, a developing country can authorise its companies to produce the vaccines at a far lesser price than they would pay under an IP framework.
Does this mean that compulsory licensing is a panacea? Not exactly. Article 31 of the TRIPS limits compulsory licensing to domestic production, and domestic use. This is an issue since many developing countries and LDCs simply do not have the capacity to produce such vaccines.
As a result, the only way for compulsory licensing to be effective is to ensure that developed countries or countries with vaccine production capacities export vaccines. However, given the legal architecture of TRIPS, this is incredibly difficult. There have been changes to TRIPS, but the only time this was used was when Rwanda received seven million doses from Canada. That took over two years, the vaccine maker involved plainly stated that this was unprofitable, and many developing nations acknowledged the difficulty of the process. Further, a compulsory license requires an agreement between the two nations, and a different compulsory license is needed for different bilateral agreements. Moreover, there need to be distinct lines of production for such vaccines with unique identifiers, and exports have to strictly meet quota requirements.
As a result, any benefits that compulsory licensing demonstrates at first blush are nullified by the onerous requirements placed upon its usage. Even this very limited international export was noted to be highly sustainable, mainly because of a lack of potential profitability. It seems highly unlikely that changes will be made to the system anytime soon. As a result, the alternative of compulsory licensing, and even other options like deals with generic companies, are unlikely to be very impactful.
The Question Of Manufacturing
This brings us to the second question: Does the waiver of IP rights serve any role? Let us theoretically assume that TRIPS agrees to the proposal and no member state has to enforce IP protections. Now, countries are free to produce vaccines indigenously.
There are two problems with this. First, most countries do not have the required infrastructure to produce vaccines. A small, developing country with no background in the pharmaceutical industry will not be able to capitalise on the waiver of IP rights since they do not have the capacity to produce vaccines in any case. Hence, the waiver is likely to be meaningless.
Second, even if a particular country has the capacity to produce vaccines, that is not enough for them to replicate the vaccine. Important information relating to vaccine production is usually kept secret by the developing company. Hence, the development of vaccines has to begin from the ground up, and that is a crucial time taken up. The only way this can be effective is in cooperation with the manufacturers. However, by waiving IP rights you are likely to antagonise these companies, and hence are likely to receive much lesser cooperation, and by extension less chance to receive vaccines.
The singular benefit is that by a full waiver, one country can freely export vaccines to other nations without pushback. The plausibility of this occurring is up for debate but comparatively is more important than anything else. The only objection to this is the idea that an IP waiver will chill innovation, and the next section will examine this claim.
Innovation And IP Rights
The most common argument against any sort of restriction of IP rights is that it will deter innovation. The argument has credibility. The pharmaceutical industry operates in a risky business: Its products are highly speculative and require extensive capital in a large number of cases. Hence, after a product is successful, there needs to be some amount of monetisation for the feasibility of these companies.
This is not ground-breaking and is the basic justification for IP rights within pharma presently. However, a distinction has to be drawn between this argument and what the proposal at the WTO asks for. This argument is a justification for why IP rights should exist as a whole. However, the proposal would only temporarily suspend IP rights. It does not challenge the existence of vaccines as a whole.
However, let us also consider a modified argument. Proponents may say that the chance of monetisation only exists when there is demand. Therefore, the only chance to recuperate costs of making the COVID-19 vaccine is when there is demand for the vaccine. This still results in companies losing incentives to innovate and actually produce useful products like vaccines in the future, for either pandemics or smaller diseases. There is now a precedent for waiving IP rights.
This argument has some merit. Former waiving of IP rights has not been effective since it sacrificed these rights. An actual precedent may lead to the destruction of the industry. However, these companies have already accepted lesser funds from compulsory licensing. Therefore, they should not have a problem with a waiver. This is particularly exacerbated in the times of a pandemic, since the world is topsy turvy and the world is on the brink of a crisis. These pandemics are very rare, and therefore, there should be no significant chilling of innovation where a pressing need exists.
The rhetoric on the issue of IP rights for COVID-19 vaccines is highly simplified. Waiving IP rights is not the silver bullet it is usually portrayed as, but it is usually better than all of the other alternatives that exist. However, even that is contingent on the good faith actions of states with the capacity to produce vaccines. The frequent call by the pharmaceutical lobby to work towards partnerships while preserving IP protections epitomises the problem that exists. The best way out is clearly to waive IP rights, but it is highly unlikely to occur. While the nations keep squabbling at the WTO, the pandemic continues to rage and millions continue to be affected.
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