TRIPS and an Equitable Fight Against COVID-19

Posted on by Mason Gauch

As the world woke up to the global threat posed by COVID-19, a race began to meet the demand for life-saving supplies: masks, personal protective equipment, medication, tests, and vaccines. While even the world’s wealthiest countries face equipment shortages, the issue is far worse for developing countries without the means to manufacture the products or compete with wealthier countries on the international market.1

On October 2, 2020, India and South Africa proposed a landmark waiver of international IP laws to expand access to “products essential to combat COVID-19.”2 Because intellectual property (IP) laws are designed to restrict access to protected products, India and South Africa argue that looser standards will lead to greater production and more affordable access.3 They argue that the world could produce and deliver these goods far more efficiently without the burdens imposed by the principle international IP treaty, the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement.4 Other countries like the UK and US oppose the waiver, arguing that it is not necessary and would impede innovation.5  

While the World Trade Organization (WTO) did not accept the proposal during a TRIPS Council meeting in mid-October, it is still under consideration until December 31, 2020.6 The WTO should approve India and South Africa’s proposal. The existing flexibilities within TRIPS are not enough; IP laws are not the driving force for innovation in the race for COVID treatments, and this waiver would help the world achieve greater access to lifesaving medical products.

I. TRIPS Restricts Production and Supply

The world cannot obtain the robust supply of necessary equipment if the patent holder is the only one allowed to produce it. Even if we develop a vaccine soon, we face the unpleasant future of having years-long vaccine shortages. For example, Pfizer recently announced that preliminary tests for a developing vaccine show a 90% success rate, but it expects to produce only 1.3 billion doses by the end of 2021.7 With a world population of 7.8 billion, this is woefully inadequate.

It is not hard to guess who gets hurt most in such a global shortage: developing countries. Some observers are already expressing worries of “vaccine nationalism” threatening effective and equitable distributions of vaccines.8 They have good cause to worry, “wealthy nations representing just 13% of the global population have already cornered more than half (51 percent) of the promised doses of the leading COVID-19 vaccine candidates.”9 But the problem goes well beyond vaccines. Developing countries are often unable to procure all types of necessary medical supplies because they: (i) lack the manufacturing capacity to produce these products, and (ii) cannot compete with wealthier importers scooping up the limited products off the international market. The world needs a solution that increases production and supply so developing countries can obtain essential medical equipment. To speak simply: Because TRIPS law restricts who can produce or use protected IP, the WTO should increase productive capacities by suspending the restrictive provisions.

II. Current Flexibilities within TRIPS are not Enough

In light of these global challenges, India and South Africa proposed a temporary waiver of the Agreement on TRIPS’ sections on copyright, industrial design, patents, and protection of undisclosed information.10 Perhaps the strongest counterargument to India and South Africa’s proposal is the suggestion that TRIPS already offers enough flexibility to sufficiently meet the public interest needs of the moment.11 To demonstrate the breadth of flexibilities already offered, the proposal’s opponents point to domestic policies, current collaboration, pre-existing TRIPS waivers, research exceptions, and compulsory licenses. However, none of these flexibilities are sufficient to meet the enormity of COVID-19’s threat to global wellbeing.

  • Domestic Policies

Private, public, and government actors are utilizing several tools within existing IP law to speed up domestic research and development. For example, many countries have accelerated their patent examination process and eased requirements for IP application in order to “facilitate the development and eventual dissemination of certain types of technology, such as technologies with healthcare impacts.”12 While these may be sound policies, they are research-focused and thus will not improve production nor access to crucial medical products.

  • Current Collaboration

Current collaborative ventures include technology pools, where multiple entities grant each other reciprocal rights to use and license their intellectual property. One such example is the World Health Organization’s (WHO) initiative to create a network of countries who “voluntarily share COVID-19 health technology related knowledge, intellectual property and data” in a COVID-19 Technology Access Pool (C-TAP).13 So far, just forty countries endorse C-TAP.14

While each case of collaboration is laudable, relying on voluntary waivers is not up to the monumental challenge COVID-19 poses. South Africa notes that crucial players in COVID-19 treatment still restrict access to their patents, and as of now no pharmaceutical company has opted into C-TAP.15 Notably, the forty signatories to C-TAP are almost entirely developing and/or small economies; none of the top-ten IP producers have endorsed C-TAP.16 The failure to bring in the major players in IP, or even a majority of countries, points to the problem with relying on voluntary collaboration. A more robust response is needed.

  • Pre-Existing TRIPS Waivers

Least Developed Countries (LDCs) are already not required to implement TRIPS-mandated patent standards for pharmaceutical products.17 While this waiver could be a boon to domestic production of medicine, the waiver is ineffective if the LDC lacks the capacity to produce medicinal products or if the LDC needs non-medicinal healthcare products.

  • Research Exceptions

Research exceptions, such as the “Bolar” exception, speed up the availability of generic medication by allowing anyone “to use a patented invention during the approval process . . . for the purposes of developing information to obtain marketing approval.”18 While the Bolar exception is a powerful tool to increase the affordability and therefore access of a product, the generic can still only be sold and marketed after the patent period expires. In other words, the exception will do little to help right now during the pandemic when all countries most need increased access.

  • Compulsory Licenses

Maybe the most important IP tool available to governments is the power to issue compulsory licenses. Article 31 of TRIPS allows a country to compel a patent-holder to license a third party to use its intellectual property.19 However, Section 31(f) provides a general limit that the compulsory license “shall be authorized predominantly for the supply of the domestic market of the Member authorizing such use.”20 Thus, India might be able to grant a compulsory license to boost production for its own citizens’ health, but it cannot use the compulsory license to increase global production and help developing countries who lack sufficient manufacturing capabilities.

Article 31bis,an amendment to Article 31, creates a loophole to limit the domestic-only rule of Section 31(f). With Article 31bis, India could grant a compulsory license to produce a pharmaceutical not just for its domestic use, but also for export to an eligible importing country.21 But even this loophole is severely limited: To be an eligible importing country, the importer must be a “least-developed country” or “notify the Council for TRIPS of its intention to use the system set out in Article 31bis.”22 This notification must specify the names and quantities of needed products and establish that it has “insufficient or no manufacturing capacities” in the pharmaceutical sector.23

But that is just the legal hurdles for the importer to jump through. The exporter has several regulatory burdens as well. The exporter must ensure that the licensee manufactures “only the amount necessary to meet the needs of the eligible importing Member(s)… and the entirety of this production shall be exported to [that] Member,” clearly labels the products, and posts information about the products’ quantity, destination, and labels.24

Finally, compulsory licenses are limited by factors external to TRIPS. For example, free trade agreements (FTAs) between the US, Australia, Jordan, and Singapore limit the use of compulsory licenses to “cases of anticompetitive practices, public non-commercial use, national emergency or other circumstances of extreme urgency.”25 Compulsory licenses are also limited by intense political backlash. The US has responded to compulsory licenses from Brazil, India, Thailand, and Colombia harshly, and in the last case threatening to withdraw financial support.26

In sum, the process of navigating the Article 31bis process is “extremely onerous and time-consuming.”27 The degree of difficulty might be measured by the fact that the Article 31bis exception has been used just once.28With cash-strapped and time-pressed developing countries, the case-by-case, product-by-product Article 31bis process might not be efficient enough to keep up with their urgent and fast-changing needs.

III. The Proposed Waiver Will Not Impede Innovation

Despite a lack of firm empirical evidence that intellectual property rights are necessary to incentivize innovation,29 it remains the bedrock justification for restricting access to this new knowledge and technology. A crucial argument developed nations bring against India and South Africa’s proposal is that weakening intellectual property rights would discourage innovation. For example, the UK, in its statement opposing the proposed waiver, described a “robust and fair intellectual property system [as] a key part of the innovation framework that allows economies to grow, while enabling society to benefit from knowledge and ideas.”30 The UK’s counterargument gets at the core tension in IP law: balancing incentives for innovation with the efficiency of easy access and use.31

Innovations developed through public funding appear, at first glance, to maximize the public interest: The firm still innovates, plus the public has minimally restricted access to the innovation’s benefits. But of course, public funding’s inefficiencies occur before the innovation is realized. How does the government decide what innovation and products or which producer of that product to fund? Peter Menell & Suzanne Scotchmer frame the issue in this way: “It is an odd conception of research that starts from the premise that we know what we want to discover, we know how to discover it, and we know who can achieve it at least cost . . . In what sense is that promoting discovery?”32

But in this COVID-obsessed time, it is clear what COVID-19 research should produce: better treatment, better testing, a vaccine, etc. Therefore, this major flaw in public funding schemes is minimized. As a matter of first principles, IP law is designed to correct market failures where a third party could simply appropriate hard-won innovation, driving the innovator’s profits into the ground.33 But in a publicly funded venture, the profits arrive on the front end and are thus immune from the market failure that applies after the innovation is shared and copied. If public funding is substantial enough to operate as an incentive to innovate, then the pro-IP argument starts to falter.

IV. Restrictive IP Laws are Responsible for Supply Shortages

Lastly, the proposal’s opponents argue that, in fact, other causes are responsible for suboptimal levels of production and supply. Namely, “non-efficient and underfunded health care and procurement systems, spiking demand and lack of manufacturing capacity are much more likely to impede access to these materials.”34 This argument doesn’t hold water because it simply recites the problems that, according to the plan’s proponents, require the proposed waiver. That some countries lack manufacturing capacity, for example, is the driving reason behind waivers of Article 31’s obstacles to production and exportation.

Conclusion

The world is suffering a shortage of essential medical equipment in the prevention, treatment, and vaccination of COVID-19. This shortage is felt most painfully in developing countries. India and South Africa’s proposed waiver offers the robust solution needed to match a historic problem. Research and production are hampered by restrictions on access and use. Although voluntary licensing and TRIPS flexibilities have been important tools in the fight against the pandemic, they are not enough. Too many restrictions and inefficiencies remain. Furthermore, the worry that the waiver would limit innovation is overblown due to the heavy public investment in medical technologies. The Council for TRIPS should grant the proposed waiver.

  1. Joshua Setipa, Local Production Could Solve Shortages of Essential Pandemic-Fighting Equipment, U.N., https://www.un.org/technologybank/content/local_production_could_solve_shortages_pandemic_fighting_equipment. ↩

  2. World Trade Organization, Communication from India & S. Afr., Proposal for Waiver from Certain Provisions of the TRIPS Agreement for the Prevention, Containment and Treatment of COVID-19, WTO Doc. IP/C/W/669 (Oct. 2, 2020), https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/ IP/C/W669.pdf&Open=True [hereinafter WTO, India & S. Afr.]. ↩

  3. Id. ↩

  4. Id. ↩

  5. TNN, US, EU Block India’s Fight for IPR Waiver for Covid Drugs, Times of India (Oct. 18, 2020), https://timesofindia.indiatimes.com/india/us-eu-block-indias-fight-for-ipr-waiver-for-covid-drugs/articleshow/78727904.cms. ↩

  6. Press Release, WTO, Members Discuss Intellectual Property Response to the COVID-19 Pandemic (Oct. 20, 2020), https://www.wto.org/english/news_e/news20_e/trip_20oct20_e.htm [hereinafter WTO, Press Release]. ↩

  7. Dominic Bailey, Coronavirus: How Soon Can We Expect a Working Vaccine?, BBC (Nov. 9, 2020), https://www.bbc.com/news/health-54027269. ↩

  8. E.g., Kai Kupferschmidt, ‘Vaccine Nationalism’ Threatens Global Plan to Distribute COVID-19 Shots Fairly, Science (Jul. 28, 2020), https://www.sciencemag.org/news/2020/07/vaccine-nationalism-threatens-global-plan-distribute-covid-19-shots-fairly. ↩

  9. Press Release, Oxfam International, Small Group of Rich Nations Have Bought Up More than Half the Future Supply of Leading COVID-19 Vaccine Contenders(Sept. 17, 2020), https://www.oxfam.org/en/press-releases/small-group-rich-nations-have-bought-more-half-future-supply-leading-covid-19. ↩

  10. WTO, India & S. Afr., supra note 2. ↩

  11. E.g., U.K. Mission to the WTO, UN and Other International Organisations, UK Statement to the TRIPS Council: Item 15 Waiver Proposal for COVID-19 (Oct. 16, 2020), https://www.gov.uk/government/news/uk-statement-to-the-trips-council-item-15. ↩

  12. See WTO, Note by the Secretariat: The TRIPS Agreement and COVID-19, at 6-7 (April 23, 2020), https://www.wto.org/english/tratop_e/covid19_e/trips_report_e.pdf [hereinafter WTO, Secretariat Note]. ↩

  13. WHO, 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. ↩

  14. Id. ↩

  15. WTO, India & S. Afr., supra note 2; WHO, supra note 13. ↩

  16. WHO, supra note 13; cf. World Intellectual Prop. Org., World Intellectual Property Indicators 2019, at 8 (2019) https://www.wipo.int/edocs/pubdocs/ en/wipo_pub_941_2019.pdf. ↩

  17. Press Release, WTO, WTO Members Agree to Extend Drug Patent Exemption for Poorest Members (Oct. 20, 2020), https://www.wto.org/english/news_e/news15_e/trip_06nov15_e.htm. ↩

  18. See WTO, Secretariat Note, supra note 12. ↩

  19. Agreement on Trade-Related Aspects of Intellectual Property Rights, Marrakesh Agreement Establishing the World Trade Organization, art. 31, Apr. 15, 1994, 1867 U.N.T.S. 154 [hereinafter TRIPs]. ↩

  20. Id. art. 31(f). ↩

  21. Id. art. 31bis. ↩

  22. Id. Annex ¶ 1(b). ↩

  23. Id.¶ 2(a). ↩

  24. Id. ¶ 2(b). ↩

  25. Carlos María Correa, Implications of Bilateral Free Trade Agreements on Access to Medicines, 84 Bulletin of the WHO 399, 401 (2006), https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2627342/pdf/16710551.pdf. ↩

  26. Ellen FM ’t Hoen et al., Medicine Procurement and the Use of Flexibilities in the Agreement on Trade-Related Aspects of Intellectual Property Rights, 2001–2016, 96 Bulletin of the WHO 185, 186 (2018), https://www.who.int/bulletin/volumes/96/3/17-199364.pdf. ↩

  27. WTO, India & S. Afr., supra note 2. ↩

  28. Id. ↩

  29. WIPO Standing Comm. On the L. of Patents, Rep. on the International Pat. Sys., SCP/12/3, at 2, 9–10, 22 (2009). ↩

  30. UK Mission to the WTO, supra note 11. ↩

  31. See, e.g.,Peter Menell & Suzanne Scotchmer, Intellectual Property, in 2 Handbook of Law and Economics 1473, (A. Mitchell Polinsky & Steven Shavell eds., 2007). ↩

  32. Id. at 1531. ↩

  33. Id. at 1476. ↩

  34. WTO, Press Release, supra note 6. ↩

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