The new TRIPS “waiver” solution is misguided

Economic Times, April 12, 2022

By Pradeep S. Mehta and Sneha Singh
18 months of negotiations have led to Members merely clarifying flexibilities that already exist and making some of these more burdensome to avail. In such a scenario, Members will fare better by utilising TRIPS in its original form and channeling their time and resources on models of collaboration that have proven to be effective.

Per a leaked draft, India, South Africa, the EU and US have shaken hands on a WTO secretariat’s response to the pandemic (Draft). The Draft is a compromise on the countries’ original negotiating positions without any substantial shift, while the critical need to distribute vaccines to people in poor countries remains unmet.

To recap, in September 2020, India and South Africa proposed a three year long waiver of obligations related to patents, trade secrets, copyrights and industrial designs that apply to COVID-19 drugs, vaccines, diagnostics, and other technologies (Waiver Proposal).

In direct opposition, the EU suggested that there should be a suspension of only those specific procedural requirements that increase complexity and time while issuing compulsory licenses (EU proposal). Further, under immense pressure and scrutiny from civil society and non-governmental organisations worldwide, in May 2021, the US voiced its support for a partial waiver of IP rights relating to vaccines alone.

The result of cumulative compromises is a Draft that carries all the deficiencies of the countries’ original proposals. The solution covers only patents applicable to COVID-19 vaccines. While a few procedural requirements for issuing compulsory licenses have been waived, some stipulations going beyond TRIPS have been added. These will unnecessarily increase the administrative burden of Low and Middle-Income Countries (LMIC), and possibly dissuade them from utilising compulsory licenses.

In sum, eighteen months of negotiations have led to Members merely clarifying flexibilities that already exist and making some of these more burdensome to avail. In such a scenario, Members will fare better by utilising TRIPS in its original form and channeling their time and resources on models of collaboration that have proven to be effective.

In our previous article, we had written extensively about the shortcomings of the Waiver and EU Proposals, and suggested measures to increase voluntary cooperation based on consent and mutual trust instead. There is still enough time to address inequities in the pandemic response by directing more resources into scaling unprecedentedly successful initiatives based on voluntary cooperation at the level of firms and nations. The necessity for the same can be understood by evaluating what the Draft and previous proposals cover and the issues they leave unaddressed.

Overall, most provisions in the Draft are derived from the EU proposal. These are clarifications that allow Members to use compulsory licensing with ease and are squarely based on policy space offered by existing rights and flexibilities in TRIPS. Such clarifications include the right to do away with prior consultations with the patent holder, the right to determine an adequate remuneration based on humanitarian considerations and good practices during national emergencies and pandemics. Other provisions beyond the EU Proposal, such as the flexibility to use test data provided by pharmaceuticals for market authorisation are also a reiteration of existing TRIPS flexibilities.

One facilitative “waiver” is that of the requirement to issue separate compulsory licenses for export purposes per Art 31bis. However, in blending the two kinds of licenses allowed by TRIPS – one for domestic markets and one for export purposes, several administrative requirements applicable only for the latter will now be imposed on the former. For instance, the Draft requires Members to notify to the TRIPS council, various details about the license holders and the quantum of vaccines produced by them. Such stipulations are provided in the TRIPS Annex for Art 31bis alone.

The Draft also allows eligible Members to compulsorily license multiple patents simultaneously. This could theoretically expedite vaccine manufacturing by eliminating the time and effort spent by manufacturers (even the companies currently manufacturing COVID-19 vaccines) in negotiating multiple licenses in a network of patents applicable to a particular vaccine/technology. The Draft refers to WIPO’s patent landscaping for assistance in identifying relevant patents and allows for updating the compulsory license authorisation, considering that many patents are in the pipeline. However, this also means that there is no automatic product-based applicability of the license, and it will be an onerous administrative exercise to track and list new patents, as and when they are approved.

Nevertheless, even a broad, product or subject based authorisation will not suffice because patents are not the principal limiting factor in expanding production. Case in point, Moderna famously announced that it would not enforce its vaccine patent rights anywhere during the pandemic, and has continued to keep that pledge unaltered for LMICs. This was an offer that no one could really benefit from considering that building new production capacity for complex molecules like vaccines requires access to technologies, know-how, and other critical ingredients (not protected by patents) which constitute the key resource constraints in scaling up manufacturing capacity.

Especially when it comes to know how and technologies protected by trade secrets, a TRIPS solution in the form of a waiver, or the forceful licensing of technologies akin to compulsory licensing of patents gives rise to more problems than it solves. Among various issues, what would forcing technological transfer mean when the manufacturing process requires the physical presence and technical assistance of a limited number of highly skilled foreign nationals? Further, unlike patents, the government does not offer any monopoly to a trade secret holder. Even if the terms of the transfer were anchored in stringent confidentiality laws with adequate remedies, information leaks beyond authorised licensees would mark the point of no return, removing the commercial value of such IP permanently. In other words, once trade secrets are divulged, there can be no return to the status quo. This will create significant and lasting negative externalities on investments, competition, innovation and the overall production and trade landscape after the waiver expires.

Ultimately then, policy measures must reflect that cooperation and trust form the crux of the issue. Vaccine production (as compared to generic drug making) requires intensive collaboration between manufacturers and regulatory authorities. Thus, achieving scale with speed and quality requires immense trust and coordination between vaccine developers/IP holders, licensed manufacturers, and regulatory authorities. Compulsorily licensing or forcing technology transfer will only antagonise such a partnership and may pose significant hazards to public health and safety, especially in the face of pervasive vaccine hesitancy.

Based on the Draft, encouraging compulsorily licensing of patents on the one hand and demanding voluntary cooperation for technologies/know-how on the other is a quandary which businesses will have to navigate. Given how expensive, time consuming and research intensive it is to innovate an efficient manufacturing process and bring a product from the bench to the bedside, simply allowing compulsory licensing of patent rights is a direly sub-optimal answer.

What comes next?
We must critically evaluate what has been achieved thus far without a TRIPS waiver. It is undeniable that decades of research, made possible because of IPRs has allowed us to arrive at multiple, effective, and competitively priced vaccines at unprecedented pace and scale. Since the first emergency use authorisation by the WHO in December 2020, more than 11.4 billion doses of COVID-19 vaccines have been administered (last updated on April 11, 2022) and more than 24 billion doses will be produced by mid-2022. These results are borne of extensive licensing and manufacturing contracts facilitated by IP rights, allowing cooperation even among direct competitors.

More recently, there has been an expansion of the mRNA Hub in South Africa to six African countries – Egypt, Senegal, Kenya, South Africa, Tunisia and Nigeria; and the establishment of another similar hub in South Korea to train LMICs to produce COVID-19 vaccines based on mRNA technology. Other voluntary arrangements between Moderna, Biontech and Providence with partners in Africa and other developing countries have also materialised.

What then will be the value of a TRIPS Waiver – whether complete or partial? All proposals at the WTO thus far, are pursuing a sub-optimal and perhaps, a counterproductive strategy in the long run. Further, in accepting the Draft as the solution, the international community, and the WTO specifically, would have succumbed to an action bias and palmed off responsibilities for any meaningful deliberation at the multilateral level.

Importantly, for India, hardening her stance on a technically inconsequential yet politically expensive deal will lead to reduced leverage in negotiating and shaping outcomes on other more important issues like agriculture and fisheries subsidies.

Instead, India as well as the rest of the WTO Membership could continue to work on the ‘third way’, proposed by WTO’s Director-General Dr Ngozi Okonjo-Iweala to ensure that there is synergistic and voluntary cooperation between Intergovernmental Organisations, governments, IP holders, businesses, and civil society. After all, expediting new R&D and manufacturing capacity in LMICs would require cooperation and trust anchored in strong IPR protection not less.

The authors work for CUTS International, a global public policy research and advocacy group.
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