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America And The TRIPS Waiver: You Can Talk The Talk, But Will You Walk The Walk?

As nations grapple with the issues surrounding global COVID-19 vaccine manufacturing and distribution, the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement has found itself in mainstream conversation in the US more than ever before. A difficult concept to fully grasp, TRIPS refers to a World Trade Organization (WTO)-led international agreement about the protection of intellectual property rights and trade.

In October 2020, the governments of India and South Africa, with the support of 62 WTO member states, proposed a TRIPS Agreement waiver proposal that would temporarily waive intellectual property rights protections for technologies needed to prevent, contain, or treat COVID-19, including vaccines and vaccine-related technologies. More than 100 low-income countries support this proposal, but it is receiving much opposition from many high-income countries, including some European Union (EU) member states, the UK, Japan, Canada, and Australia. On May 5, 2021, the Biden administration announced support for negotiating this waiver, intensifying debate in the US and the EU—but so far the US has not gone further than its announcement of support.

The TRIPS waiver is critical to combating the COVID-19 pandemic around the world. Demand for the vaccine has already surpassed supply, with high-income countries taking a large share of reserved doses. Given that no single vaccine manufacturer could produce enough vaccines to meet the demand of the entire globe, supporters of the waiver ponder the ethics of multinational manufacturers holding exclusive rights to information and technology, preventing other companies from entering the markets that are not being served—primarily in low- and middle-income countries. Sharing vaccine-related information will not only help get the pandemic in check now, but it could also encourage firms to develop the next round of vaccines that will be necessary to address new variants.

The TRIPS waiver is critical to ensuring an equitable distribution of vaccines around the globe. High-income countries already have widespread vaccination campaigns well underway, while many low-income countries have yet to administer a single dose. Without a TRIPS waiver, the gap between vaccination rates in high-income and low- and middle-income countries (LMIC) will only widen.

With this in mind, this is a critical moment for the US to advance its global health leadership and to seize the opportunity to meaningfully support the proposal by India and South Africa, thereby taking a real step toward more equitable vaccine production and distribution.

Negotiating The TRIPS Waiver

After the US declared its support for negotiating the TRIPS waiver, the co-sponsoring countries submitted revised waiver language to the WTO TRIPS Council, which administers and monitors the TRIPS Agreement. In response, the EU submitted its General Council Declaration (Draft Declaration), titled TRIPS Agreement and Public Health in the Circumstances of a Pandemic, in conjunction with its earlier communication, Urgent Trade Policy Responses to the COVID-19 Crisis: Intellectual Property. Text-based negotiations of the waiver proposal were slated to begin on June 30, 2021, during an informal meeting of the TRIPS Council; no official proposal or declaration has been finalized yet.

The EU’s Draft Declaration reiterates the “legal certainty” of TRIPS flexibilities—measures that WTO member states can take to circumvent patent rights, to access life-saving medicines—and states that the TRIPS Agreement “does not and should not prevent Members from taking measures to protect public health.” This, however, has also been already codified and emphasized in the 2001 Doha Declaration on the TRIPS Amendment and Public Health, which led to the amendment to the TRIPS Agreement that established TRIPS flexibilities. The EU’s Draft Declaration only reiterates the existing provisions of the TRIPS Agreement and the Doha Declaration; it does not contribute meaningfully to text-based negotiations of the India-South Africa waiver proposal nor does it promote any new policy measure that would accelerate the production and equitable global distribution of vaccines and medicines.

Below, we will list three components of the Draft Declaration and explain how each is simply a restating of existing provisions in the TRIPS Agreement and the Doha Declaration:

To waive the “requirement of making efforts to obtain authorization from the right holder,” according to Art 31(b), for issuing compulsory licence (CL) under Art 31 or Art 31bis. This is done by declaring the pandemic “a national emergency or other circumstances of extreme urgency.” [Draft Declaration, para a]

TRIPS allows member states to issue licenses to any third parties (that is, any party other than the patent right holder) to produce and market the patented product without the prior approval of the patent rights holder; these are known as compulsory licenses (CL). In general, before issuance of such licences, it is mandatory that the third party try to get a license directly from the patent right holder on reasonable commercial terms.

The EU Draft Declaration proposes to clarify that this requirement to seek a direct license from the patent right holder before the issuance of a CL by a government is not applicable in cases of national emergency, in other circumstances of extreme urgency, nor in cases of public non-commercial use. However, there is nothing to clarify here; the text of the Draft Declaration is simply a paraphrased reiteration of Art 31(b) of the TRIPS Agreement. Art 31(b) clearly states that “prior to such use (CL), the proposed user (third party who is in line to receive CL) has made efforts to obtain authorization from the right holder (patent holder) on reasonable commercial terms and conditions and that such efforts have not been successful within a reasonable period of time. This requirement may be waived by a Member in the case of a national emergency or other circumstances of extreme urgency or in cases of public non-commercial use.

The Doha Declaration further reiterates the right to declare the emergency. It states, “Each member has the right to determine what constitutes a national emergency or other circumstances of extreme urgency, it being understood that public health crises, including those relating to HIV/AIDS, tuberculosis, malaria and other epidemics, can represent a national emergency or other circumstances of extreme urgency.”

To support manufacturers in LMIC and to provide affordable access to vaccines and medicines, with the determined remuneration (Art 31h and para 2, Art 31bis) reflecting “the price charged by the manufacturer of the vaccine or medicine produced under the compulsory licence.” [Draft Declaration, para b]

The Draft Declaration provides that when such a CL is issued, the patent right holder is required to be compensated proportionally to the price at which the third party (who has received the CL) would be selling the product.

This is a simple explanation of the flexibility existing in Art 31(h), as it mentions an “adequate remuneration” considering the “economic value of authorization” to the patent holder. Here, in Art 31(h), there is no mention of the parameter to assess the economic value of CL (or authorization) according to which the “adequate remuneration” is determined. This absence of a parameter to determine the economic value of an issued CL is a known flexibility that allows member states to determine the same, according to the monetary gains of the third party from the product.

To provide enough freedom for governments in implementation of Art 31bis notification mechanism—that is, “In the circumstance of a pandemic…the exporting Member may provide in one single notification a list of all countries to which vaccines and medicines are to be supplied by the exporting Member directly or through indirect means…” [Draft Declaration, para c]. The provision can be used not only for WTO member states but also for joint initiatives (such as the global vaccine partnerships Gavi and the Coalition for Epidemic Preparedness Innovations, or CEPI), presuming that they are providing vaccines and medicines to “eligible importing Members,” as within the scope of para 1.b Annex of the TRIPS Agreement.

This provision enables a country to export patented pharmaceutical products to any countries that lack domestic manufacturing capabilities by issuing a CL in its jurisdiction to any interested third party acting in its market. The notification made to the TRIPS Council must specify the names and quantities of the products needed, confirm that the eligible importing member does not have sufficient manufacturing capabilities to produce the product in question, and confirm that the government has granted the CL.

This point, too, fails to present something new. This is again a reiteration of existing provision Art 31bis.

Additionally, the provision is handicapped by a number of bureaucratic hurdles, of which the least concerning is the provision for the procedure of notification, Annex para 2c. Unlike the impression we get from the Draft Declaration, Annex para 2c does not mandate the notification to be filed individually. Rather, it is silent on the number of notifications to be made in the case of multiple importing countries, that is, there are no restrictions in providing the list of all countries to which the vaccines, medicines, and so forth are exported in a single notification. The same has already been recognized by the WTO (Model Notifications-Model 3:Exporting Country) and the European Union (Art 12 of Regulation (EC) No 816/2006) prior to the pandemic.

A Declaration That Falls Short

The EU Draft Declaration recognizes that “the response to the COVID-19 crisis needs to be comprehensive and include, but not be limited to, ensuring that the intellectual property system supports efforts to enhance production and supply of vaccines and medicines.” However, it falls short. As outlined above, the Draft Declaration introduces no new policy measures; it is, at best, simply an explanation of already existing provisions in the TRIPS Agreement and Doha Declaration. While global vaccine uptake has been widely inequitable, the Draft Declaration fails to suggest any new points that would help remedy this and ensure lifesaving vaccines are accessible everywhere. The current TRIPS flexibilities, as restated by the EU, are not efficient during a global pandemic. Legal obstacles and pressure from pharmaceutical companies make the process too slow and complicated to address the immediate challenges at hand. 

Furthermore, the Draft Declaration is limited to patents only and fails to address the barriers created by other intellectual property restrictions. For instance, if one thing is clear from the discussions and the opposition raised against the India-South Africa waiver proposal, it is the pivotal role of trade secrets in the transfer of tacit knowledge of technology. The operational specificities for the scaling up of vaccine production and information for regulatory approval are secured as trade secrets, making it difficult for new manufacturers to produce and enter the COVID-19 vaccine market. The EU Draft Declaration is completely silent on this matter and, hence, fails to provide a viable policy measurement “to increase manufacturing capacity and investment, as well as supplies at an affordable cost.”

The Draft Declaration is not much of a surprise when one considers who is profiteering from the pandemic. All of the frontrunner vaccines, except for Moderna’s COVID-19 vaccine, are either solely or jointly developed or produced by European pharmaceutical companies. While the EU appears to be helping to alleviate this dire global crisis, it clearly has incentive to protect the interests of its pharmaceutical companies.

Thus, the EU has mooted the Draft Declaration to divert attention from and delay text-based negotiations on the waiver proposal. By submitting its Draft Declaration, which is considered a proposal on par with that of the India-South Africa waiver proposal, the EU is aiming to delay text-based negotiations. Negotiations will take much longer given that the WTO TRIPS Council now has to discuss this counter proposal, too. Additionally, one might argue that the EU’s Draft Declaration is, in fact, not a proposal at all, given that it gives no new policy recommendations and is only a reiteration of the existing TRIPS flexibilities.

Organizations such as Les Medecins Sans Frontiers and Health Action International have voiced their discontent with the EU for submitting this Draft Declaration to delay the text-based negotiations of the India‑South Africa proposal. In the midst of a global pandemic that has already killed more than four million people, there is no room for hesitancy nor inaction.

An Opportunity To Be A Global Leader

Against this backdrop, the US should take a proactive role to check the diversionary tactics of the EU and facilitate the adoption of the India-South Africa waiver proposal. By not taking action, the US Trade Representative’s office (USTR) is supporting the EU (and a handful of other countries) in preventing the WTO from delivering the most useful and rational solution to addressing the shortage of COVID-19-related health products and technologies.

The EU’s diversionary tactics undermine the integrity and credibility of the multilateral trading system. Even worse, it denies 70 percent of humanity its right to health. The USTR must rise to the occasion and ensure that its May 5 announcement actually translates into action in the form of waiver support and policy implementation. If the US is to be a leader in global health, it must match its word with action by supporting the proposal and facilitating its implementation while calling on others to do so as well.

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