Waiving IP Rights During Times of COVID: A ‘False Good Idea’

By Hans Sauer
April 19, 2021

“The most likely result of the proposed waiver would be a chaotic global patchwork of national laws that would linger at various stages of national implementation for years after the end of the pandemic…. And proponents can point to no credible instances in which IP has in fact hindered the development or production of COVID-19 countermeasures.”

 – A “false good idea”: From French, “fausse bonne idée,” see e.g. France Minister for Industry Pannier-Runacher: “Remove patents on vaccines? A false good idea.”

https://depositphotos.com/2329862/stock-photo-true-false-road-sign-with.htmlOver the course of four months, close to 850 million doses of COVID-19 vaccines have been administered in over 100 countries. To the extent the unprecedented pace of research, development and manufacturing to combat the ongoing pandemic is a success, it has many fathers. But it would not have been possible without the participation of the U.S. biopharmaceutical industry and its collaboration with global partners. To ensure that developed and developing countries around the globe maintain and expand access to safe and effective COVID-19 vaccines, therapeutics and diagnostics, it is critical that the U.S. government support ongoing industry collaboration and oppose well-intentioned but counterproductive efforts to waive intellectual property (IP) rights.

Waiver Background

In early October 2020, India and South Africa requested that the World Trade Organization (WTO) suspend international protections for patents, copyrights, industrial designs, trade secrets and proprietary materials, “in relation to the prevention, containment, or treatment of COVID-19 until widespread vaccination is in place globally and the majority of the world’s population has developed immunity.” Driven by mounting frustration with the progress of global efforts to ensure that all people everywhere will have timely access to COVID-19 vaccines, many developing countries subsequently joined this request and wish to proceed to text-based negotiations. The United States, the Members of the European Union, Japan, Brazil, Chile, Singapore, the UK, Australia, Canada, and other developed countries have opposed the proposal on the grounds that it lacks justification, is infeasible, and counterproductive, amongst other reasons. Debate at the WTO continues to date, with no clear path forward.

Meanwhile, a chorus of non-governmental organizations and other groups, supported by scores of progressive Democratic Members of Congress, is urging the Biden Administration to throw its support behind South Africa’s and India’s global IP waiver proposal. They argue that such a move would help reestablish the United States as a global public health leader and unleash poor countries around the world to make their own COVID vaccines. The Biden administration is reportedly weighing these requests but has yet to reach a conclusion.

Scope and Implementation of the Proposed IP Waiver

Before discussing what can and cannot be achieved by suspending IP rights during times of COVID, it is first necessary to get clarity about what is actually being proposed. In a nutshell, WTO members would be released from their obligation under TRIPS to grant new patents, copyrights, and protections for industrial designs, trade secrets, regulatory data, and business confidential information and materials. Member countries would also be absolved from enforcing already-existing protections, in each case for an undetermined number of years “in relation to [the] prevention, containment or treatment of COVID-19,” until “widespread vaccination is in place globally, and the majority of the world’s population has developed immunity.”

WTO member country governments would be authorized to implement this waiver in their unfettered discretion. Government action taken under cover of the proposed waiver would be exempt from the WTO dispute settlement provisions. This means that even arbitrary government conduct would basically be unreviewable, and that there would be no forum to arbitrate any resulting trade conflicts between WTO members. This is important because unlike the existing TRIPS compulsory licensing provisions, the proposed IP Waiver would not require governments to provide a specific justification for the abrogation of IP rights, compensation, or legal process for rightsholders.

It should be clear from the foregoing that there are many practical problems with this proposal:

  • Even if it were to pass out of the WTO, the waiver would still have to be implemented under the national laws of the WTO member countries. No explanation has been provided as to how up to 164 countries would be expected to quickly amend multiple statutes in their legal codes, or which form these amendments would take. Curiously, close to half of the waiver-supporting countries are already exempt from TRIPS anyway, and are effectively demanding to be free of rules that don’t apply to them.

    The most likely result of the proposed waiver would be a chaotic global patchwork of national laws that would linger at various stages of national implementation for years after the end of the pandemic.

  • Due to the breadth and vagueness of the proposal, it would be impossible for IP rightholders to understand which products or services would lose IP protection in which country, or for how long – and little faith can be had in assurances that a waiver would be targeted and time-limited. Especially with regard to the critical category of trade secret or proprietary information, manufacturing know-how, clinical regulatory data packages and proprietary cell lines and other biological materials that are proposed to be shared, the waiver would in no way be time-limited. Proprietary information and materials cannot be un-disclosed or un-shared once they have been made public; they would simply lose their protection forever.
  • One wonders whether Congressional proponents of the TRIPS Waiver have given any thought as to how it could be implemented in U.S. law. There is no mechanism in U.S. law for simply waiving vested IP rights. Amendments to the federal patent, copyright, food and drug, and other federal statutes would need to be attempted; trade secret protections under 50 state laws overridden; and the waiver’s interference with the IP and confidentiality provisions of myriad existing private contracts would need to be sorted out. As a result, the Federal Government would have to assume unforeseeable and potentially colossal financial liability. And because the waiver is intended for the benefit of foreign developing nations, the legality of any attempt at U.S. domestic implementation would be doubtful, as Congress has no authority to expropriate U.S. property to benefit foreign countries. It is of course possible that Congressional proponents of the waiver are merely engaging in virtue-signaling, without any intention of ever implementing anything. But nonetheless, the waiver is certain to invite similar legislative train wrecks in other countries that aspire to the rule of law, and it is perplexing how little forethought seems to have gone into the proposal.

The Proposed Waiver is Unlikely to Help the Fight Against the Pandemic

To begin with, one would think, the burden of establishing the need for such an extreme and disruptive measure should be on its proponents. Yet, in the face of unprecedented progress towards COVID vaccines, tests and treatments in record time, the waiver proponents can point to no credible instances in which IP has in fact hindered the development or production of COVID-19 countermeasures. Readers should judge for themselves by perusing the joint South African/Indian TRIPS Council submission purporting to demonstrate such IP barriers. Even cursory inspection shows that this proof consists of a number of pending patent applications, a handful of patents that haven’t been asserted, a few statements by politicians, and historical narratives having nothing to do with COVID-19. There have been a few instances of patent litigation, but none to block or delay COVID products. Interestingly, royalty-free licenses by drug originators to dozens of manufacturers in developing countries are counted as IP barriers to access.

Perhaps recognizing the lack of affirmative proof supporting the need for a COVID IP waiver, proponents are increasingly trying to shift the burden to those who oppose the waiver, maybe best exemplified by World Health Organization Director General Tedros Ghebreyesus’ stance: “if not now, then when would a WTO waiver ever be justified?” Yet this is a poor substitute for an actual rationale, especially when the TRIPS Agreement and its addenda are already replete with IP flexibilities that have been justified for both national and multilateral use on the ground that they will be necessary in a public health emergency. The same proponents who have for decades with significant traction argued for an ever-growing expansion of these flexibilities now say that it is not worth even trying to use them; only the effective abrogation of all IP rights in relation to COVID-19 would be a quick enough measure to deal with the present crisis while it lasts.

However, the proposed blanket suspension of IP rights is no quick fix for the pandemic, as it is unlikely to accelerate the delivery of COVID-19 vaccines. Waiver proponents have been unable to document the existence of idle global COVID vaccine manufacturing capacity that could be unleashed by suspending IP rights. Existing capacity to produce traditional vaccines with conventional manufacturing technology simply cannot quickly or easily be converted to produce the advanced COVID-19 vaccines currently deployed. Thus, developing country manufacturers that currently make e.g. diphtheria, yellow fever, or tetanus vaccines, cannot simply be re-tooled to make the high-end mRNA or vectored COVID vaccines we are eagerly waiting for. Very different facilities will be needed, and getting these built, certified, and operational will take time, money, and precious expertise.

Waiver proponents also seem to forget that someone must keep making the whooping cough, polio, MMR, and other childhood vaccines against diseases that kill more children in the developing world than COVID ever will. Current global need for non-COVID vaccines is estimated at 3.5-5.5 billion doses per year, and those who talk about using existing capacity must realize that we cannot convert current manufacturing away from these critically-important products. On top of that, an estimated 14 billion doses of COVID vaccines will be needed globally. As GAVI – The Vaccine Alliance explains, it was always clear that demand for COVID vaccines would be high, immediate, and impossible to meet in the short term.

This is no fault of the IP system. Vaccine manufacturing processes are complex, require specific know-how and equipment, and just cannot happen overnight. Some COVID-19 vaccines involve new technologies, such as mRNA and lipid nanoparticle encapsulation, for which no large-scale manufacturing facilities or copious raw materials existed at the outset of the pandemic. The worldwide capacity to build or convert new plants is likewise limited, specialized manufacturing equipment is difficult or impossible to source, and none of this is or was ever going to be achievable within a few months as the proponents of the TRIPS waiver assert. Not even counting the time it takes to construct and equip a new plant, just the regulatory certification of a completed new facility takes several months before it can begin commercial production, and the manufacture and quality control of a single batch of COVID-19 vaccine takes 3-4 months before it can be released. Anywhere between 100 and 1,000 quality controls are done at each step of the manufacturing process. Those who argue that an IP waiver would enable the free flow of COVID vaccines within months are raising impossible expectations.

Accordingly, the Developing Countries Vaccine Manufacturers Network (DCVMN), which pushes for more manufacturing in poorer nations, agrees that giving away IP is not the answer. The CEO of India’s SII (“the guys who make more jabs than anyone”) agrees, stating that neither IP nor the lack of licensed manufacturing is the issue.

Granted, it is nonetheless possible – perhaps even likely – that some additional available capacity may indeed exist to perform certain steps of the manufacturing processes for some types of COVID vaccines. It will be important to identify and inventory such capacity, but it must be understood that it may be situated at points in the manufacturing and supply chain where it is not yet needed because the bottlenecks are elsewhere. Proverbially, it won’t do much good to, for example, take yet more fill-and-finish plants or packaging-and-labeling facilities under contract if there is not enough bulk vaccine to fill, no glass vials to fill it into, and no syringes to administer it with.

That said, vaccine producers are expanding their global supply and manufacturing chains as rapidly as possible, including by partnering with the most qualified producers in the global South, with more than 260 COVID vaccine manufacturing and production deals being on record around the world as of March 2021. As reported at the March 8 Chatham House global COVID vaccine supply chain and manufacturing summit, global production of COVID vaccines until the end of 2021 is projected to fall into the range of about 9.5 billion doses, nominally enough to vaccinate all of the world’s vulnerable populations and make a major dent into the world’s overall adult population. Under optimistic assumptions that all will go well, this would still leave a shortfall of about 2-3 billion doses. Nobody ever said that this would be easy – to close this gap, it will be all the more important that we stick to rational policies and reject irresponsible proposals that will do more harm than good.

Changing Narratives Unmask the Real Goal

There is another aspect of this waiver debate that requires special mention because it goes to the heart of what is actually being demanded. Even the most IP-hostile nongovernmental groups have come to understand that just suspending patent rights will not magically make more vaccines appear and have been adjusting and refining their narratives and demands as work towards COVID vaccines progressed. There has been a clear pivot away from early narratives in the spring of 2020, according to which rightholders were feared to use their patents to actively prevent others from developing or providing COVID countermeasures. When these concerns failed to materialize, and vaccines and therapeutics manifestly advanced towards real-world use and began to be licensed among different manufacturers in the fall of 2020, calls changed to demands for transparency, suspicions of profiteering, and general distrust whether vaccine-producing companies would ever work in the public interest. Voluntary licensing of vaccine manufacturing technology to other manufacturers to increase supply for the developing world was recast as exclusionary conduct, undertaken to merely “block” access in non-licensed territories.

In the latest iteration, IP-hostile nongovernmental groups have basically moved past patents. They are now claiming that vaccine originator companies are per se obstructing the global fight against the pandemic unless they agree to the unrestricted transfer of their manufacturing know-how, blueprints, cell lines, formulas, media, procedures and data to anyone who asks. In this way, waiver proponents seek to pave the way for compulsory technology transfer by which governments would be empowered to “share regulators’ data on manufacturing methods, and to enter industrial complexes to access additional information, data, and biologic resources.”

It is clear from all this that the COVID pandemic is being used as a cover narrative to argue for a quantum leap in the debate over IP and public health. Taking away or denying patent rights would no longer be enough. Affirmative expropriation and the forced transfer of industrial property is taking its place on the NGO agenda – at least with respect to vaccine originator companies from North America and Western Europe. It is unclear why, but no nongovernmental group is demanding access to Russian, Chinese or Indian COVID vaccine technology, even though there is no strong reason to be dismissive of it. But ironically, not even such extreme demands are likely to do much to accelerate the global fight against the pandemic. Expectations that manufacturers around the world could “freely” and independently make versions of existing COVID-19 vaccines within months are simply unrealistic. There is no such thing as a “generic vaccine” as some waiver proponents expect. Any resulting products would inevitably differ in quality, safety, and efficacy, and will not be approvable without running new expensive and time-consuming clinical trials. This inefficiency would be exacerbated by the diversion of scarce raw materials away from up-and-running manufacturers to inexperienced producers who are doing this for the first time, at lower efficiency, at least initially, often in regions that lack biological manufacturing infrastructure. Such supply diversions and inefficiencies will only make it harder to maintain current global vaccine production, and worldwide COVID vaccine output will decline, not grow.

This is part 1 of a two-part post. Part 2 will explain why the proposal is a stalking horse for changing the global rules of trade in ways that have nothing to do with the pandemic and that will do more harm than good.

Image Source: Deposit Photos
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The Author

Hans Sauer

Hans Sauer is Deputy General Counsel and Vice President for Intellectual Property for the Biotechnology Innovation Organization (BIO), a major trade association representing more than 1,000 biotechnology companies from the medical, agricultural, environmental, and industrial sectors. At BIO, he advises the organization’s board of directors, amicus committee, and various staff committees on patent and other intellectual-property-related matters. Before taking his current position at BIO in 2006, he was chief patent counsel for MGI Pharma Inc. in Bloomington, MN, and senior patent counsel for Guilford Pharmaceuticals Inc. in Baltimore, MD. Mr. Sauer holds a M.S. degree in biology from the University of Ulm in his native Germany, a Ph.D. in neuroscience from the University of Lund, Sweden, and a J.D. degree from Georgetown University Law Center, where he serves as adjunct professor.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

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  1. BP April 19, 2021 11:45 am

    This is certainly a paid-for lobbying piece and the author is transparent about that, thank you. Unfortunately, in the US, lobbying has confounded benefits to people/taxpayers envisioned by WTO/TRIPS. Pharma lobbyists convinced congress to subsidize US cotton farmers and Brazilian cotton farmers, costing US taxpayers hundreds of millions of dollars while leaving market distortions in place, to the severe detriment of others. How is that fair? Clearly, in 1995, WTO/TRIPS did not envision the impact of lobbying/corruption in the US. The Nixon era activities that gave rise to the FCPA and the like are, today, worse and condoned. An unbreakable loop exists where media profits, political parties profit, corporations profit and taxpayers lose (like in Netflix’s “O Mecanismo” on Operação Lava Jato). The author is right to mention “voluntary licensing” but does not elaborate (perhaps in Part II?). Key voluntary licensing deals should be encouraged to reduce practical impediments to rapid production, distribution and delivery of vaccines. The virus and its variants wait for no one.

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