[Ip-health] America And The TRIPS Waiver: You Can Talk The Talk, But Will You Walk The Walk?

K.M. Gopakumar kumargopakm at gmail.com
Tue Jul 13 07:30:32 PDT 2021


 https://www.healthaffairs.org/do/10.1377/hblog20210712.248782/full/America
And The TRIPS Waiver: You Can Talk The Talk, But Will You Walk The Walk?

   - Vineeta Gupta
   <https://www.healthaffairs.org/do/10.1377/hauthor20210709.566981/full/>
   - Sreenath Namboodiri
   <https://www.healthaffairs.org/do/10.1377/hauthor20210709.528087/full/>


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
<https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/IP/C/W669.pdf&Open=True>
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
<https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/IP/C/W669R1.pdf&Open=True>
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
<https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/IP/C/W681.pdf&Open=True>,
in conjunction with its earlier communication, Urgent Trade Policy
Responses to the COVID-19 Crisis: Intellectual Property
<https://trade.ec.europa.eu/doclib/docs/2021/june/tradoc_159606.pdf>.
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
<https://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_trips_e.htm>,
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)
<https://www.wto.org/english/res_e/publications_e/ai17_e/trips_art31_oth.pdf>,
for issuing compulsory licence (CL) under Art 31
<https://www.wto.org/english/res_e/publications_e/ai17_e/trips_art31_oth.pdf>
or Art 31bis
<https://www.wto.org/english/res_e/publications_e/ai17_e/trips_art31_bis_oth.pdf>.
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)
<https://www.wto.org/english/res_e/publications_e/ai17_e/trips_art31_oth.pdf>
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
<https://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_trips_e.pdf>
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)
<https://www.wto.org/english/res_e/publications_e/ai17_e/trips_art31_oth.pdf>,
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
<https://www.wto.org/english/docs_e/legal_e/31bis_trips_annex_e.htm>.*

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 31*bis*
<https://www.wto.org/english/res_e/publications_e/ai17_e/trips_art31_bis_oth.pdf>
*.*

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
<https://www.wto.org/english/res_e/publications_e/ai17_e/trips_art31_bis_oth.pdf>.
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
<https://www.wto.org/english/tratop_e/trips_e/art31bis_model3notes_notifs_e.pdf>)
and the European Union
<https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32006R0816&from=EN>
(Art 12 of Regulation (EC) No 816/2006
<https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32006R0816&from=EN>)
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
<https://www.expresspharma.in/wto-ip-waiver-too-simplistic-global-vaccine-tech-transfer-needs-other-strategies/>
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
<https://www.deccanherald.com/national/eu-presents-draft-declaration-at-wto-to-slow-down-proposal-for-trips-waiver-999963.html>
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
<https://twitter.com/MSF_access/status/1409895259836932099> and Health
Action International
<https://twitter.com/HAImedicines/status/1406927101928869891> have voiced
their discontent
<https://msfaccess.org/disingenuous-eu-initiative-attempts-derail-negotiations-trips-waiver-covid-19-monopolies>
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 <https://ourworldindata.org/covid-vaccinations> 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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