[Ip-health] KEI Comments on the Recent EU TRIPS Waiver Papers

Claire Cassedy claire.cassedy at keionline.org
Fri Oct 15 13:41:09 PDT 2021


https://www.keionline.org/36768

KEI Comments on the Recent EU TRIPS Waiver Papers

October 15, 2021
James Love

In the past few days, two documents have been leaked regarding the European
Union (EU)’s positions at the World Trade Organization (WTO), in
negotiations over which rules if any at the WTO should be waived or
modified to address the current COVID-19 pandemic. (A nine page September
30, 2021 memo; and a one page EU non paper).

EaU-Main-messages_TRIPS waiver_30 September 2021 [1]
EU-Oct2021-Leak-Points-Convergence [2]

Commentaries by Ellen ‘t Hoen and Pascale Boulet in Medicines Law &
Policy[3], and Brook Baker in InfoJustice[4] provided tough critiques,
calling the EU’s proposals “mostly meaningless” and “wholly inadequate.”

The Following are comments by KEI.

1. The EU wants to replicate the 2003/31bis approach on importing products
on a compulsory license to countries without domestic production capacity.
The 2003/31bis mechanism has been considered a very bad option by EVERYONE
who has tried to use it, due to its complexity and the need to
simultaneously engage health and trade officials from importing and
exporting countries as well as the WTO and to consistently involve everyone
in the prediction and reporting of production and demand. For COVID, there
are these other problems:

a. With the pandemic, time is of the essence, and arguments over whether or
not a country has manufacturing capacity are irrelevant if the time it
takes to implement manufacturing is significant. Also “capacity” is not
just a static technical requirement, economies of scale and economic
feasibility are important.
b. The 2003/31bis mechanism does not deal with rights in data or access to
know-how or cell lines, matters that everyone acknowledges are very
important in scaling manufacturing of countermeasures.
c. The opt-out procedure as an importer is clearly protectionist, designed
to limit economies of scale in developing countries. An April 7, 2020 Open
Letter on the opt-out discussing the problems with the opt-out was signed
by 30 groups and three dozen experts. (https://www.keionline.org/32707)
d. The 2003/31bis mechanism was limited to pharmaceutical products, which
is more restrictive than the broader set of countermeasures that are or
might be important. Diagnostic tests are referred to in the 31bis and the
Annex to the TRIPS Agreement but are defined there as those needed for the
use of a product. Clearly, any quick and accurate diagnostic test is
useful, even if that use is not connected to a product. In the current
pandemic, countermeasures so far include protective masks, tools to
sterilize rooms, respirators, oxygen, diagnostic tests, drugs and vaccines,
and beyond this, some countries have been asked to implement special
exceptional rules for distance education when schools and libraries were
forced to close due to the pandemic.
e. When the EU says that 31(b) of TRIPS requirements for prior negotiations
can be waived, it’s an odd “concession” since 31(b) already states: “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
noncommercial use.” How is this something new?
f. NOT waiving Article 39 of the TRIPS means not waiving the most useful
part of the current waiver proposal, since this is one most relevant to
manufacturing know-how and regulatory data.
g. The EU does not mention Article 27.1 of the TRIPS, which requires that
“patents shall be available and patent rights enjoyable without
discrimination as to . . . the field of technology. . . .“, even though
this presents an unwanted area of ambiguity regarding measures to create
pandemic related exceptions.
h. It is a bit confusing for the EU to suggest “Article 31(f) – requirement
to supply predominantly the domestic market – to be waived.” but then
propose modifications to 31bis, since the much disliked 31bis becomes
completely irrelevant if 31(f) is waived.

2. The EU wants the WTO to get involved in remuneration issues, and that
just adds another area of complexity, delay and uncertainty. The original
TRIPS text gives governments considerable discretion in setting
remuneration, and there is no compelling reason to change that. Article
31bis created a system where the exporting country decides what the royalty
should be in the importing country, an outcome that is designed to allow
countries with capacity to manufacture to pre-empt policies on remuneration
from the developing country importers. This was a mistake and should not be
replicated.

3. The EU wants to exclude from the Waiver Part III of the TRIPS, which
deals with enforcement of rights. This too is designed to narrow the waiver
considerably, since the role of injunctions in particular and also damages
from infringement are important, not to mention the time consuming
procedures that can take place resolving disputes. Indeed, Moderna is
arguing in multiple lawsuits in US courts that the enforcement of third
party patent claims is a threat to their ability to manufacture vaccines.
(See: Perry Cooper and Susan Decker, Moderna Wants Fed. Cir. Help to Avoid
Covid Vaccine Patent Suits, Bloomberg Law, Oct. 6, 2021
https://news.bloomberglaw.com/ip-law/moderna-wants-fed-cir-help-to-avoid-covid-vaccine-patent-suits
)

4. The 3 year period makes it more difficult for any new entrants in
manufacturing vaccines or drugs to amortize investments, particularly given
the lead time in bringing manufacturing online and gaining regulatory
approvals.

Concluding Comments

The 2003 WTO decision to implement Paragraph 6 of the 2001 Doha Declaration
came after a long negotiation where WTO delegates were determined to have
an outcome, instead of acknowledging a failure to reach a consensus. Every
single group working on access to medicine lobbied against it, and big drug
companies and high income countries lobbied for it. The USTR and US State
Department pressured countries to ratify this into 31bis, which was even a
worse outcome because unlike a waiver, it was subject to dispute
resolution. The result was a stain on the 2001 Doha Declaration and the
WTO. Article 31bis explicitly allows high income countries to block imports
from developing countries under a compulsory license, even during a
pandemic or other emergency, and it is designed to be rarely if ever used.
Canada, which has touted its 31bis mechanism as a solution in the WTO TRIPS
waiver negotiations, even refuses to list COVID-19 as a health problem
eligible for its use — a stunning but rarely acknowledged hypocrisy.

In the current negotiation, the TRIPS waiver has so far acted as an excuse
for many countries to hold off on the use of compulsory licensing or other
measures allowed under the agreement. The issues are sufficiently
complicated that few members of the general public are even aware of the
benefits or limits of a good waiver, or the cynically meaningless or worse
outcomes that are possible. It is important that proponents of a TRIPS
waiver hold out for something that unambiguously moves things in the right
direction, and makes it easier to scale manufacturing and increases access
to countermeasures. In particular, removing limitations on exports of
countermeasures and actions by governments to provide access to
manufacturing know-how should be the priority, and broader measures, such
as the 2020 legislation in Germany to restrict patents* should be clearly
understood to be consistent with any new waiver of the WTO rules.


*The 2020 Act for Protecting the Population in the Event of an Epidemic
Situation of National Importance, (Gesetz zum Schutz der Bevölkerung bei
einer epidemischen Lage von nationaler Tragweite). See: Sebastian Fuchs,
COVID-19: New German legislation to fight pandemic may affect granted
German patents, Bird & Bird. May 2020.
https://www.twobirds.com/en/news/articles/2020/germany/covid-19-new-german-legislation-to-fight-pandemic-may-affect-granted-patents

[1]
https://www.keionline.org/wp-content/uploads/EaU-Main-messages_TRIPS-waiver_30-September-2021.pdf
[2]
https://www.keionline.org/wp-content/uploads/EU-Oct2021-Leak-Points-Convergence.pdf
[3]
https://medicineslawandpolicy.org/2021/10/the-eu-proposed-covid-waivers-of-certain-trips-rules-are-mostly-meaningless/
[4] http://infojustice.org/archives/43712


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