by guest contributor Dr Bonginkosi Shozi, Postdoctoral Fellow, Institute for Practical Ethics, UC San Diego, and Honorary Research Fellow, School of Law, University of KwaZulu-Natal
Multilateral Matters
An occasional blog on international developments related to intellectual property, innovation, development and public policy
Introduction
In May of 2020, just over a year into the COVID-19 pandemic, and before a publicly available vaccine, I was invited by Professor Wendland to write a blog post on what was, at that point, the most promising initiative for advancing access to healthcare products necessary for responding to the ongoing public health crisis: a voluntary pool of exclusive rights on COVID-19–related subject matter (see Multilateral Matters #6 “What can African Countries do to Make Sure they Have Affordable Access to a COVID-19 Cure?”).
The global calls in support of a voluntary pool led to the launching of the COVID-19 Technology Access Pool (C-TAP), which was endorsed by 45 World Health Organization (WHO) Member States.[1] The operation of this initiative was supported by the Medicines Patent Pool (MPP) – an organization dedicated to advancing access to life-saving medicines in low-to-middle income countries by facilitating voluntary licensing and patent pooling.
The widespread support the voluntary pool received raised the hopes of many that it would help secure equitable distribution of the COVID-19 vaccines which were, at that point, still in development. Ultimately, these hopes were in vain. The first wave of vaccines received approval in December of 2020. In the year that followed, high-income countries were able to procure a sufficient supply of vaccines to vaccinate 75-80% of their populations while low-income countries struggled to secure access to and distribute vaccines, leading to less than 10% of their populations being vaccinated.[2] The so-called global ‘vaccine apartheid’ has persisted into the present day, with massive inequalities in access to COVID-19 healthcare products (including vaccines, diagnostics, and therapeutics).
Why was the voluntary pool so ineffective? Ultimately, this was largely because of reasons I alluded to in my previous blog post: ‘If key actors do not agree to co-operate despite pressure from the WHO, European Union (EU), scholars, and civil society, an accessible vaccine or treatments for COVID-19 may still end up being beyond the reach of those who need them most’.[3] Sure enough, multinational pharmaceutical companies made their resistance to the notion of a voluntary pool clear and unequivocal from the start – with prominent figures like Pfizer CEO Albert Bourla describing the idea as ‘nonsense’ and ‘dangerous’.[4] In the absence of willingness from pharmaceutical companies to share their intellectual property (IP) rights, the voluntary pool failed to bear much fruit.
At the core of the calls for a voluntary pool was an acknowledgement that significant challenges around securing the licenses to use the many IP rights in pharmaceuticals, rights often held by multiple companies in multiple jurisdictions operate as a barrier to the production and distribution of life saving healthcare products. The voluntary pool was an endeavor to overcome this barrier while still recognising the IP rights of pharmaceutical companies.
In a departure from this approach, in October of 2020, India and South Africa approached the World Trade Organization (WTO) with a proposal that would allow member states to overcome the barrier described by disregarding IP rights altogether. The joint proposal by South Africa and India, as presented to the WTO (the Proposed IP Waiver), would entail that member states would be granted permission by the WTO to disregard the minimum standards of IP rights they are beholden to provide for by the TRIPS Agreement, and instead elect to neither grant nor enforce IP related to COVID-19 healthcare products for the duration of the pandemic. On the back of persistent advocacy, this proposal was backed by over 100 WTO Member states and compelled the WTO’s member countries to make a decision on it. This decision was made public in July of 2022 – though many are unhappy with it.
Following from the theme of my previous contribution, in this blog post I will explore what more African countries can do to secure access to COVID-19 healthcare products, as we continue to grapple with the late stages of the pandemic. I will outline the developments leading up to the WTO decision on the IP waiver and describe its implications for African countries. I will also outline the limitations it comes with, and reflect on how these limitations might be overcome.
Overview of the Proposed Waiver
The proposal put forward by South Africa and India was intended to address a pressing issue that emerged in the early days of COVID-19 vaccine rollouts: as they saw it, the world’s leading pharmaceutical companies and their backers had been using their monopoly power to prevent vaccine and medical product manufacturers across the world from scaling up production to meet global needs – even though it was obvious that they could not produce enough supply to meet the global demand quickly enough.
This monopoly power, so the argument goes, is enabled by the IP held by these pharmaceutical companies, which prevents others from producing vaccines, diagnostics and therapeutics related to COVID-19. Therefore, according to proponents of the IP waiver, the solution would be for countries to be given the power to deprive pharmaceutical companies of their monopoly power, and thereby permit manufacturers in their jurisdictions to produce COVID-19 healthcare products as well. This would allow them to circumvent the supply shortage – as well as the prohibitively high prices that are often attached to COVID-19 healthcare products.
In the text of the Proposed IP Waiver, it was proposed that the application of all IP rights that WTO member states are bound to give legal recognition to by TRIPS, be made capable of suspension ‘in relation to prevention, containment or treatment of COVID-19’. In other words, the Proposed IP Waiver would be applicable to (i) all WTO member states, (ii) all forms of IP recognised in terms of TRIPS (including copyright, industrial designs, patents, and trade secrets), and (iii) all COVID-19 related healthcare products (including vaccines, diagnostics, and therapeutics).
After the Proposed IP Waiver was brought before the WTO, a number of formal and informal meetings of the TRIPS Council – the body responsible for administering and monitoring the operation of TRIPS – were held. After over half a year of deliberations with no decision being reached, and with the prospects of an adoption of the proposal dwindling, the hopes of supporters of the IP waiver were again raised when the Biden Administration announced that the USA supported the idea of a waiver.[5] But this was qualified support – as the USA only supported a waiver of patent rights, and not other forms of IP. Negotiations continued to advance at a slow pace for the remainder of 2021, and well into 2022.
Much of the delays in reaching a decision on the Proposed IP Waiver were occasioned by the staunch opposition brought against the notion of an IP waiver, which was helmed by the European Union (the EU). The grievances of the EU with the Proposed IP Waiver were laid bare when it brought before the WTO a ‘Counter Proposal’ in October 2021.[6] In this Counter Proposal, the EU expressed its unwillingness to support the IP Waiver Proposal, taking the position that a waiver on IP was unnecessary. According to the EU, the existing public health flexibilities under TRIPS were sufficient to attend to the problems being faced by developing countries in accessing COVID-19 healthcare products. As an alternative to a wholesale waiving of IP rights, the EU’s Counter Proposal proposed widening the scope of the existing flexibilities for patent rights – specifically focusing on provisions related to compulsory licenses (also known as ‘involuntary licenses’ or ‘government use’ licenses).
Despite the fact that the EU’s Counter Proposal represented a significant departure from the text of the Proposed IP Waiver, the text of the Counter Proposal formed the basis of further negotiations on the IP waiver. This became evident in April 2021 when the text of an early draft of the WTO Ministerial Committee’s decision on the IP waiver was ‘leaked’. The leaked document came under heavy critique from supporters of the waiver as it narrowly focused on waiving certain requirements for compulsory licensing of COVID-19 related patents in order to scale up production – neglecting other aspects of the original Proposed IP Waiver – and furthermore placed stringent constraints on who could make use of this waiver.[7]
The WTO Waiver Decision
Finally, in July of 2022, at the WTO’s 12th Ministerial Conference in Geneva, Switzerland, a decision was reached regarding the proposed waiver (the WTO Waiver Decision). From the text of the WTO Waiver Decision, the influence of the US and EU as alluded to above is evident. The WTO Waiver Decision introduces just a single waiver of a requirement in relation to compulsory licensing of patents related to COVID-19 vaccines: Ordinarily, compulsory licenses, which are permitted under Article 31 of TRIPS, are subject to the condition that any products produced in terms of the compulsory licenses are limited to the quantities necessary to meet the local demand. Article 31bis of TRIPS allows countries to exceed this amount, only in so far as doing so is necessary for another country (who has also issued a compulsory license for that product) to import quantities of the patented product needed to meet the demand in their country. The WTO Waiver Decision dispenses of this demand-driven requirement, allowing ‘eligible members’ to scale up their vaccine production and export locally manufactured vaccines without fear of having action taken against them by the patent holders via the WTO.
The WTO Waiver Decision is, however, subject to a number of limitations. Firstly, the mechanism described in the Waiver Decision may only be utilised by ‘eligible members’ – which are all developing countries that lack the capacity to manufacture COVID-19 vaccines.
The second limitation on the WTO Waiver Decision is that it only applies to vaccines, meaning that it cannot be used for other COVID-19 related healthcare products. The WTO Waiver Decision mentions that a decision must be reached regarding whether the waiver shall extend to diagnostics and therapeutics but provides that the WTO’s Ministerial Committee should make such a decision within 6 months.
The third limitation is that eligible members are required to ensure that any vaccines imported in terms of this waiver are not subsequently re-exported.
The fourth limitation is that WTO members states are required to communicate any implementation of the WTO Waiver Decision to the TRIPS Council.
Finally, the fifth limitation is that the use of measures allowed by the WTO Waiver Decision are limited to 5 years from the date of the decision. This means that this mechanism will not be available for use in future pandemics.
The WTO Waiver Decision has not been well-received by proponents of an IP waiver. It has been remarked by activists that the outcome of this decision is only a ‘partial waiver’ and is not worth celebrating as it is another victory of the interests of the ‘elite powers’ in the pharmaceutical industry – backed by the major powers in the WTO – over public health.[8] In the remainder of this blog, I reflect on the forces that led a widely supported waiver on all aspects of IP to amount to a relatively narrow waiver of a single aspect of patent rights in the form of the WTO Waiver Decision.
Reflecting on the pharma industry’s resistance to pro-access initiatives for COVID-19 healthcare products
The messaging from multinational pharmaceutical companies on their unwillingness to support measures (like the voluntary pool) that focus on loosening IP protections as provided under TRIPS in order to facilitate greater access to COVID-19 healthcare products has consistently been the assertion that closely guarding IP is vitally important, because without it there is no incentive to innovate.[9] This, apparently, applies even during a global pandemic, when one might hope that saving lives would be adequate motivation.
The absence of incentive is not due to a lack of good reasons to innovate per se. Rather, it is that pro-access measures may cut into profit margins. The pharmaceutical industry has a long and documented history of using IP as a mechanism to leverage public health crises like the AIDS and TB epidemics into profits. Once again in the context COVID-19, IP on COVID-19 healthcare products has allowed the pandemic to be immensely profitable for multinational pharmaceutical companies based out of developed countries like the US and Europe.[10] To illustrate how profit is a driving factor of multinational pharmaceutical companies’ resistance to pro-access initiatives for COVID-19, let us consider what might have occurred had the voluntary pool gained the momentum it needed to be successful.
By participating in the voluntary pool, manufacturers from other countries around the world would have been able to use the medical information currently covered by IP to make vaccines and other healthcare products, but the pharmaceutical companies that owned this IP would not have been able to profit from the sales of these products. Given that it was not aligned with their financial interests, it is unsurprising that pharmaceutical companies failed to give the voluntary pool their full support.
One might interject here to note that individuals and companies that support innovation that leads to live-saving healthcare interventions ought to profit from this. And this is true. But this need not come in the form of profiteering at the expense of human lives. Pharmaceutical companies could have still made money on COVID-19–related healthcare in the context of a voluntary patent pool, by methods such as imposing a reasonable fee on access to the patent pool, as well as from the sales of their products in markets that could afford to pay more.
The issue for pharmaceutical companies, evidently, was not that they would not be making a profit from their IP – but that they would be making less profit than they were making by keeping their IP to themselves and leaving those who could not afford to access their products to become ill and even die.
More than just immediate financial gain, the resistance from multinational pharmaceutical companies to pro-access measures is about maintaining their advantage in the global healthcare market. Both the voluntary pool and the IP waiver (as originally proposed) would have enabled manufacturers in developing countries to benefit from the knowledge behind COVID-19 medical innovations, which in turn would have helped develop their capacity to produce similar innovations. This would make them potential competitors to multinational pharmaceutical companies in those markets and, potentially, in markets in the developed world as well – if these developing-world manufacturers were allowed to export their products and sell them as generic alternatives.
Understanding that the interrelated motives of protecting profit margins and deterring the development of pharmaceutical manufacturers who may be a source of competition are a significant part of multinational pharmaceutical companies’ resistance to mechanisms proposed to make COVID-19–related healthcare more accessible – let us briefly reflect on how these motives influenced events surrounding the WTO regarding the Proposed IP Waiver.
What went wrong with the IP Waiver Proposal?
The failure of pro-access initiatives for COVID-19 healthcare initiatives should not, in principle, be attributable to the motives of multinational pharmaceutical companies, as some measures were not reliant on industry compliance. This was the case with the Proposed IP Waiver, which came down to the decision-making of the WTO. Why, then, was the outcome the same?
To answer this question, it is important to reflect on the balance of power in multilateral trade, and the role the WTO plays in maintaining this balance of power. This is something Professor Yousuf Vawda and I analysed in a recent article, outlining what we term the ‘hegemony’ in multilateral trade, and how the WTO and its outputs (including TRIPS) often serve to protect it.[11]
In this context ‘hegemony’ refers to a kind of dominance in relations between nation-states, where the dominant states use their power or influence to create international systems based on what are, in theory, consensual relationships between states that entail generally applicable rules.[12] But these systems and rules are not actually as balanced as they seem on paper. In reality, they are designed in a way that is favorable to the dominant state, and serve to ensure their continued supremacy. Often these systems will include some measure of protection or power for the non-dominant states, but never enough to truly upset the balance of power.
As Professor Vawda and I show, the WTO exists because of the hegemony of the high-income countries (HICs) such as the US and Europe in multilateral trade. And multinational pharmaceutical companies are a significant contributor to the wealth and power of these countries. As such, it is unsurprising that the policies of the WTO often align themselves with interests of these multinational pharmaceutical companies. For instance, TRIPS has from its inception subjected developing countries to IP standards that were based on the US’ IP system, and has largely not changed despite its adverse outcomes for public health in the developing world.
HICs continue to use their influence at the WTO to back the dominance of multinational pharmaceutical companies in the global healthcare market by insisting on strict adherence to IP standards. This is why pharmaceutical companies and HICs continue to exert commercial and political pressure on developing countries not to make use of TRIPS flexibilities for public health, even during public health crises like the HIV/AIDS epidemics, and the current COVID-19 global pandemic.[13] This is notwithstanding the quantity of support such measures may receive from developing countries.
It is within this context of unequal power relations, and the agenda of the dominant HICs of supporting multinational pharmaceutical companies, that the events surrounding the IP Waiver Proposal must be understood. Despite the fact that the proposal by South Africa and India for an overarching waiver on all IP for all COVID-19 healthcare products was supported by over 100 of the WTO’s 164 member states, it was the EU’s proposal for a much more restricted waiver that carried the day. A true testament to the power of this relatively small contingent of HICs within the WTO. It is evident from the events surrounding the WTO Waiver Decision and the text of the decision itself, that maintaining the balance of power in multilateral trade was a major motivating factor influencing the outcomes.
The Deputy US trade representative openly acknowledged that the sole purpose of the eligibility requirements was to discourage developing countries that have existing capacity to manufacture COVID-19 vaccines from availing themselves of the flexibilities contained in the waiver.[14] Why this should be the case is unclear, since it is only those countries that already have manufacturing capacity who would actually be able to make use of the additional flexibilities under the WTO Waiver Decision. To limit the use of the WTO Waiver Decision in this way would be irrational, if this mechanisms primary aim was to promote access to vaccines in developing countries.
However, this eligibility requirement is explainable when viewed through the lens of the WTO as a mechanism for the hegemony – as the effect of this decision is to ensure that developing countries only import vaccines from pharmaceutical manufacturers in HICs. This is further reinforced by the emphasis on eligible states not re-exporting vaccines to other eligible countries, as this ensures that all imports are made directly from pharmaceutical companies in HICs, who may thus continue to control and monetize vaccine distribution.
Conclusion
Having reflected on the events on the past few years, it is now time to look forward and ask: What more should African countries do ensure access to COVID-19 healthcare products.
Firstly, notwithstanding the infelicities of the WTO’s IP Waiver Decision, African countries should not allow this opportunity to pass them by. Compulsory licensing can be a powerful mechanism to promote access to healthcare, and the IP Waiver Decision allows more flexibility in how this can be done. It is suggested that African countries take every possible measure to grant licenses to local manufacturers for COVID-19 vaccines.
Even if the IP Waiver Decision only applies to vaccines, it is important to recall that the utilisation of public health flexibilities under TRIPS such as parallel importation are still an option for other COVID-19 healthcare like diagnostics and therapeutics. African countries have this far failed to utilize these mechanism – and this should be urgently corrected.
Perhaps the most substantial benefit of the IP Waiver is not a direct one, but the ancillary benefit of how it may enable developing countries in Africa to develop their domestic capacity for pharmaceutical manufacturing. This is a benefit that should be pursued with full gumption. It is of the outmost importance that developing countries, including those in Africa, collectively co-operate and support each other in this regard – prioritizing the sharing of scientific knowledge and technology transfer between developing countries. African countries can no longer afford to allow their responses to the COVID-19 pandemic to be determined by the goodwill of pharmaceutical companies or HICs – Africa must take its destiny into its own hands.
This blog is written exclusively in the author’s capacity. Any views expressed are those of the author alone and do not necessarily represent the views of any organization or institution.
Additional readings are listed on the Multilateral Matters portal (http://ip-unit.org/multilateral-matters/)
Endnotes
[1] ‘COVID-19 Technology Access Pool’ <https://www.who.int/initiatives/covid-19-technology-access-pool> accessed 19 July 2022.
[2] Edouard Mathieu and others, ‘A Global Database of COVID-19 Vaccinations’ (2021) 5 Nature Human Behaviour 947.
[3] Bonginkosi Shozi, ‘Multilateral Matters #6: What Can African Countries Do To Make Sure They Have Affordable Access to a COVID-19 Cure?’ (UCT IP Unit: Multilateral Matters, 12 May 2020) <http://ip-unit.org/2020/multilateral-matters-6-what-can-african-countries-do-to-make-sure-they-have-affordableaccess-to-a-covid-19-cure/> accessed 9 October 2020.
[4] ‘Pharma Leaders Shoot down WHO Voluntary Pool for Patent Rights on Covid-19 Products’ (STAT, 28 May 2020) <https://www.statnews.com/pharmalot/2020/05/28/who-voluntary-pool-patents-pfizer/> accessed 15 July 2022.
[5] ‘In “Monumental” Decision, US Expresses Support for TRIPS Waiver’ <https://twn.my/title2/wto.info/2021/ti210509.htm> accessed 19 July 2022.
[6] Medicines Law and Policy, ‘WTO Covid-19 TRIPS Decision: Some Observations | Medicines Law & Policy’ <https://medicineslawandpolicy.org/2022/06/wto-covid-19-trips-decision-some-observations/> accessed 14 July 2022.
[7] Fatima Hassan, Leslie London, Yousuf Vawda, ‘The Leaked WTO COVID Patent Waiver Text Promises a Very Bad Deal’ <https://www.aljazeera.com/opinions/2022/4/8/the-leaked-wto-covid-patent-waiver-text-promises-a-very-bad-deal> accessed 18 July 2022.
[8] Priti Patnaik, ‘Trade Won, Health Did Not. A Sliver of a Waiver at the WTO.’ (Geneva Health Files, 18 June 2022) <https://genevahealthfiles.substack.com/p/trade-won-health-did-not-a-sliver> accessed 14 July 2022.
[9] See endnote 4 above.
[10] ‘When Lifesaving Vaccines Become Profit Machines for Drugmakers’ (Bloomberg.com, 6 July 2021) <https://www.bloomberg.com/news/articles/2021-07-06/when-lifesaving-vaccines-become-profit-machines-for-drugmakers> accessed 15 July 2022.
[11] Yousuf Vawda, Bonginkosi Shozi, ‘Doha Twenty Years On: Has the Promise Been Betrayed?’ (SouthViews, 20 June 2022) <https://www.southcentre.int/wp-content/uploads/2022/06/SV238_220620-3.pdf> accessed 27 July 2022.
[12] Brian Schmidt, Expert Comment, Hegemony: A conceptual and theoretical analysis (2018), Dialogue of Civilizations Research Institute. <https://doc-research.org/wpcontent/uploads/2018/08/Schmidt_Hegemony_PDF_web.pdfcontent/uploads/2018/08/Schmidt_Hegemony_PDF_web.pdf> accessed 27 January 2022.
[13] South Centre, ‘The Doha Declaration on TRIPS and Public Health Ten Years Later: The State of Implementation’, (Policy Brief 7, November 2011) <https://www.southcentre.int/wp-content/uploads/2013/06/PB7_-Doha-Declaration-on-TRIPS-and-Health_-EN.pdf> accessed 23 January 2022.
[14] See endnote 8 above.