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COVID ‘Compromise’ on International IP Underscores Need for New Approach

By Cynthia M. Ho

The leaked compromise regarding a “waiver” of international intellectual property (IP) obligations under the TRIPS Agreement for World Trade Organization (WTO) members has met harsh criticism as a shadow of the original proposal to waive international obligations regarding patent, trade secret, and copyright obligations relating to any COVID vaccine, treatment, diagnostic, or personal protective equipment (PPE).

The compromise excludes diagnostics, treatments, and PPE. It only narrowly modifies compulsory licenses of patents covering COVID vaccines. Moreover, it imposes additional restrictions on use of compulsory licenses. But still, multinational pharmaceutical manufacturers have protested even these modest changes from the status quo, arguing that there is no IP problem that needs to be fixed.

Clearly there is a problem. It has taken 18 months since the original Indian and South African proposal to get to this limited compromise, while gross vaccine inequity between wealthy and poor countries continues. In addition, the leaked compromise between four WTO members is still being debated — and even if agreement can be reached, it needs agreement of over 100 other WTO members. We need a new approach.

IP on COVID vaccines should be a global public good

For COVID treatments and diagnostics to be broadly available at affordable prices, their IP must be considered a global public good by all. What does that mean? A global public good refers to something that everyone can access (“nonexcludable”) and whose use by one does not prevent use by others (“nonrivalrous”). Physical products like vaccines do not neatly fit this definition. As we have seen, due to vaccine nationalism, vaccine supplies purchased by one mean they are unavailable to others.

However, IP is different; it cannot be used up the way vaccines can. So, if IP on vaccines and treatments were freely available as a global public good, anyone could make them, and with more manufacturers, not only would supply and access increase, but prices would also fall.

What the TRIPS Waiver Proposals — new and original — leave out

Although the leaked compromise is criticized for leaving out trade secrets, even the initial proposal by India and South Africa that included trade secrets would not be adequate to increase global vaccine supplies. Why? Waiving liability for trade secret rights does not provide affirmative access. Notably, whereas patents are always published, the definition of a trade secret is that it is secret from the public.

Modifying usual trade secret protection is necessary to promote a global public goods approach. Countries could use existing laws to mandate knowledge sharing. In the U.S., the Defense Production Act could be used to do so. In future pandemics, a country with foresight could include contractual provisions that mandate such action in exchange for public funding. This would be consistent with a WHO recommendation that all publicly funded research be available and affordable.

Barriers beyond TRIPS

Even if trade secrets were shared, that may not be enough to promote actual affordable access to COVID treatments. Why? There are domestic and international barriers which reinforce the need for a global public goods approach.

Data exclusivity

Many countries provide a type of monopoly protection for new drug approvals called “data exclusivity.” This delays the time before a generic drug or biosimilar can get approved, by blocking regulators from using the first applicant’s clinical data for the approval of competitors’ versions. This prevents competitors from entering the market, as they would have to replicate costly clinical trials from scratch. Data exclusivity usually lasts for several years after the first drug or vaccine is approved. Although TRIPS does not require data exclusivity, many Free Trade Agreements do – and do not offer exceptions.

Investor-State Disputes

There’s yet another wrinkle in many Free Trade Agreements. Many of these enable a foreign company to bring a dispute against a country if the company’s investment, including IP, loses value due to unique investment claims, i.e., an investor-state dispute. Nations can be liable for millions of dollars, creating a chilling effect on legitimate domestic action.

So, even if the WTO agrees to waive TRIPS obligations, investment disputes would not be waived. Although there are some exceptions in such agreements, a defense can still cost millions. Some have recognized the need to suspend such disputes during COVID, and there is a proposed, but unadopted text. Considering this looming liability against modifying domestic IP and regulatory rules, any TRIPS waiver could be a hollow victory.

Towards A Global Public Goods Approach

A global public goods approach addresses these many legal barriers which prevent the manufacture of needed treatments, vaccines, and diagnostics. This is true not just for COVID, but future pandemics.

Some entities and even countries are now moving towards a global public goods approach. The best example is an academic institution in Texas that developed a COVID vaccine and shared all its IP, including related technology, to manufacture with the Indian company Biological E. Choosing an Indian company is savvy, since India thus far has resisted granting pharmaceutical manufacturers data exclusivity, which restricts speedy access to drugs. Even if not all countries agree to a global public goods approach, India can make treatments and export them to other countries whose domestic laws similarly embrace this approach.

Countries that want to implement a global public goods approach can also learn lessons from Brazil. For example, a proposed Brazilian law suggesting the compulsory license of patents include sharing relevant technology obviates a key problem with utility of compulsory licenses of vaccines. Although that particular provision was line vetoed, it provides an easy template. Moreover, Brazil’s new compulsory license law models another critical feature that domestic laws should have – a way around data exclusivity. Brazil’s law requires patent owners to disclose to licensees clinical data necessary for regulatory approval. This is consistent with TRIPS flexibility to disclose such data.

The U.S. can take a bigger step to promote global public health now. The U.S. has offered to share technology associated with National Institutes of Health inventions to a WHO pool of patents. This pool can efficiently provide global low-cost access, since each contributed patent can be licensed to manufacturers in multiple countries. To align this offer with a global public goods approach, the U.S. should license its IP to all, instead of leaving out nearly half of the world, as Merck did when it shared IP on COVID treatment Paxlovid. Second, it is essential that not only patents, but related trade secrets are shared. Third, the U.S. should also agree to waive any data exclusivity and patent linkage imposed by FTAs to which it is a signatory.

Looking to the Future

We can and should build upon mistakes during COVID. Current vaccine and treatment inequity was not inevitable. Existing international and domestic IP rules allow IP owners to voluntarily share their IP rights.

Early on in the pandemic, the World Health Organization (WHO) proposed IP owners voluntarily license IP to others to ensure affordable COVID treatments. The WHO proposal is logical, yet contrary to big pharma’s profit-maximization business model.

For example, although Astra Zeneca did not aim to maximize profits at the beginning of the pandemic, it declared low-cost pricing for its COVID-19 vaccine to be over before the Omicron wave started.  Pfizer claimed that it is protecting public safety from less experienced manufacturers by rebuffing requests for licenses. (Currently, there are over 100 untapped, yet competent manufacturers. Meanwhile, Pfizer is projected to earn $32 billion this year — before the CDC recommended a fourth booster shot for some.) Although Moderna pledged that it would not enforce its COVID patents against low income countries, they have not shared essential non-patent IP rights that cover the method of making their vaccine.

As we have seen from COVID, trying to negotiate international solutions to intellectual property issues during a pandemic is neither efficient nor productive. We have an opportunity to implement a global public goods approach to IP with the WHO proposed Pandemic Treaty, which was launched in December 2021. Codifying the approach detailed above as part of the Pandemic Treaty could prevent future IP-related pandemic inequities.

Cynthia Ho is the Director of the Intellectual Property Program at Loyola University Chicago. 

The Petrie-Flom Center Staff

The Petrie-Flom Center staff often posts updates, announcements, and guests posts on behalf of others.

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