Waiver of IP Protections for COVID-19 Vaccines Still Under Consideration at WTO
Surprising very few, the intensive discussions at the World Trade Organization (WTO) over specific text for a proposed waiver of intellectual property (IP) protections for COVID-19 vaccines, and possibly other related technologies, came to a pause in late July with no notable progress being made. The WTO members have now departed Geneva for the European summer holiday, a move that has irked those calling for accelerated action, and are to resume talks in September. [Baschuk 2021-07-28 Bloomberg] The original proposal put forth by India and South Africa in October of last year called for the waiver of obligations under Sections 1 (Copyright and Related Rights), 4 (Industrial Designs), 5 (Patents), and 7 (Protection of Undisclosed Information) of The Agreement on Trade-Related Aspects of Intellectual Property Rights (the TRIPS Agreement) to enforce intellection property protections in relation to “prevention, containment, or treatment of COVID-19” for a to-be-determined number of years. The proposal has since been updated to specify a duration of at least 3 years, although critics worry that a waiver without a definitive expiration could require consensus to terminate, potentially leaving the temporary nature of the provisions in limbo. [Lopez 2021-06-04 Bloomberg] The TRIPS Agreement is the world’s most comprehensive international agreement encompassing all aspects of IP. It automatically extends to all 159 members of the WTO, requiring minimum standards for IP protection enforceable by trade sanctions within a mandatory dispute process, with some special provisions for developing and least developed nations. Decisions are generally made by consensus, although technically a three-fourths majority could be employed under certain circumstances.
As evidenced by the subsequent, yet temporary, drops in stock prices of vaccine manufacturers, much of the world was caught off guard when the Biden administration reversed positions in early May of this year, coming out in support of some version of a waiver. Notably, Katherine Tai, the U.S. Trade Representative only indicated support for waiving protection for vaccines, in particular, a narrower scope than most waiver proponents have requested. However, the U.S. shift in position has not necessarily turned the tide in favor of a waiver among developed countries. In June, the EU proposed a contentious alternative high-level plan, which explicitly questioned the prudence of compromising IP protections as called for by the waiver. [EC press release 2021-06-04] Waiver proponents view the proposal as a deliberate distraction.
Following an urgent call from several developing and least-developed countries to speed up negotiations, a slew of meetings for intensive text-based negotiations of the waiver were conducted over the summer with the aim of reaching some sort of agreement by the end of July. [Kanth 2021-06-21; Aquino 2021-06-09] The negotiations were expected to initially focus on the scope of products and IP protections covered, [Kanth 2021-06-21] with plenty of room for talks to become derailed and for nations who tout support for the waiver in spirit to curtail its reach. [Davis 2021-05-07 Law360] Many have interpreted the U.S. announcement of support as a display of optics to signal compromise while aiming to find a much more restrained solution to expedite sluggish vaccination efforts, despite outcry from many Republicans and some Democrats that the Biden administration is even entertaining the idea. [Leonard 2021-05-06, Bloomberg]; [Decker 2021-05-06 Bloomberg] The U.S. had apparently expressed strong skepticism about the timeline and approach of these talks and indicated the talks should instead focus what specific goals the waiver is hoping to achieve before progressing into scope. [Kanth 2021-06-21] In the first meeting on June 30th, the U.S. appeared to side with the EU in signaling that expanded vaccine access could be achieved with minimal disruptions to IP protections. [Karpan 2021-07-01] The administration has also signaled it will seek input from vaccine developers before agreeing to anything. [Lopez 2021-05-12] Some have thought, though, that the threat of broad IP waivers may spurn vaccine developers to engage in more voluntary licensing that will ramp up production in attempts to avoid compulsory transfers of technology. [Davis 2021-05-07 Law360] Pfizer recently announced a manufacturing deal with South Africa’s Biovac institute, although waiver proponents say such efforts are still greatly insufficient. [Lopez 2021-07-23 Bloomberg]
While the proposed waiver extends to several areas of IP, most agree that patents and undisclosed information, in particular, form the crux of the debate. Katherine Tai, the U.S. Trade Representative, has not publicly committed to any position beyond waiving patent protections in particular. [Karpan 2021-07-01] Moderna has temporarily waived its COVID-19 vaccine patent rights, but the vaccine is still protected, at least in the U.S. and EU by regulatory marketing exclusivity. [Collins 2021-06-11] With respect to patents, existing TRIPS flexibilities already allow for countries to issue compulsory licenses for domestic production in the face of public health crises and, under additional criteria, compulsory licenses for export. But proponents of the waiver argue that the existing processes, which can require country-by-country and case-by-case negotiations and litigation with the vaccine developers and may be limited to public uses, are too time-consuming and inconvenient to mount an effective response, particularly where thickets of IP protection cover single vaccines. [Labonte 2021-01-09, The Conversation]; [Public Citizen, tradewatch.org] In fact, compulsory licensing to exporting manufacturers under Article 31b is has only been successfully used once in the past twenty years, [Public Citizen, tradewatch.org] when Canada issued a compulsory license authorizing the manufacture and export of an AIDS medication to Rwanda. [WTO 2007-10-04] Additionally, multiple countries may be involved in the pipeline for manufacturing a single packaged vaccine to be distributed in a country in need. Further, one key advantage to a unanimously agreed-upon waiver over attempting to utilize existing TRIPS flexibilities, would be that countries could more comfortably exploit the waiver without the threat of trade complaints or sanctions from other nations. [Lopez 2021-05-07] Proponents of the waiver point to alleged U.S. and European retaliatory trade measures against nations that have attempted to use existing TRIPS flexibilities to skirt IP protections. [Public Citizen, tradewatch.org]
While the proposed waiver extends to several areas of IP, most agree that patents and undisclosed information, in particular, form the crux of the debate.
However, even if patent protection were not an issue, manufacturing and distribution of the vaccines would remain a substantial obstacle to achieving global immunity. [Paton 2021-05-07 Bloomberg] Aspects of vaccine manufacturing and regulation raise further issues of what TRIPS calls “undisclosed information,” encompassing trade secrets and know-how. Such undisclosed information may be particularly crucial in scaling up manufacture in a commercially viable fashion. [Garrison 2020-12-16]. Article 39 of TRIPS requires members to protect the confidentiality of undisclosed information, including data submitted to regulatory agencies for marketing approval of pharmaceuticals. As related to vaccines, undisclosed information could include clinical data (e.g., related to effectivity, including negative results), manufacturing processes, medical formulas, cell lines, genomic information, technical designs and specifications, instruction manuals, process controls and monitoring, quality control procedures, technical training, working practices, etc. [Garrison 2020-12-16]; [Levine 2020-07-10]; [Eakin 2021-05-25 Law360] The Pfizer and Moderna vaccines, in particular, are expected to be extremely difficult to replicate given they rely on new mRNA technology.
The WTO touts the COVID-19 Clinical Research Coalition, which aims to provide a platform for voluntary data-sharing, and the WHO-backed COVID-19 Technology Access Pool (C-TAP), which provides a platform for technology developers to bundle intellectual property rights, knowledge, and data into non-exclusive licenses with each other and with multiple quality-assured manufacturers, as examples of voluntary efforts to fill-in the know-how gap. [WTO Report 2020-10-15] In general, the voluntary transfer of know-how between two parties is highly contractually stipulated, usually allowing the licensor strict control over the dissemination of its know-how and protecting rights to improvements and developments that may derive from the collaboration, some of which might be patentable in themselves. [Bracho 2021-05-24 Bloomberg].
The proposed waiver, though, wades into relatively unchartered territory of compulsory transfers of undisclosed information. Likely the biggest threat felt by vaccine manufacturers is that the compulsory transfer of undisclosed information will not simply diminish their return on investments in COVID19 vaccines, but would jeopardize entire proprietary technological platforms that support a wide range of potential products. Such giveaways would likely impact small-to-medium sized enterprises especially, which account for approximately 75% of US COVID-19 treatments, and particularly small university spin-outs, which are highly depend on IP for valuation. [Balfour 2021-06-30]
As details of a waiver have not yet been hammered out, it remains unclear exactly who might have access to such undisclosed information (e.g., the general public or only generic manufacturers) and the mechanisms by which such transfers would be achieved. Even with a waiver in place, individual countries would likely need to enact legislation or emergency executive actions to execute the transfer of information. [Labonte 2021-01-09, The Conversation] The most obvious means would be for regulatory agencies to disclose data and manufacturing protocols submitted by vaccine manufacturers that they are ordinarily required to keep confidential. In fact, the issue of data confidentiality has already been raised in the U.S. as an obstacle to developing a competitive generic biologics market, with some pointing to the Federal Pesticide Act (FPA) as a successful model which allows more free dissipation of regulatory data by the EPA. [Heled 2019] There are some exemptions to confidentiality of data supplied to regulatory drug agencies implemented in the U.S. and Europe, particularly where public funding helped finance the underlying research. For example, for research funded by the U.S. government, the Bayh-Dole Act provides some additional licensing provisions to the government which could potentially extend to some know-how; however, these provisions are largely untested and may be contractually restricted. [Collins 2021-06-11]. But there is no precedent for compulsory transfer of confidential information in general. [Levine 2020-07-10]
Even with a waiver in place, individual countries would likely need to enact legislation or emergency executive actions to execute the transfer of information.
Additionally, knowledge holders may be located outside the jurisdiction of a member state desiring to compel transfer, [Garrison 2020-12-16] and waiving an obligation for member states to protect undisclosed information does not necessarily compel other member states to do so. Notably, India, one of the waiver proponents that actually has substantial pharmaceutical manufacturing capacity, does not even presently require submission of test data for marketing approval. [Haugen 2020-12-01] Compulsory disclosure of undisclosed information is further complicated by the fact that the knowledge holders for manufacturing a single vaccine may be dispersed across multiple entities and/or even multiple jurisdictions, particularly where a supply chain of highly technical components is utilized or certain processes are outsourced to contractor entities. [Garrison 2020-12-16] The legislative levers that might be needed to fully enforce compulsory disclosure of undisclosed information or that could be pulled to halt executive branch action, as well as the lawsuits that might be filed would seem likely to stall any grand gestures of governmental action related to undisclosed information. [Eakin 2021-05-25 Law360] For instance, compulsory disclosures would likely spurn allegations of violating the Takings Clause of the Fifth Amendment, although the Supreme Court had found previously in Ruckelshaus v. Monsanto Co. that the FPA had not done so [Heled 2019]. Still, compulsory disclosure facilitated by regulatory agencies may not be sufficient to fill the knowledge gap for the successful manufacture of the vaccines, leaving room for countries to consider other creative avenues. Brazil, for instance, has proposed one of a kind legislation which would tie patent rights to the compulsory disclosure of all information needed to make COVID-19 vaccines. [Eakin 2021-05-25 Law360]
Opponents argue that bottlenecks in manufacturing capacity and supplies would stymie the effect of the waiver, despite the transfer of undisclosed information, and that even with full technology transfer, it would take months or years for factories to come up to speed on vaccine production. [Leonard 2021-05-06, Bloomberg]; [Paton 2021-05-07 Bloomberg] Manufacturing capacity is particularly limited for mRNA-based vaccines and there’s not even necessarily a sufficient population of people with expertise capable of manufacturing them. [Karpan 2021-05-11 Law360] Some also warn that redistributing crucial supplies to manufacturers without existing capabilities to manufacture the high-quality vaccines with regulatory approval would actually hinder vaccine distribution efforts. [Karpan 2021-05-11 Law360]; [Lima 2021-05-08 Bloomberg]; [Paton 2021-05-07 Bloomberg] Even manufacturing facilities with access to all IP rights are experiencing production delays from regulatory reviews. [Baschuck 2021-05-06] Opponents also resound that such efforts to undermine IP rights will only discourage future innovation, including research that targets new variants of the coronavirus. [Bacchus 2020-12-16 Cato Institute]; [Paton 2021-05-07 Bloomberg]
The large divide between fervid proponents of the waiver and even those who have expressed some mild support suggests any significant compromise may be some time coming. Many view the waiver controversy any way as less of a problem-driven exercise and more of an opportunity for the usual players to debate both the power of big pharma in the U.S. [Collins 2021-06-11] and the stifling effects IP protections can have on the least developed nations around the world. Also, the angst amongst some proponents of the waiver, some believe, may stem more from policies of vaccine nationalism than of TRIP impediments. [Clarke 2021-04-22 Lexology] Regardless, the decisions reached at the WTO during this crisis are likely to shape future policy discussions for years to come.