IPR waivers: The magic pills to decolonize vaccine access?

Clamor has risen around India & South Africa’s proposal seeking Intellectual Property Rights or IPR waivers for easier access to COVID-19 medicines. But what choices do nations have if the negotiations fail to bear fruit? And, if the debates actually lead to something concrete, is the pharmaceutical industry ready to buckle up for the challenge that lies ahead?

• Last year, the global scientific community worked hard to develop preventative and curative therapies to combat COVID-19. Efforts are still being made in this direction.
• Simultaneously, some developed nations entered into commercial agreements with pharmaceutical companies to develop and procure vaccines to prevent COVID-19. Further, the Big Pharma lobby has argued that IPR protection is important to encourage scientific R&D and innovation.
• As the developing nations were left out of this race, India & South Africa rose to the occasion and demanded greater flexibilities on Trade-Related Aspects of Intellectual Property Rights to ensure global equity in COVID-19 eradication.
• However, a closer look would explain that the IPR waiver is just the beginning. The questions that really matter are what can be done in the short run to enhance the production and distribution of vaccines; and is the pharma industry capable of delivering on the promise of mass production of affordable vaccines?

Last year, when COVID-19 was spreading its tentacles across the globe, countries started exploring ways to counter and cure the disease. From developing a vaccine against the virus to testing the efficacy of drugs like Remdesivir to convalescent plasma therapy, the worldwide scientific community toiled hard to tackle the threat. As new variants of the disease emerge in the world, research is still being done to find ways to mitigate it.

Luckily, some of the efforts have borne fruit and they ended up developing some of the antidotes that proved to be fairly promising in preventing the disease or at the least, diminishing its severity. This is a remarkable achievement in a fairly short span of time. GlaxoSmithKline, Novartis, Pfizer, Gilead Sciences, Sanofi, Johnson & Johnson and Moderna are some of the companies involved in this endeavor to produce vaccines.

Now, that the vaccines are available and other treatments are being explored, the question of equitable access to affordable COVID-19 vaccines (& medicines) arises. This is where India & South Africa’s landmark proposal to the World Trade Organization (WTO) comes in. The proposal has been designed to ease rules that impose intellectual property (IP) barriers that restrict access to life-saving COVID-19 medicines, tools, equipment and vaccines.

However, this is just one angle of the story. It is also equally important to ask that if the proposal is granted, is the industry really ready to manufacture the COVID-19 vaccines and medicines. And more importantly, what options do countries have if the negotiation falls apart?

IPR Waiver: The messiah against vaccine nationalism?

While the IPR waiver proposal jointly drafted by India and South Africa is noble, it is important to understand the reasons why it emanated in the first place. One of the reasons for this is to free the mystique behind the whole process of developing vaccines (medicines). It revolves around the different facets of the agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) – sections 1 (Copyright and Related Rights), 4 (Industrial Designs), 5 (Patents) and 7 (Protection of Undisclosed Information).

Given the complexities revolving around the process of making vaccines, relaxations on other forms of intellectual property (& not just patent) will also be needed. Thus, for example, a patent might protect information pertaining to key ingredients used for the vaccine, while the expertise to produce it might be withheld as a trade secret.

Another reason for drafting the proposal is a humanitarian one. The proponents of IPR argue that granting the waivers is a bad practice that will undermine the profits of the pharmaceutical industry which has invested its money in the R&D to develop these vaccines & discourage future innovation. Thomas Cueni, Director, International Federation of Pharmaceutical Manufacturers and Associations, argued that “the [IPR waiver] effort would jeopardize future medical innovation, making us more vulnerable to other diseases”.

This is countered on various grounds by the other side:

(i) Many big pharmaceutical companies are living off profits mustered from evergreening patents on decades-old drugs;

(ii) Public funding constituted around 99% of finance towards their R&D to combat coronavirus

(iii) The greater global wellbeing outweighs the profit of a few pharmaceutical companies.

India’s ambassador to the WTO, Brajendra Navnit aptly articulates the trade off:

“It’s very simple economics. For a commercial business of US$ 30-40 billion of annual vaccine output of a few companies, we are coming in the way of US$ 6-7 trillion of global GDP output in one year.”

In addition, there were also accusations of vaccine nationalism as the developed nations acquired more vaccines than they needed. A case in point is Switzerland, which has reserved 27.5 million doses though it has a population of just 8.5 million. Dr Rashmi Banga, Senior Economic Affairs Officer, UNCTAD, notes that through the end of 2021, wealthy countries representing just 13% of the global population have already reserved over 50% of the expected COVID-19 vaccine doses. She opines:

Vaccine nationalism is being fully supported by the pharma industry, which is interested in maximizing their profits through the monopoly position that they get because of the IPRs.

But how did we manage to come so far, so soon? Dr. Yogesh Pai, Assistant Professor of Law and Co-Director, Centre for Innovation, IP and Competition, National Law Univeristy explains the genesis of this skewed nature of global vaccine distribution:

Vaccine markets are monoposonistic in nature (where Government is usually the largest/single buyer), requiring advance market commitments (AMCs). Such AMCs were concluded by several countries such as the US, UK and the EU even before the vaccines were approved. This explains the current global vaccine inequities because other countries did not make similar commitments at the right time and at the required scale.

Source: Statista
Note: Vaccine production as of 3rd March, 2021.

Is the pharma industry ready to rise to the occasion?

If all the WTO members agree to the draft, then discussions on IPR waivers will shift to the complexities of each and every facet of COVID-19 treatment such as vaccines, drugs, PPEs and so forth. But if it comes through, it offers some convenient solutions. Nitin Gupta, Senior Trademark and Copyrights Attorney says:

If the IPR waiver is granted, there would be no need to run from pillar to post to get compulsory license for production or sales of patented vaccines. That time can be utilized in providing vaccines immediately, which is the need of the hour.

But, it rests on all WTO members being on the same page. This, however, is a fairly time taking process. For example, it took the WTO approximately five years to issue the Doha Declaration in 2001. For argument’s sake, however, even if we assume that the negotiations are concluded this year, then the next question that would arise is that is the pharmaceutical industry actually ready for it?

India itself imports around 85% of active pharmaceutical ingredients (APIs) from China. Trade barriers complicate the matter further as restrictions were imposed by certain governments (e.g. the U.S.) on export of certain critical material inputs required for producing vaccines. Further, most of the API production units in India run at 30-40% of their capacity. There is a dearth of skilled personnel in the industry too. Around 50% of the human resources in pharmaceutical industry are engaged in production & quality control & just 20% in research/testing.

This also indicates the low inclination towards R&D in the country. Thus, while India secured the 48^th rank in Global Innovation Index in 2020, it lagged behind several competing countries, such as Singapore (ranked 8th), China (14th), Malaysia (33rd), Vietnam (42nd), and Thailand (44th). Lastly, the sector is plagued by the lack of adequate infrastructure. Recently, India has also acknowledged this at the WTO. Satwik Shekhar, Legal Consultant (Assistant Professor), CTIL, IIFT, argues:

At present, the raw materials used to produce COVID-19 vaccines are procured from suppliers in as many as 15 different countries in some cases. So, supply chain management is very important. Secondly, even if the IPR waivers are granted, can all the companies in pharmaceutical industry make vaccines? Do they have the required funds, infrastructure and technological know-how for that?

Global Innovation Index (GII) — India’s rankings in 2020

It is, thus, clear that to move up the value chain and be prepared for such situations, India has to establish an entire ecosystem of innovation that brings together the academia/ research institutions, big pharma companies and startups/entrepreneurs, medical institutions/hospitals. This has to be supported by skilled professionals, proper infrastructure and a strong supply chain. The IPR waiver is just the first step in a long journey. Achal Prabhala, advocate for intellectual property reform and access to medicines, Shuttleworth Foundation expounds the whole concept beautifully:

Think of the IPR waiver as a 90 meter race. The first 30 meters are to secure the legal rights to make the vaccine and other COVID-19 therapies through suspension of pharmaceutical monopolies. The next 30 meters is to secure the technology to make these. The last 30 meters is to figure out an adequate supply of equipment and raw materials to make the manufacturing smooth.

The missing keys to unlock medicines without borders

Moreover, even if one country walks out on the negotiations, the whole exercise would be rendered futile. The proposal drafted by India & South Africa is currently opposed by some developed questions. What options then do countries have before them?

Firstly, countries are anyway entitled by the WTO and their domestic laws to make vaccines. For example, the Brazilian federal government published a law for providing for exceptional measures related to the acquisition of vaccines and other services related to COVID-19. Similarly, India could exercise Section 92 of the 1970 Indian Patents Act and allow compulsory licenses to be issued at any time in case of a national emergency or circumstances of extreme urgency.

However, as Shekhar points out the problem is that if compulsory licensing takes place, those pharmaceutical companies have to reverse engineer the vaccine and then manufacture their own drug. This would spiral into another year of further R&D, clinical trials, hits and misses, licenses and approvals from the government and is, therefore, a time-taking process.

Secondly, encourage patent holders to voluntarily license their patents to manufacturers. India, for example, already has such exemplary arrangements: Serum Institute of India & the UK’s Oxford-AstraZeneca; and the government has provided three public sector enterprises with the resources and permissions necessary to produce Bharat Biotech’s Covaxin. Prakhar Bhardwaj, Senior Research Fellow, CTIL believes:

“There is a lot that needs to happen to scale up the production of COVID-19 vaccines, especially in the field of international collaboration between companies. In the MRNA vaccines, for example, the components are quite specialized. It uses a special lipid and hardly 4/5 companies hold its patent. This would require exchange of knowledge and technology transfer.”

Thirdly, the government too, should try to make India an attractive destination for vaccine making, as argued by Shekhar & Dr Pai. The government should, therefore think of offering subsidies on R&D and incentives (like tax breaks), which are compliant with WTO’s guidelines. This would also involve flexible regulations vis-à-vis indemnification, exemptions from price capping, bridging trials & basic customs duty.

It should also provide technical training to ensure that the workforce is skilled to participate in vaccine production. Decentralizing power could also expedite decision making and reduce bureaucratic barriers to the entry of foreign vaccine makers in the country. Prof. Nilanjan Banik, Bennett University, insists:

The government should make efforts to reduce regulatory procedures in order to enhance the production and distribution of vaccines. Decentralization of power will be a great way to empower the bureaucracy to expedite the requisite decision making and encourage international vaccine makers to set up plants in the country.

Fourthly, vaccines can be declared as public goods, as suggested by Dr Banga. UNESCO too, has urged the same to ensure they are made equitably available in all countries, and not only to those who bid the highest for these vaccines. Ultimately vaccine equity is the best way to control and annihilate the pandemic, stop this battle of breath and reboot the global economy.

Lastly, countries could also form a coalition and collectively bargain for better deals with pharma lobbies. They need to show solidarity in the different international fora like the WTO and WHO in order to have equal access to vaccines produced. Capital must also be infused in regional banks so that they can help their members recover from this crisis and get access to better medical facilities. Countries must also lift trade barriers governing the cross-border movement of the raw materials needed to produce medicines.