The Role of Patent Waivers and Compulsory Licensing in Facilitating Access to Covid-19 Vaccines (Part II)
Dr. Obi Adigwe and Davidson Oturu
While pharmaceutical and biotech companies have traditionally produced drugs for protecting human health, they are commercial entities which utilize the patent rights they hold as the incentive which allows them to make profit on their research and development (R & D) investment and to maintain the cycle of innovation.
However, by strictly enforcing their patents, vaccine manufacturers make it almost impossible for any other company to replicate the production of their Covid-19 drugs. This, in turn, may cause a shortage of vaccines accessible by low-income nations. Consequently, herd immunity would not be reached as the virus continues to spread and probably, mutate thereby rendering the vaccine inefficient against the new strain of the virus.
Due to vaccine nationalism, developing nations also have to purchase vaccines at a higher rate from the companies. For instance, in June 2021, South Africa ordered 1.5 million doses of the AstraZeneca vaccine and paid more than double what the EU is paying per dose. The EU claims that it is entitled to a lower price because it invested in the vaccine’s development and need to recoup their investment disregarding the fact that the AstraZeneca vaccine’s clinical trial was carried out on South Africans in 2020.
With these restrictions, the discussion remains on how there can be easier access to these vaccines, and we examine these issues further in this article.
Compulsory licensing of the COVID-19 vaccine
Over twenty countries have expressed their support towards the issuance of compulsory licences for one or more pharmaceutical products since the founding of the WTO. This implies that the use of compulsory licensing to combat the virus would not be the first time such measure is being proposed to suppress a health crisis as it was explored in the early 2000s during the HIV/AIDS epidemic.
Revisiting the HIV/AIDS Epidemic
In 2005, the Minister for Health of Ghana declared a state of emergency due to the HIV/AIDS epidemic, which was unfolding and granted a compulsory licence in that regard, in line with the Doha Declaration and TRIPS Agreement thereby aiding the importation of generic medicine into Ghana.
Two countries that had notable success with decreasing the price of antiretroviral drugs in the early 2000s were Thailand and Brazil. Both countries provided free antiretroviral treatments to all citizens living with HIV/AIDS and were thus keenly motivated to seek out affordable antiretroviral supplies. They requested the supply of ‘Efavirenz’ and ‘Lopinavir/Ritonavir’.
In initial price negotiations with Thailand, Merck offered Efavirenz at the price of US$500 per patient per year, and Abbott offered Lopinavir/Ritonavir at the price of US$2200 per patient per year (PPPY). The Thai government rejected both of these offers due to the high prices and issued compulsory licences for both drugs in late 2006 and early 2007. These licences then enabled the Thai government to import generic versions of the antiretroviral drugs from India at a significantly lowered cost of $224 for generic Efavirenz and $676 for generic Lopinavir/Ritonavir.
The experiences learnt during the HIV/AIDS epidemic are already being emulated. For a government to use compulsory licensing for COVID-19 related purposes, its domestic laws must have procedures in place to authorize such government action. Several countries have already taken legislative steps to ensure their governments can swiftly issue compulsory licences as part of their COVID-19 response.
In March 2020, legislatures in Canada, Chile, and Ecuador laid the legal groundwork for the issuance of compulsory licences to address COVID-19. Canada’s COVID-19 Emergency Response Act amended the Canadian Patent Act to allow for a faster process for issuing a compulsory licence on public health grounds. The amendment allows the government to issue a licence for necessary innovations and to negotiate remuneration later.
Chile’s Chamber of Deputies also passed a resolution granting the use of compulsory licences for the prevention and treatment of COVID-19. Specifically, the resolution declares that the coronavirus pandemic constitutes sufficient justification to grant compulsory licences for COVID-19-related technologies. Similarly, a Committee of the National Assembly in Ecuador passed a resolution requiring the Ecuadorian President and Minister of Health to provide free or affordable access to COVID-19-related preventative, diagnostic, and treatment technologies through the use of compulsory licences.
Justification of compulsory licensing
Due to the communicable nature of the virus, nations have to act fast and stop the spread or it may continue to mutate, and new strains would emerge which may render the vaccine useless. One of the major advantages of compulsory licensing is that it still gives room for remuneration to the inventors of the vaccine. Pharmaceuticals depend on IP for compensation of the time and resources exhausted in carrying out their R&D, and although their monopolistic rights would be limited, they would still be eligible for remuneration. This in turn secures the future of innovation as it still grants an incentive for these pharmaceuticals to continue inventing new medicine.
The downside of compulsory licensing
The use of compulsory licensing must meet certain requirements under the TRIPS Agreement. For example, the scope and duration of the licence must be limited to the purpose for which it was granted, and legal review should be made available for patent holders to use. In practice, compulsory licences can only be granted country by country and product by product.
Although TRIPS provides for “adequate remuneration” to be paid to the patent holder in consonance with the economic value, there is no definition provided for what adequate remuneration means and how to ascertain the economic value. Moreover, though granting compulsory licensing to domestic manufacturers would be an economical way to produce the vaccines or any other drug for covid-19 treatment, it is essential to consider that developing and least developed countries may not have the requisite infrastructure to manufacture, store, or transport such vaccines and drugs.
Also, the special procedures of using compulsory licences for exportation are very complex and quite expensive. Despite the opportunity to lower drug prices, many low-income countries tend to shy away from using compulsory licences for pharmaceutical products. Admittedly, some countries are bound by restrictions in bilateral relations such as free-trade agreements with provisions limiting the use of compulsory licences. However, many countries are not legally restricted from compulsory licensing but avoid doing so due to fears of trade retaliation like what the US threatened South Africa with in the early 2000s.
History also shows that some nations are reluctant to accept compulsory licensing. For example, Hungary did not permit compulsory licensing based on a public health crisis until the coronavirus outbreak last year. Following a legislative amendment, the Hungarian authority could now, in principle, grant a Hungarian pharmaceutical manufacturer a compulsory licence for the production and domestic distribution of any vaccine developed abroad. But what happens if the country where the vaccine patent is domiciled refuses to ratify or amend any laws allowing for compulsory licensing of its vaccine patents?
Even where compulsory licences are issued for patents, pharmaceuticals may institute an action against them, and continue to lobby for trade-based measures against governments that use them. For example, Gilead recently sued the Russian government for issuing a compulsory licence to manufacture ‘Remdesivir’, a drug used to treat Covid-19. However, the Russian Supreme Court found in favour of the Russian government. Lobbying against the Hungarian government was also carried out by Gilead for the compulsory licensing of their drug as they believe their IP rights are being infringed on.
The main issues surrounding compulsory licensing are the legalities which are attached to it and the non-consensual nature of the licensees towards the patent owners. Due to the inadequacies and impracticability of compulsory licences, a patent waiver was suggested by the WTO and backed by the United States finally after opposing South Africa and India’s proposal late 2020.
Patent waivers simply mean the owner of the invention waives their right of monopoly over the invention and cannot deter the public from making use of that invention.
During the Polio crisis, the creator of the vaccine, Jonas Salk, was said to have waived his patent rights over the vaccine. When asked who owns the patent, he said ‘There is no patent, could you patent the sun”? Based on this waiver, Israel was able to locally produce the vaccine and eradicate polio in their country.
This waiver can be done voluntarily like what Moderna has done; it could also be compulsory by the government refusing to grant patents to any invention for a certain period, usually during a public health crisis like what is currently being proposed by the United States. This is done pursuant to Article 27 of TRIPS which posits that members may exclude from patentability, the commercial exploitation of inventions which are necessary to protect public order or morality, including protecting human life or health. They may also exclude from patentability, diagnostic, therapeutic and surgical methods for the treatment of humans.
Justification for waiver of the vaccine patents
When patents are waived, it immediately enters the public domain. The implication of this is that there would be no legalities attached to it and any one can duplicate the invention. Although, the waiver by itself will not automatically result in widespread manufacturing, it may ease the complex rules revolving around IP and exports and give governments freedom to collaborate on technology transfers and exports without fearing trade-based retaliation. It will help reduce the dependence on any one country or region for medical products and mitigate the risks of export restrictions. With new variants emerging and some evidence that repeat vaccine boosters may be needed, the waiver will enable governments around the world to be prepared for a long-term response to Covid-19.
The downside of waiving vaccine patents
Making patents free of charge would not in itself be a satisfactory solution, as it would not compensate for the scarcer capacities and lack of know-how in less developed countries. This is also demonstrated by the example of Moderna, which has already announced its intention not to enforce the patent protection on its vaccine; however, the lack of technical know-how and resources would still be another obstacle around vaccine production. The world’s least developed countries, however, still enjoy a patent waiver on medicines, and this waiver has recently been extended to 2033; however, can these low-income countries successfully produce the medicine that is so required? Do they have the technology, resources and infrastructure needed for producing and storing these medicines?
A further concern is that some companies might start producing the medicine without the right technology and good manufacturing practice, which could result in low-quality vaccines, and such processes could lead to serious public health hazards.
Recommendation and Conclusion
The experience of covid-19 suggests that a re-examination of IP rights in the context of health emergencies is overdue. There is also need for an overhaul of the procedure surrounding compulsory licensing as it should be more flexible and put the interests of all parties into consideration.
On patent waivers which are seen as the more direct mechanism out of the two, implementation of a collaborative scheme between countries to pool resources and technological know-how would be seen as a great addition to the waiver as the major shortcoming of the waiver is the lack of capacity and knowledge by the low-income nations who would most benefit from the waiver. The waiver however is our best bet at these times as the virus has begun to mutate and as various strains are being unearthed, an accessible pool of knowledge would be needed to combat the new strains. This would preserve time, which is of essence right now, as pharmaceuticals would not have to start afresh in their research and may rather draw information needed from the existing pool.
Davidson Oturu is a Partner and head of the intellectual property and innovation practice group at AELEX; Dr. Obi Adigwe is the Director General of the National Institute for Pharmaceutical Research and Development, (NIPRD)