Context

  • The European Union, India, South Africa and the U.S. have announced that a compromise outcome is on the cards on the temporary IPR waiver proposal introduced in the World Trade Organization in October 2020.

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Background

Proposal for temporary IPR waiver

  • In October 2020, amidst the health emergency caused by the rapid spread of the COVID-19 pandemic and the shortages in the availability of affordable vaccines, medicines and other medical products, India and South Africa had tabled a proposal in the World Trade Organization (WTO).
  • Noting that the application and enforcement of intellectual property rights (IPRs) were found to be hindering or potentially hindering timely provisioning of affordable medical products to the patients, the proposal sought a temporary waiver for all WTO members on the implementation, application and enforcement of certain provisions of the Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement in relation to the “prevention, containment or treatment” of COVID-19.
  • The proponents argued that such a waiver would help in rapid scaling up of manufacturing globally and thus help ensure timely access to affordable medical products and would thus facilitate an appropriate response to COVID-19.
  • The main aspect of their argument for the waiver was based on the fact that when human lives are at stake, relevant medical products should be treated as global public goods.

Lack of progress on the proposal

  • Even after almost 18 months of the proposal, members of the WTO have not been able to finalize the “waiver proposal”.
  • Despite overwhelming support from developing countries, most advanced countries have opposed the proposal based on concerns over what effect this waiver could have on their pharmaceutical companies.

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Details

The proposal includes granting compulsory licences to interested companies/countries instead of a blanket IPR waiver.

Compulsory licensing

  • Compulsory licensing is when a government allows someone else to produce a patented product or process without the consent of the patent owner. It is one of the flexibilities in the field of patent protection included in the WTO’s agreement on intellectual property — the TRIPS Agreement.
  • Article 31 of the TRIPS Agreement lists a number of conditions for issuing compulsory licences.
    • Normally the person or company applying for a licence has to have tried, within a reasonable period of time, to negotiate a voluntary licence with the patent holder on reasonable commercial terms. Only if that fails can a compulsory licence be issued, and even when a compulsory licence has been issued, the patent owner has to receive adequate payment.
    • The scope and duration of the licence must be limited to the purpose for which it was granted, it cannot be given exclusively to licensees (e.g. the patent-holder can continue to produce).
    • Article 31(f) provides that the compulsory licences issued by any WTO member must be used “predominantly for the supply of the domestic market”.
  • The new proposal notes that given the current medical urgency, the condition of having to make efforts to obtain voluntary licences with the patent holders before granting compulsory licences on the patented products would be waived.
  • The proposal also provides that WTO members would be able to issue compulsory licences even if they do not currently have the provisions to issue them under their respective national patent laws.
    • India’s patent law allows for the grant of compulsory licences if patent holders charge high prices on the proprietary medicines in the exercise of their monopoly rights.
  • The proposal explicitly mentions that the above provisions could be only used by an “eligible member”, defined as a “developing country member” of the WTO that “had exported less than 10 percent of world exports of COVID-19 vaccine doses in 2021”. Thus the new proposal has an export restriction clause.
    • India’s share in global exports of vaccines stands at around 2.4%.

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Concerns with the new proposals

Exclusion concerns

  • While the proposal removes the export restriction under Article 31(f) of the TRIPS agreement, it still places export restrictions in the form of the eligibility criteria mentioned above.
  • The eligibility criteria defined in the proposal would lead to the exclusion of least developed countries like Bangladesh, which has a growing pharmaceutical industry.

Limited product coverage

  • Also, the new proposal is applicable to only vaccines as against the original waiver proposal which sought the inclusion of not only medicines, vaccines, and medical equipment but also the methods and the means of manufacturing the products necessary for the prevention, treatment, or containment of COVID-19.

Increased conditions

  • The new proposal has introduced additional conditions for using the compulsory licences, some of which are well beyond the developing country obligations under the TRIPS Agreement.
  • The new solution mandates notification of all patents covered under the compulsory, details of licensee, the quantity and export destination which was not necessary under the TRIPS provisions.

Doubts over efficacy of the solution

  • There are concerns over whether the compulsory licences would result in the desired outcome of helping increase vaccine production. Notably, under the compulsory licences framework, the transfer of technology is not ensured. This would make it difficult to scale up the production of COVID-19 vaccines, medicines, and medical devices in the developing world, thus constraining their availability at affordable prices.
    • Notably, only 14% of people in low-income countries have received at least one vaccine dose. The recent surge of COVID-19 infections in countries like China is a strong warning to the global community that the threat from COVID-19 still remains.

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