2021: A Changed IP Landscape for Defeating COVID-19

By January 28, 2021 COVID-19, TRIPS

New Year’s Day 2021 was a nail-biter.  Hope from the rollout of 95% effective COVID-19 vaccines by Pfizer, AstraZeneca, and Moderna seemed matched by despair from news reports about the rapid global spread of new variants of a deadly virus whose original version we are still struggling to bring under control.  The rapid spread of these variants has occurred despite lockdowns, border closures and a moribund transnational travel industry.  It reminds us that our fates in combatting and surviving this catastrophic pandemic remain undeniably intertwined.  Any solution necessarily must be international in fact and effect.

Critical Elements for a New Global Response

I believe innovation remains a critical element in an effective international solution to defeat this terrible killer.  There is little doubt of the continuing need for available, effective treatments. For example, in the United States wealthy Republicans such as Former President Trump and Former New Jersey Governor Chris Christie had ready access to a treatment “cocktail” that cured them in record time.  That treatment is not only prohibitively expensive, it is also unavailable to the general public.  With the death toll in the United States alone surpassing 420 million deaths, we cannot afford to relax or inhibit global innovation efforts, particularly when new and even more deadly variants of COVID-19 continue to appear.

Equally vital, however, is the need for additional vaccines, using different ingredients to reduce supply chain shortages, and even more critically, to create ones that neither require two doses, nor require storage at Artic temperatures.  Even though the Pfizer vaccine has a 95% effective rate, it needs to be stored at such low temperatures (-76° to -112° F) that distribution even in a technologically advanced country like the United States is problematic at best.

Even though innovation processes must be improved and protected, in my opinion, the most critical focus, at least in the short term, has to be on improving international production and distribution, and supply chains for treatments and vaccines, as well as their ingredients and required delivery devices.  One of President Biden’s first acts upon his inauguration last week was an executive order triggering the use of the Defense Production Act to mandate production  “to secure supplies necessary for responding to the pandemic.”  These supplies include low dead volume (or dead space) syringes that allow dispensers to squeeze an additional dose out of Pfizer distributed five dose vaccine vials.  Predictably when Pfizer discovered that its five dose vials contained six doses, it immediately announced plans to reduce the number of shipped vials under contract even though low dead volume syringes are in short supply.  Despite this shortage, the Food and Drug Administration under the Trump Administration approved Pfizer’s request to charge for the extra delivered doses whether they were successfully retrieved or not by changing the wording of its emergency approval to acknowledge the six dose delivery.  The ultimate impact will be a reduction in the amount of vaccines delivered by Pfizer under contract while still receiving the same amount of money.  In short, the cost of the vials is increased.

The Biden administration is reportedly in discussions to restrict such six dose credits to only vials shipped with low dead volume syringes.  Pfizer’s actions unfortunately illustrate why promises by pharmaceutical companies to provide cheaply priced vaccines to assure access for all have been met with skepticism.

The critical need for equitable distribution of COVID-19 vaccines remains a continuing concern, both domestically and internationally. In his 200 page National Strategy for the COVID-19 Response and Pandemic Preparedness, released January 21, 2021, President Biden provides as critical goals for combatting COVID-19 globally surge the international COVID-19 public health & humanitarian response” and “strengthen the humanitarian response.”  His letter to WHO not only retracted Former President Trump’s notice of withdrawal, but also reaffirmed  WHO’s “crucial role in the world’s fight against the deadly COVID-19 pandemic as well as countless other threats to global health and health security.”

This recommitment to multinational solutions is crucial in effectively combatting COVID-19.  Yet as we try to cope with the new reality of treatment hope and distribution despair, COVID-19 has already altered, I believe permanently, the international IP landscape in which the resolutions of these deadly problems will be created.  The high protectionist norms set by the TRIPS Agreement have already been seriously eroded by domestic and international efforts to permit the production and distribution of the IP protected treatments and vaccines to combat this killer virus.

Not the Same TRIPS Protectionist Model

Post-pandemic, the protectionist TRIPS-plus international IP landscape is no longer “the norm.” To the contrary, both domestic and international efforts have eroded the power of that norm.

A proposal jointly tabled by South Africa and India in October 2020 to waive “the implementation, application and enforcement of Sections 1, 4, 5, and 7 of Part II of the TRIPS Agreement [dealing with copyrights, industrial designs, patents, and trade secrets, respectively] in relation to prevention, containment or treatment of COVID-19” is emblematic of a growing perception that current international norms are insufficient to deal with the challenges of combatting COVID-19. (Article 12) Under the joint proposal the requested waiver would continue “until widespread vaccination is in place globally, and the majority of the world’s population has developed immunity.”  The precise duration of the waiver was left to TRIPS Council to decide. (Article 13)

At its heart, this waiver proposal represents a growing view that neither TRIPS flexibilities under the Doha Declaration on Public Health and TRIPS nor that adoption of Article 31bis and its expansion of compulsory licenses are sufficient to the meet the pressing global demand for treatment. Procedural rules with regard to the role of such waivers under the WTO and an unforgiving calendar prohibited the adoption of the proposal by its December 31st deadline.  But the proposal is not dead.  It remains under active consideration.  So do the issues raised in the debate engendered by the question whether current changes in the IP landscape are sufficient to meet the critical demands for rapid equitable distribution of effective COVID-19 treatments and vaccines.  Yet even without the immediate adoption of the TRIPS waiver, there is little doubt that the protectionist view of IP rights in the face of the pandemic has eroded, I believe, permanently.

Efforts to reduce IP protectionism began even before the Pandemic. For example, the U.S. Congress rejected provisions in the US-Canada-Mexico Free Trade Agreement (USMCA) that sought to increase IP protections for biomedical innovations.  Similarly, the Comprehensive and Progressive Agreement for the TransPacific Partnership suspended increased patent protections previously negotiated as part of the TransPacific Partnership.

Post-pandemic, the Regional Comprehensive Economic Partnership, signed by 10 Asian countries, Australia, Brunei, Cambodia, China, Indonesia, Japan, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, South Korea, Thailand, and Vietnam, on November 15, 2020, represents the largest global trading block to date governed by a Free Trade Agreement, excluding TRIPS.  RCEP continues the trend toward what I see as a more balanced access approach to IP protection under TRIPS.  In clear language, the RCEP recognizes that TRIPS continues to be a critical multilateral instrument for the protection of intellectual property rights. It states that in the event of any “inconsistency” between TRIPS and RCEP, TRIPS “shall prevail to the extent of the inconsistency.” (Article 11.3) Yet the RCEP also stresses that a critical objective is that “the protection and enforcement of intellectual property rights contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations.” (Article 11.1.2(emphasis added))

The RCEP places access for purposes of public health at the forefront of the necessary protection required to support innovation.  In a separate Article that reaffirms the importance of TRIPS flexibilities acknowledged in the Doha Declaration, it also stresses “that this Chapter can and should be interpreted and implemented in a manner supportive of each Party’s right to protect public health and, in particular, to promote access to medicines for all.” (Article 11.8.1(c) (emphasis added)).  In further support of this more balanced approach to IP rights and access for purposes of the protection of public health, the RCEP allows individual members the right to establish their own exhaustion regimes for all IP rights. (Article 11.6)  It emphasizes both the need for an expansive application of Articles 31 and 31bis (Article 11.39) and contains a “patent fair use” provision identical to TRIPS Article 30. (Article 11.38)

These efforts to strengthen a country’s right to secure access to IP-protected drugs and other public health goods and services mirror individual country responses last year to the pandemic that included creating rights to grey market imports,  compulsory licenses, seizure of necessary materials and goods to combat the pandemic, open access/open license software for contact tracing and indemnification for IP infringements.  Many of these efforts are not limited to dealing with the current pandemic but are instead broadly worded to deal with “national health emergencies.”

These developments do not mean that enough has been done to meet the current demands in the war against COVID-19.  But the change in tenor means that significant inroads against the abuses that have made drugs patents so toxic from a public health care perspective can, and should, be made now. Because the last time we saw such an international playing field so open to reigning in the harms that IP excesses can cause was in response to the AIDS pandemic.  South Africa led the way with its Medicines and Related Substances Control Amendment Act of 1997 that changed the rules for grey market drugs in the 1990s.  South Africa’s waiver proposal could similarly serve as a starting point for advancing IP-based public health reforms in the 21st Century.

Prioritizing Issues in the Next Phase of the Battle

The new phase of the war against COVID-19 – with effective vaccines created and theoretically available – places the focus squarely on production and distribution issues.  Consequently, there are three critical issues that should be at the forefront of the current international response.  The first is production barriers.  We need enforceable, compulsory responsibilities for IP holders to provide the necessary information, data, trade secrets, and technology for efficient third party production of the required doses to meet domestic demands.  Harnessing the power of TRIPS Article 31bis to permit such licensing is a good first step.  Given the inability of current vaccine producers to meet their contractual obligations in a timely fashion, there is little doubt such need exists.  As I have said before, however, a compulsory license without the necessary data to ensure efficacy and safety in their production makes such license a non-starter.  Even the WTO in its recent report on Developing and Delivering COVID-19 Vaccines Around the World recognizes that quality control and enhanced protection against counterfeits is a critical step in securing the drug supply chain.Second, data exclusivities that prevent the entry of competitive products into the market must end where domestic needs are not being met.  The recently signed United Kingdom-European Union Trade and Cooperation Agreement contains a data exclusivity provision that may make sense for two countries’ seeking to maintain their respective competitive advantages against each other. Article IP.35 provides strong market exclusivities to the first comer.  But it is not a model for how exclusivities related to drugs for which a desperate and potentially deadly domestic need could be filled.

Third, we have to stop hoping drug pricing issues will go away.  Even in the United States, despite a flurry of activity pre-COVID regarding U.S. drug companies’ non-transparent and abusive pricing policies, no change has occurred.  Worse, there are reports that even for COVID-19 treatments whose research is being funded by the U.S. government, such as the $1 billion dollars provided to Pfizer, there is no price-break for such actions. To the contrary, the United States is reportedly paying more for the Pfizer vaccine, than other developed countries, including the United Kingdom.  Yet the pricing models these companies have published virtually assure that most middle income and certainly all low income countries will be unable to meet even these reduced economic demands.

As I have argued elsewhere, we need new transparent models for establishing fair pricing regimes for compulsory licenses for patent protected medical treatments supplied to fight COVID-19.  Innovation requires funding.  That funding requires fair compensation to make up for any necessary shortfall that would arise if companies could only rely on government and/or NGO funding.  It’s time to adopt a uniform and predictable formula for determining adequate compensation tied to R&D/production costs and reasonable returns on investment.  We need to start working on that now to combat this current pandemic, and whatever national emergencies arise in the future.

In laying out these suggestions, I realize there will be a strong push back from IP protectionists.  I am not suggesting the elimination of IP rights, even to fight this pandemic.  But I have always advocated for rational IP-protection.  There is no better time to reach that goal when the altered international IP regime of 2021 is finally ready to deal with the issue.  Lives depend on it.  Any further delay in dealing with these issues will only result in a mounting death toll.  None of us can afford that.

About the Author

  • TradeRx Report Moderator
    Professor Emeritus of Law and Former Director of the Center for Intellectual Property, Information and Privacy Law at UIC John Marshall Law School in Chicago, Illinois.