This policy brief, including the following “Introduction and Executive Summary,” comes from Eric M. Solovy.
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Introduction and Executive Summary
On June 17, 2022, in the early morning hours of the final day of the World Trade Organization’s (“WTO”) 12th Ministerial Conference, the Members of the WTO adopted a waiver of the Agreement on Trade Related Aspects of Intellectual Property Rights (“the TRIPS Agreement”), commonly known as the “TRIPS Waiver for COVID-19 Vaccines” or the “TRIPS Waiver.”[1] The TRIPS Waiver, with its primary focus on compulsory licensing of patents (i.e., licensing without the authorization of the patent owner) that are “required for the production and supply of COVID-19 vaccines,” reflected a compromise position among WTO Members.[2] The initial proposal advanced by India and South Africa, on October 2, 2020, would have gone much further, authorizing WTO Members to waive the substantive and enforcement-related provisions of the TRIPS Agreement not only for patents but also for copyrights, industrial designs, trade secrets, and test data protection; moreover, the original proposal would have gone far beyond COVID-19 vaccines, to cover intellectual property (“IP”) “in relation to prevention, containment or treatment of COVID-19.”[3]
The debate over the TRIPS Waiver began at a time when the development of the first COVID-19 vaccines was already nearing completion. To wit, the Pfizer-BioNTech COVID-19 Vaccine received emergency use authorization from the U.S. Food & Drug Administration (“FDA”) on December 11, 2020 – i.e., just two months after India and South Africa had submitted their original TRIPS waiver proposal.[4] Yet, at the same time that certain countries began attacking IP rights as an obstacle to addressing the pandemic, it was already well understood that the rapid development of COVID-19 vaccines, therapeutics, and diagnostics would not have been possible but for the billions of dollars in private investments, over the course of many years, in technologies that were incentivized by strong IP protection.[5] It is no coincidence that the first COVID-19 vaccines were developed in industrialized countries that offer strong IP protection – protection that provided the incentives necessary for private investors to take the huge risks required when researching revolutionary technologies.[6]
For example, although mRNA was discovered in 1961, it took many years of research, at huge expense and great risk, to create the mRNA-based technology used in COVID-19 vaccines.[7] BioNTech’s Dr. Sahin and Dr. Tureci, a married couple, had been working on mRNA technology for more than 25 years, without any successful commercial applications prior to developing their COVID-19 vaccine.[8] To take another example, before going public in 2018 with its mRNA technology, Moderna had raised USD 2.6 billion in investments and partnership funding, along with USD 600 million raised in an IPO.[9] At the time of its IPO, Moderna was spending hundreds of millions of dollars a year, reporting in September 2018 that it “had an accumulated deficit of $865.2 million.”[10] This scale of private investment in a venture as risky as these ground-breaking new technologies would simply have been impossible but for the upside potential offered by the promise of IP rights over any resulting therapeutics or vaccines and, in turn, the potential to recoup returns on those investments. Further, the assurance that IP rights would be honored and, where necessary, enforced, in multiple countries enabled the creators of vaccines to enter into voluntary licensing agreements with enterprises around the world for the manufacture and distribution of the vaccines, making them rapidly available throughout the world.[11]
Since the inception of the TRIPS Agreement nearly thirty years ago, there have been voices calling for its dilution. The ongoing COVID-19 pandemic amplified some of these voices. Ignoring the role of IP in the creation of COVID-19 vaccines (and diagnostic and therapeutic products), many governments bought into the narrative claims that protection of IP rights obstructs access to important vaccines and therapeutic products. In making this argument, they conveniently put to the side the multitude of trade, regulatory and logistical barriers that clearly prevented vaccines from quickly going into arms in a number of developing countries.[12] At the same time, some have argued that certain countries viewed the pandemic, and a TRIPS waiver in particular, as a strategic opportunity to get access to next generation technologies that would provide benefits to their domestic economies long after the COVID-19 pandemic ends.[13]
Upon the announcement and public release of the terms of the TRIPS Waiver, the reactions were, not surprisingly, mixed. They were generally aligned with the long-term views of international IP rights that had been consistently expressed by countries, activists, and industry since the inception of the TRIPS Agreement.
For those countries and activists that have long advocated against IP protection for pharmaceutical products, they characterized the TRIPS Waiver as a compromise that did not go far enough but that nevertheless served to validate (in their view) that they had been right all along about the relationship between IP protection and global health. For example, Médecins Sans Frontières (“MSF”) expressed disappointment that the scope of the TRIPS Waiver was not as broad as the original proposal but then went on to question whether patent protection is ever appropriate for pharmaceutical products, calling “on governments to take concrete steps to rethink and reform the biomedical innovation system to ensure that lifesaving medical tools are developed, produced and supplied equitably where monopoly-based and market-driven principles are not a barrier to access.”[14]
For those who, in record time, created and produced the revolutionary vaccines, diagnostics, and therapeutics that have enabled families and businesses around the world to begin returning to normal, the TRIPS Waiver was understood as a threat to IP rights, to the incentives they create, and ultimately, to innovation itself. As the U.S. Chamber of Commerce stated in advocating against a TRIPS waiver:
Waiving intellectual property rights would only hobble the innovation that is critical to improving lives and raising living standards globally. If enacted, this move would set an unfortunate precedent and may limit innovative companies’ ability to devote unprecedented resources to quickly discover and deliver solutions for the next global crisis, be it pandemic, food security, or climate-related.[15]
There are currently calls for a further expansion of this waiver, both in terms of duration and product scope. As explained below, any expansion of the waiver could deal an additional blow to incentives to biopharmaceutical innovation, which would, in turn, compromise our ability to deal with future public health emergencies (as well as possible future variants of COVID-19).
When WTO Members gather in Geneva, Switzerland, to decide, pursuant to the direction in paragraph 8 of the TRIPS Waiver, whether the waiver should be “extend[ed] to cover the production and supply of COVID-19 diagnostics and therapeutics,” it is important to take a step back from the public rhetoric and evaluate the TRIPS Waiver in view of its actual text, as well as the text of the provisions of the TRIPS Agreement that it waives and/or purports to “clarify.”
In Part II, below, this paper briefly discusses the evolution of global IP protection and why a multilateral treaty such as the TRIPS Agreement is absolutely essential to incentivizing R&D in an increasingly globalized economy. Part III then offers a summary of the legal content of the TRIPS Waiver. Part IV places the TRIPS Waiver into its proper context in the WTO system, explaining the legal nature of a waiver as a matter of WTO law.
Next, in Part V, I turn to the potential impact of the TRIPS Waiver. After first noting that no WTO Member has given notice of an intent to make use of the TRIPS Waiver since its inception over five months ago, I explain (in Part V(A)) that, by creating uncertainty as to the value of pharmaceutical patents, the TRIPS Waiver may serve to decrease the incentives to innovation created by the patent system, to the detriment of global public health. Part V(B) highlights how, in contrast to the mechanism set out in Article 31bis of the TRIPS Agreement, the failure to include tracking, tracing, and detailed transparency requirements in the TRIPS Waiver could lead to diversion of vaccines, which would be counterproductive to the stated intent of the TRIPS Waiver.
Part V(C) considers the potential harm that may arise if WTO Members rely on one of the so-called “existing good practices,” as referenced by the TRIPS Waiver, for determining remuneration to a patent owner whose patent is compulsorily licensed. In Part V(D), I consider the potential impact of the provision of the TRIPS Waiver addressing regulatory data protection, a type of IP right distinct from patents which provides important incentives to bring new pharmaceutical technologies to market. Part V(E) considers the public debate, particularly in the United States, surrounding the possible impact of the TRIPS Waiver on the global competitiveness of certain WTO Members.
Finally, Part VI considers how the proposed expansion of the product scope of the TRIPS Waiver to COVID-19 diagnostics and therapeutics (as not yet defined) could serve to create uncertainty for a much larger group of patent owners and, in turn, further reduce incentives for innovation, to the detriment of global public health. It would do so at a time when R&D is rapidly progressing in preparation for new variants of COVID-19 and ultimately for the next pandemic.
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[1] See Ministerial Decision on the TRIPS Agreement, WTO Doc. WT/MIN(22)/30 (Jun. 22, 2022), available at: https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/WT/MIN22/30.pdf&Open=True (“TRIPS Waiver”).
[2] Id. at ¶ 1.
[3] TRIPS Council, Communication to the TRIPS Council from India and South Africa, Waiver from Certain Provisions of the TRIPS Agreement for the Prevention, Containment and Treatment of COVID-19, Annex at ¶ 1, WTO Doc. IP/C/W/669 (October 2, 2020).
[4] Press Release, U.S. Food & Drug Admin., FDA Approves First COVID-19 Vaccine(Aug. 23, 2021), available at https://www.fda.gov/news-events/press-announcements/fda-approves-first-covid-19-vaccine#:~:text=The%20first%20EUA%2C%20issued%20Dec,trial%20of%20thousands%20of%20individuals.
[5] Eric M. Solovy, The Doha Declaration at Twenty: Interpretation, Implementation, and Lessons Learned on the Relationship Between the TRIPS Agreement and Global Health, 42 Nw J. Int’l L. & Bus. 253 (2022), at 289-296, available at https://jilb.law.northwestern.edu/issues/?vol=vol%2042%20-%20issue%202.
[6] See Bojan Pancevski & Jared Hopkins, How Pfizer Partner BioNTech Became a Leader in Coronavirus Vaccine Race, Wall Street Journal (Oct. 22, 2020), https://www.wsj.com/articles/how-pfizer-partner-biontech-became-a-leader-in-coronavirus-vaccine-race-11603359015.
[7] See Elie Dolgin, The Tangled History of mRNA Vaccines, Nature (Sept. 14, 2021), https://www.nature.com/articles/d41586-021-02483-w.
[8] See Pancevski & Hopkins, supra note 6; see also David Gelles, The Husband-and-Wife Team Behind the Leading Vaccine to Solve Covid-19, New York Times (Nov. 10, 2020), https://www.nytimes.com/2020/11/10/business/biontech-covid-vaccine.html.
[9] See Moderna, Inc., U.S. Securities and Exchange Commission filing (Amendment No. 1 to Form S-1 Registration Statement), November 28, 2018, at i, 1.
[10] Id. at 20.
[11] See, e.g., Guilherme Cintra, Is an extension of the TRIPS waiver needed for COVID-19 tools?, Global Health Matters, IFPMA (Oct. 15, 2022), available at https://www.ifpma.org/global-health-matters/is-an-extension-of-the-trips-waiver-needed-for-covid-19-tools/; see also COVID-19 vaccines and treatments output continues apace, IFPMA (Apr. 13, 2022), available at https://www.ifpma.org/resource-centre/covid-19-vaccines-and-treatments-output-continues-apace-as-health-systems-and-last-mile-hurdles-remain-collective-stumbling-blocks/ (“The COVID-19 vaccine manufacturing scale-up has seen 372 partnerships forged, of which 88% (329) include technology transfer or fill & finish. 51 manufacturing and production agreements were made in developing countries (LICs and LMICs).”).
[12] See Indicative List of Trade-Related Bottlenecks and Trade-Facilitating Measures on Critical Products to Combat COVID-19, WTO Information Note (July 20, 2021), available at https://www.wto.org/english/tratop_e/covid19_e/bottlenecks_report_e.pdf.
[13] See Shayerah I. Akhtar, Cong. Rsch. Serv., R47231, World Trade Organization: “TRIPS Waiver” for COVID-19 Vaccines (2022), at 13.
[14] Lack of a real IP waiver on COVID-19 tools is a disappointing failure for people, Médecins Sans Frontières (Jun. 17, 2022), available at https://www.msf.org/lack-real-ip-waiver-covid-19-tools-disappointing-failure-people (asserting that “we are disappointed that a true intellectual property waiver, proposed in October 2020 covering all COVID-19 medical tools and including all countries, could not be agreed upon, even during a pandemic that has claimed more than 15 million people’s lives.”).
[15] Press Release, U.S. Chamber of Commerce, Proposal at WTO to Waive Intellectual Property Would Set Harmful Precedent (Jun. 15, 2022), available at https://www.uschamber.com/intellectual-property/proposal-at-wto-to-waive-intellectual-property-would-set-harmful-precedent; see also, e.g., Press Release, PhRMA, PhRMA Statement on the TRIPS Waiver Agreement (Jun. 17, 2022), available at https://phrma.org/resource-center/Topics/Trade/PhRMA-Statement-on-the-TRIPS-Waiver-Agreement (stating that the COVID-19 TRIPS Waiver “undermine[s] the very intellectual property rights that enabled hundreds of collaborations to produce the COVID-19 vaccines on a global scale.”).