WTO says no to IP – they allow compulsory licensing which infringes on patent rights

In a sign of their increasing frustration with global efforts to ensure that all people everywhere will have access to COVID-19 vaccines, several developing countries have asked other members of the World Trade Organization (WTO) to join them in a sweeping waiver of the intellectual property (IP) rights relating to those vaccines. Their waiver request raises anew the recurring debate within the WTO over the right balance between the protection of IP rights and access in poorer countries to urgently needed medicines. But the last thing the WTO needs is another debate over perceived trade obstacles to public health. Unless WTO members reach a consensus, the multilateral trading system may be further complicated by a delay like that in resolving the two-decades-old dispute between developed and developing countries over the compulsory licensing and generic distribution of HIV/AIDS drugs. A new and contentious “North-South” political struggle definitely would not be in the interest of the developed countries, the developing countries or the pharmaceutical companies, or the WTO. Certainly it would not be in the interest of the victims and potential victims of COVID-19. Background In early October 2020, India and South Africa asked the members of the WTO to waive protections in WTO rules for patents, copyrights, industrial designs, and undisclosed information (trade secrets) in relation to the “prevention, containment or treatment of COVID-19 … until widespread vaccination is in place globally, and the majority of the world’s population has developed immunity.”1 India and South Africa want to give all WTO members freedom to refuse to grant or enforce patents and other IP rights relating to COVID-19 vaccines, drugs, diagnostics, and other technologies for the duration of the pandemic. In requesting the waiver, India and South Africa have argued that “an effective response to the COVID-19 pandemic requires rapid access to affordable medical products including diagnostic kits, medical masks, other personal protective equipment and ventilators, as well as vaccines and medicines for the prevention and treatment of patients in dire need.” They have said that “as new diagnostics, therapeutics and vaccines for COVID-19 are developed, there are significant concerns, how these will be made available promptly, in sufficient quantities and at affordable prices to meet global demand.”2 Later in October, the members of the WTO failed to muster the required consensus to move forward with the proposed waiver. The European Union, the United States, the United Kingdom, and other developed countries opposed the waiver request.3 One WTO delegate, from the United Kingdom, described it as “an extreme measure to address an unproven problem.”4 A spokesperson for the European Union explained, “There is no evidence that intellectual property rights are a genuine barrier for accessibility of COVID-19-related medicines and technologies.”5 In the absence of a consensus, WTO members have decided to postpone further discussion of the proposed waiver until early 2021. Balancing IP Rights and Access to Medicines Not New to WTO This waiver controversy comes nearly two decades after the end of the long battle in the multilateral trading system over access to HIV/AIDS drugs. At the height of the HIV/AIDS crisis at the turn of the century, numerous countries, including especially those from sub-Saharan Africa, could not afford the high-priced HIV/AIDS drugs patented by pharmaceutical companies in developed countries. Having spent billions of dollars on developing the drugs, the patent holders resisted lowering their prices. The credibility of the companies, the countries that supported them, and the WTO itself were all damaged by an extended controversy over whether patent rights should take precedence over providing affordable medicines for people afflicted by a lethal disease. Article 8 of the WTO Agreement on the Trade-Related Aspects of Intellectual Property Rights (the TRIPS Agreement) provides that WTO members “may, in formulating or amending their laws and regulations, adopt measures necessary to protect public health … provided that such measures are consistent with the provisions of this Agreement.” In similar vein, Article 7 of the TRIPS Agreement provides that the “protection and enforcement of intellectual property rights” shall be “in a manner conducive to social and economic welfare.”6 It can be maintained that these two WTO IP rules are significantly capacious to include any reasonable health measures that a WTO member may take during a health emergency, such as a pandemic. Yet there was doubt among the members during the HIV/AIDS crisis about the precise reach of these provisions. As Jennifer Hillman of the Council on Foreign Relations observed, ordinarily the “inherent tension between the protection of intellectual property and the need to make and distribute affordable medicines” is “resolved through licensing, which allows a patent holder to permit others to make or trade the protected product—usually at a price and with some supervision from the patent holder to ensure control.”7 But, in public health emergencies, it may be impossible to obtain a license. In such cases, “compulsory licenses” can be issued to local manufacturers, authorizing them to make patented products or use patented processes even though they do not have the permission of the patent holders.8 After years of debate, WTO members clarified in the Doha Ministerial Declaration in November 2001 that each WTO member “has the right to grant compulsory licenses and the freedom to determine the grounds upon which such licenses are granted.”9 In August 2003, WTO members followed up on the 2001 declaration by adopting a waiver that allows poorer countries that do not have the capacity to make pharmaceutical products—and thus cannot benefit from compulsory licensing—to import cheaper generic drugs from countries where those drugs are protected by patent.10 In such a case, both the importing and exporting countries are excused from what would otherwise be their obligations under the TRIPS Agreement. This waiver was transformed into an amendment in the WTO IP rules in 2017.11 Compulsory licensing of medicines is not popular with private drug manufacturers because it is a derogation from the customary workings of market-based capitalism. However, as these actions by WTO members in 2001, 2003, and 2017 illustrate, compulsory licensing is not a derogation from the balance struck by the members of the WTO between protecting IP rights and ensuring access to essential medicines. Rather, it is a crucial part of that balance. The balance struck in the WTO treaty includes the option of compulsory licensing during health emergencies. Does a Novel Virus Present Novel Issues? Now comes the COVID-19 crisis. In the debate over the proposed COVID-19 waiver, mostly we have heard the usual arguments, all of them reminiscent of the HIV/AIDS debate. The pharmaceutical companies in the global vaccine chase have been quick to express their oppositionto the proposed waiver of IP rights for the pandemic’s duration. They have warned that allowing their COVID-19 vaccines to be copied without their permission through recourse to compulsory licensing “would undermine innovation and raise the risk of unsafe viruses.”12