Waiving COVID-19 vaccine patents is only the first step; need to develop production capacity and eliminate export controls on raw materials and equipment as well

Submitted by Patricio V. Marquez on Sat, 05/08/2021 - 05:27 PM

Waiving COVID-19 vaccine patents is only the first step; need to develop production capacity and eliminate export controls on raw materials and equipment as well

COVID-19 vaccines

Patricio V. Marquez and Toluwalola Kasali

The announcement early this week that the United States Government backs a short-term waiver to the TRIPS Agreement to loosen intellectual property restrictions on COVID-19 vaccines has dominated news reports across the world.  This is an important precedent amidst the pandemic, although the support of the European Union, the United Kingdom, Japan, and other rich countries is also needed to reach a negotiated consensus at the World Trade Organization (WTO).

While it is clear that vaccination for all is the way out of the pandemic, we need to be careful not to be misled by the expectation that the proposed short-term TRIPS waiver will immediately result in an abundant supply of vaccines to meet the vaccines and vaccination needs worldwide.  

In this post, we examine various elements related to this complex issue to shed some light on the discussion.  We look at compulsory licensing, the opportunities and challenges, the joint proposal of South Africa and India for the temporary waiver for COVID-19, the United States position, and critical production and supply aspects of vaccines.

The DOHA Declaration

The DOHA Declaration on the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement and Public Health was adopted in 2001 in recognition of the gravity of the public health problems afflicting many developing and least-developed countries, especially those resulting from HIV/AIDS, tuberculosis, malaria and other epidemics. The Agreement specifically stressed the need to be part of the wider national and international actions to address these problems.

The Declaration stated that while it is recognized that Intellectual Property (IP) protection is important for the development of new medicines, it also recognizes the concerns about its effects on prices. Therefore, in the public interest, the DOHA Declaration in Paragraph 4 reaffirmed WTO members' rights to protect public health and, in particular, promote access to medicines for all. In this regard, it reaffirmed WTO members' rights to use the provisions in the TRIPS Agreement which provide flexibility for such purposes as promoting access to medicines for all.

The TRIPS flexibilities include compulsory licensing, parallel importation, public non-commercial use license (government use), least-developed countries' pharmaceutical measures, and research exceptions.

The still evolving COVID-19 pandemic  

The world is currently facing the largest public health crisis in our lifetime, with a toll, as of early May 2021, of more than 155 million confirmed cases and 3 million deaths. As new variants of the virus are detected, countries such as Brazil and India, grapple with a massive surge in COVID-19 cases. New COVID-19 waves are also enveloping other developing countries across the world, ranging from Laos to Thailand in Southeast Asia, and those bordering India such as Bhutan and Nepal, to Uruguay, a country that was lauded as a model for keeping the coronavirus under control, and that now has one of the highest death rates in the world, and Argentina, Colombia and Peru, where the daily tallies of the dead have hit records in recent days. 

This tragedy is placing severe strain on these countries’ health-care systems, and is underpinning the urgency to scale up vaccine manufacture and supply.  This will help ease supply shortages currently being faced globally, which are disproportionately affecting developing countries-- by the end of April 2021, only 1.2 billion vaccine doses had been produced worldwide,  an amount nowhere close to the 10-15 billion doses needed to stop the spread of the virus. As ominously observed in a recent article by Nobel Prize Laurate in Economics, Joseph Stiglitz’s and his co-author, Lori Wallach, at this rate, hundreds of millions of people in developing countries will remain unimmunized at least until 2023, risking a prolongation of the pandemic.  

Currently, there is also a large disparity in access to vaccines and vaccination rates between developed and developing countries. According to the World Health Organization (WHO), more than 700 million vaccine doses have been administered globally; over 87 percent have gone to high-income or upper-middle-income countries, while low-income countries have received just 0.2 percent. The  WHO has stated that no one is safe with a fast-moving pandemic unless everyone is safe. It is, therefore, in the public's interest that the COVID-19 pandemic be brought under control as quickly as possible by making vaccines accessible to all countries.  However, there are significant concerns about how sufficient quantities of vaccines will be made available to all, rapidly, and at affordable prices as intended by the Declaration.

TRIPS Flexibility: What is compulsory licensing?

Flexibilities were incorporated into the WTO TRIPS Agreement to pursue public health objectives. Article 31 of the TRIPS Agreement refers to compulsory licensing – which allows a  government to license the use of a patented product or process to a third party without the consent of the patent-holder. The license is issued under certain conditions, including the need to demonstrate prior (unsuccessful) negotiations with the patent owner for a voluntary license and the payment of adequate remuneration to the patent holder. However, in situations of national emergencies and other circumstances of extreme urgency like the COVID-19 pandemic, some requirements can be waived to accelerate the process. In applying this provision, each member state has the right to grant compulsory licenses and the freedom to determine the grounds upon which such licenses are granted.

The provision for compulsory licensing created a limitation for countries with insufficient or no manufacturing capacity for pharmaceuticals.  Therefore, the TRIPS Agreement was amended to provide for a special compulsory licensing mechanism that allowed for production in one country for export to meet the public health needs of one or more other countries. It enables countries unable to manufacture pharmaceuticals to obtain cheaper copies produced under compulsory licenses elsewhere if necessary. 

Are there benefits and limitations to invoking compulsory licensing?

Compulsory licensing is formally recognized in the TRIPS Agreement and needs to be invoked on a country-by-country basis for each patented invention and enabled in national legal frameworks and regulations.  Therefore, no "globally accepted" compulsory license can be adopted towards the global COVID-19 response.  In the case of COVID-19 mRNA vaccines, it is also important to keep in mind that because these vaccines have more than 100 components worldwide, many with some form of IP protection, coordinating compulsory licenses between countries for this supply chain would be very difficult.  


So, what are the perceived benefits and limitations of adopting this measure?  In the WTO TRIPS Council Meeting of June 2017, an excerpt from the statement by India showed compelling benefits related to the treatment of HIV/AIDS:

“During the 1980s and 1990s, antiretroviral medicines used to treat HIV/AIDS were priced beyond the reach of most people who needed them in developing countries. Countries like Brazil, Thailand, South Africa, and others have used flexibilities under the TRIPS Agreement, including compulsory licenses to bring down the price by increasing the supply of generic ARV medicines for a fraction of the price of the patented equivalents. Indian generic companies, especially CIPLA, played an important role by announcing in early 2001 that triple therapy could be manufactured for less than a dollar per day, as compared to the price of standard triple therapy at US$ 10,000 per patient per year. Indian generic companies made ARV medicines accessible to all those who needed the drugs but had previously not been able to afford them”.

Regarding limitations, an excerpt from the statement by South Africa at the WTO TRIPS Council Meeting of June 2017 revealed that:

“Many governments have not used the flexibilities available under the TRIPS Agreement for various reasons, such as capacity constraints or political pressure from states and corporations, as mentioned in the UN Secretary General's High-Level Panel Report on Access to Medicines. Moreover, even where some developing countries used the flexibility available to them under the TRIPS Agreement to address public interest objectives through measures that are fully consistent with the TRIPS Agreement, these attempts have been challenged legally and politically. Political and economic pressure placed on governments to forgo the use of TRIPS flexibilities violate the integrity and legitimacy of the system of legal duties and rights created by the TRIPS Agreement as reaffirmed by the Doha Declaration”.

As a result, the more countries that invoke legally allowable measures, including compulsory licensing, to achieve public health objectives, the less likely it becomes that governments of developed nations can put political and economic pressure on the group to forgo the use of TRIPS flexibilities. 

The temporary waiver for COVID-19: Joint proposal of South Africa and India

A proposal by India and South Africa requests to WTO to waive certain provisions of the TRIPS Agreement to support the COVID-19 pandemic response. The proposal recognizes that other intellectual property rights may also hinder rapid access to affordable medical products beyond patents. In addition, it states that many countries, especially developing countries, may face institutional and legal difficulties when using flexibilities available in the TRIPS Agreement. Specifically, it raises particular concern for countries with insufficient or no manufacturing capacity and the cumbersome and lengthy process for the import and export of pharmaceutical products. It, therefore, calls for the WTO Members to agree to waive some of the obligations under the TRIPS Agreement on the protection and enforcement of patents, copyright, and related rights, industrial designs, and protection of undisclosed information during the COVID-19 pandemic.

What is the problem: Developed vs. Developing countries?

Pharmaceutical companies invest in research and development, testing, and approval processes to develop new life-saving medications. These companies take risks for both losses and successes, and they do this with the intention that in the event of a successful drug, they will profit from its success through their patent as well as recoup all research & development costs and potentially make up for previous losses. This, they say, is an essential incentive for continued innovation.

Developed countries in the Organization for Economic Cooperation and Development (OECD) are major critics of the joint proposal by India and South Africa and have blocked negotiations at the WTO. These include the European Union, the United States (recently made a U-turn and backed the proposal), and Switzerland, which are home to major pharmaceutical companies. Ironically, these countries are also part of the high-income countries that have secured a majority of the available vaccines. They argue that protecting IP rights boosts research and innovation and that waiving IP rights does not address the manufacturing and distribution capacity problems.

The current vaccine production capacity does not appear to be on track to meet global demand. Therefore, having more countries across the developed and developing world manufacturing more vaccines potentially will help move the needle, assuming that capacity is already in place and access to critical raw materials is not hindered by trade bottlenecks. For example, the Serum Institute of India (SII), which received a voluntary license, is now the world's largest vaccine manufacturer by volume, according to The Vaccine Alliance.

It is also important to state that some pharmaceutical companies received government grants - taxpayers' money - as part of the financing to develop COVID-19 vaccines. Therefore, it is reasonable to ask that society also benefits from vaccine discoveries financed with the support of taxpayer funding and academic scientists. Indeed, as noted in Jeffrey Sachs’s article, key scientific breakthroughs of mRNA vaccines were achieved by two researchers working under NIH grants at the University of Pennsylvania in the 1990s and early 2000s, and their pioneering work relied on a network of academic researchers funded by the US National Institutes of Health (NIH).  The University of Pennsylvania still owns key patents that have been sub-licensed to BioNTech/Pfizer and Moderna.  Also, as he noted, since the emergence of COVID-19, US Government support for the rapid development of the COVID-19 vaccines has totalled more than US$10 billion; at least US$955 million to Moderna to fund accelerated work, including the clinical trials, and an advanced market commitment with BioNTech-Pfizer. 

And, the pharmaceutical firms have already been rewarded handsomely: Pfizer forecasts US$26bn from annual sales of its COVID-19 vaccine; that is, the vaccine will generate 73% more than forecast based on contracts signed until mid-April 2021; and Moderna profit, just in 2021, is projected to reach US$18.4 billion.

Voluntary licensing?

Voluntary licenses are often adopted to promote access to lower-cost generic medicines in low- and middle-income countries.  These licenses are at the discretion of the patent holder. While voluntary licensing is a viable option, it is in no way sufficient – because it relies on the discretion of companies to permit other companies to produce their patented products.

At least two pharmaceutical companies, including AstraZeneca and Novavax, have allowed manufacturers in India to produce their vaccines under voluntary licensing agreements. China and Russia are also pursuing licensing agreements in nations that include Brazil, Serbia, and India, to produce their COVID-19 vaccines.  According to Seth Berkley, CEO of GAVI, The Vaccine Alliance, this has allowed for vaccine manufacturing for the Global South by the Global South, helping to ensure no country is left behind when it comes to the race for a COVID-19 vaccine.

However, according to the WHO Director-General, who supports India and South Africa's waiver request, the main disadvantage of this approach is the lack of transparency.

The position of the United States is a “dose of hope”

Katherine Tai, United States President Biden’s top trade adviser, announced ahead of the WTO meeting, that the US would support a waiver, while stressing that it believes strongly in intellectual property protections.  To this end, the press release issued on May 5th, 2021, was clear in articulating a plan of action at the WTO:

“This is a global health crisis, and the extraordinary circumstances of the COVID-19 pandemic call for extraordinary measures.  The Administration believes strongly in intellectual property protections, but in service of ending this pandemic, supports the waiver of those protections for COVID-19 vaccines. We will actively participate in text-based negotiations at the World Trade Organization (WTO) needed to make that happen. Those negotiations will take time given the consensus-based nature of the institution and the complexity of the issues involved. The Administration’s aim is to get as many safe and effective vaccines to as many people as fast as possible.  As our vaccine supply for the American people is secured, the Administration will continue to ramp up its efforts – working with the private sector and all possible partners – to expand vaccine manufacturing and distribution.  It will also work to increase the raw materials needed to produce those vaccines.”

Let’s be clear: the US Government decision to support the waiver for COVID-19 vaccines, is just the beginning of a long process of negotiations. For example, Germany, along with other nations and the pharmaceutical industry, oppose a waiver of rules protecting the IP behind the vaccines.  Now, finding common ground for wider distribution of COVID-19 vaccines in poorer countries falls to the WTO -- a body known more for its inability to do international deals than to clinch them.

Production capacity, knowledge, and skills and supply of raw materials also matter

Vaccines are difficult to manufacture. Beyond voluntary licensing agreements, boosting production of COVID-19 vaccines for ramping up vaccination globally will require plant capacity, technical knowledge and skills, uninterrupted access to critical raw materials, and quality controls. 

As described clearly in a recent article in the Financial Times, some observers, such as Sir Robin Jacob, Chair of Intellectual Property Law at University College London, are doubtful that other companies would have the capacity in place to suddenly be able to make the vaccines if the patented intellectual property was waived.  This observation is countered by backers of the waiver proposal that have noted that there are more than a dozen drug makers in developing countries (e.g., India, South Africa, Bangladesh, Brazil, and Cuba) that have passed quality checks by the WHO and the U.S. Food & Drug Administration and that could be equipped to produce the vaccines with a transfer of the technical know-how from vaccine makers and funding from institutions such as the World Bank Group.

There are supply chain concerns as well.  In the Financial Times article, some observers pointed out that large-scale vaccine production efforts are also hindered by various bottlenecks, including limited supplies of raw materials such as lipid nanoparticles and equipment such as bioreactor bags, that need to be addressed as well. It is also argued that new factories would face the same constraints, including export controls that have slowed down the movement of equipment and some key parts.  The recent experience of Cuba, which is developing its homegrown COVID-19 vaccines, illustrates this challenge—as documented in an article in Nature, the US trade embargo is severely constraining the acquisition of materials for vaccine development as companies are afraid of losing access to the US market if they supply them. 

Given the above potential constraints, options to deal with them include expert support from vaccine makers to new plants to manage the technology transfer process and easing of export controls so that vaccine makers are not restricted in where they send their vaccines or the ingredients to make them. 

Along the lines of the above options, the WHO is also proposing that pharmaceutical companies that produce mRNA vaccines share their patents and technical knowhow with regional hubs in poorer countries. The scheme could give the companies more control over where their intellectual property ends up, while still expanding production.  To this end, the WHO is working with the GAVI, the Vaccine Alliance and the Coalition for Epidemic Preparedness Innovations (CEPI) to ramp up production and supply.  A COVAX manufacturing task force has been formed, and a New Partnership for African Manufacturing will be formed by the African Union. It aims to build five vaccine production hubs on the continent, starting with three mRNA facilities in Rwanda, Senegal, and South Africa. The WHO is also developing regional regulatory capacity through the African Medicines Agency.

There are precedents, both current and historical, for the above actions. In the article by Stiglitz and Wallach, it is noted that Russia and China have not only made their COVID-19 vaccines available; they have engaged in significant technology and knowledge transfer, forging partnerships around the world, and helping to speed up the global vaccination effort.  In the past, the article also notes that cross-country collaborative research into mRNA and its medical applications has been underway for decades, with the initial breakthrough in 1978 by the Hungarian scientist Katalin Karikó,  and the work has been ongoing ever since in Turkey, Thailand, South Africa, India, Brazil, Argentina, Malaysia, Bangladesh, and other countries, including the US NIH.

How do we move forward?

The sheer scale of the COVID-19 pandemic and the enormous global demand for vaccines means that adopting the TRIPS flexibilities alone, practically, will not be enough. Countries will need to come together with a "united" purpose to consider solutions that work for all people and not just a few countries or pharmaceuticals. This will include taking up and adopting all solutions that take us closer to the goal, including the temporary waiver of patents, knowledge and technology transfer, technical and funding support, and eliminating export controls or other barriers that hinder supply of raw materials and equipment. Patent holders, as suggested in Jeffrey Sachs’s article, should still be compensated at a reasonable rate for the successful use of their intellectual property, and the waiver would apply only to COVID-19, and not be extended automatically to other uses.  This implies, as argued by Stiglitz and Wallach, that drug manufacturers will be not be deprived of high returns on their investments, but only stand to miss out on monopoly profits, including those from future annual booster shots that doubtless will be sold at high prices in rich countries.

Currently, this situation takes us back to one we faced almost 20 years ago in the HIV/AIDS crisis regarding discussions about patents and waivers to save lives. As a people, we must ask ourselves what a refusal to do this means. To put it simply, it means that while medicines and vaccines are available to rich countries, millions of people living in developing and least-developed countries might die unnecessarily, leaving behind poverty and bereavement among families and communities worldwide – even though the solution is out there.

Let us just sit with that thought for a minute, and we will discover that we as people are in essence better than that.  We have a moral obligation to assist the poor and powerless of society who struggle to survive and to put the needs of these most vulnerable members of society ahead of individual and corporate interests in accordance with the "preferential option for the poor" principle.  Indeed, now and in the post-pandemic period, we have an opportunity to build something different, something better, recognizing that we are all in the global boat together.


Source of image: iStock-1281444683