Leibowitz: A Flap at the WTO on Patents—What Does it Mean?

First, a bit of context—the World Trade Organization Agreement on Trade Related Intellectual Property Rights (TRIPS) sets standards for all WTO members to protect IP rights of foreign and domestic rights holders. There are no provisions in the TRIPS agreement regarding reducing or eliminating those protections. The word “waiver” does not appear in the TRIPS agreement.

The proposal to change that will require the unanimous approval of WTO members. This proposal is a long way from being implemented, but it opens new avenues for companies seeking to defeat patents to combat the pandemic, and new challenges for companies seeking to keep those protections.

All are interested in putting an end to the scourge of the pandemic. As the disease took hold, the developed world was hit hardest at first. The United States had more cases than any other country early in the pandemic. The European Union and the UK had a large number of cases and deaths, and resorted to massive and paralyzing lockdowns that crippled entire economies. States in the U.S. did similar things.

The federal government put a massive amount of work in securing vaccines to prevent the spread of the disease. Operation “Warp Speed” was successful in facilitating the distribution of vaccines throughout the country. We now have enough vaccines to inoculate the entire U.S. population.

Now the developing world is experiencing a new surge of COVID cases and deaths, especially Brazil and India. Less developed countries are complaining about lack of access to treatments for suffering patients as well as access to vaccine doses.

Other industrialized countries have not fared as well as the United States. Many countries in Europe have only recently begun mass vaccinations. As of Friday, while 45 percent of the U.S. population had received at least one shot, and the UK was over 50 percent, Germany stands at 32 percent, and France at 26 percent. Among poorer countries, the situation is more dire. Brazil’s vaccination percentage is under 15 percent, and India, which now has eclipsed the United States in COVID cases and deaths, is under 10 percent.

In light of the disparity of shots between rich and poor countries, the “blame game” about access to treatments and vaccines is proceeding along all-too-familiar lines. Some claim that greedy pharmaceutical companies are to blame because they are not sharing their IP with poor countries, leaving those countries unprotected. That has spurred such organizations as the World Health Organization, and many developing countries, to insist that drug companies should waive their patent protections and license the recipes and production methods at no or reduced costs.

The WTO waiver proposal is an outgrowth of these complaints. Last October, India and South Africa proposed that the WTO consider waivers of IP protection for “prevention, containment or treatment of COVID-19….” Last Wednesday, the United States announced its support for waiving IP protection for COVID-19 vaccines. USTR Katherine Tai said the U.S. would actively participate in negotiations at the WTO, which will “take time given the consensus-based nature of the organization.”

There are serious international trade implications from proposing the loss or scaling back of IP protections for COVID-19 treatments. As Ambassador Tai indicated, these negotiations will take time and more availability of vaccines will not come overnight. The “consensus-based nature” of the WTO refers to a general rule of unanimity of WTO members to change agreements. There are 164 members of the WTO; unanimity has been almost impossible to achieve for 20 years.

However, perhaps an agreement in this area can revive the WTO process of negotiation. But don’t count on it. The important takeaways here are not that there is a chance the world will “Come Together” (props to the Beatles) and unite to defeat this scourge by amending a basic agreement constituting the WTO; but perhaps the global community can try to tackle broader problems.

Support from the U.S. for the concept of IP waivers is a clear wake-up call for the pharmaceutical industry. That prospect may send shivers down the spines of other industries too.

In response to the changing posture, this country will look for cooperation from the developing world on other issues, such as reforming the WTO dispute settlement system.

In the immediate future, the WTO’s TRIPS Council will meet in June in Geneva to discuss the next steps in the COVID-19 initiative. As Ambassador Tai said, these international negotiations take time.

Meanwhile, expect to see much discussion about the real causes for scarcity of vaccines and treatments for COVID in less developed countries. The patents and other IP protections that companies like Pfizer, Moderna and Johnson & Johnson have received for their COVID vaccines give them the exclusive right to practice these patents for 17 years, to protect their trade secrets and to license rights to manufacture in exchange for payments. The new support for waivers of these protections from the U.S. could provide leverage enabling other countries to press pharma companies to increase access and production. Some companies have announced cooperative agreements regarding production and distribution of vaccines already.

Perhaps the larger problem is the lack of capacity to produce vaccines in many countries. Clearly not all countries are capable of setting up a new industry to produce COVID vaccines, which requires mass production of highly complex “messenger RNA” drugs under very carefully controlled conditions and to get it into arms while protecting it against spoilage or loss. The necessary raw materials for this production are not available everywhere either. Pharma companies are justifiably wary of granting licenses for this technology under impractical or unsafe circumstances. This problem will take months to sort out. In the meantime, people need to be careful and to get shots, if they have access to them. Fortunately, in this country, most people do.

We are seeing new arenas for competition as well as cooperation between developed and developing countries springing out of the COVID emergency. This episode can lead to new areas of interest in balancing the interests of producer and consumer nations in many fields. There is room for optimism that the distribution of vaccines will be stepped up soon.

Lewis Leibowitz

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