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Vaccine IP Waivers: A Solution or a Red Herring? - Jackel Cheung

The United States’ recent surprise partial backing of a World Trade Organisation (‘WTO’) waiver proposal for COVID-19 vaccines has been met with mixed responses. The waiver, first proposed by India and South Africa in October 2020 at the WTO, called for a temporary suspension of IP rights for all products required to combat COVID-19. Germany, rejecting such a waiver, claims that ‘the protection of intellectual property is a source of innovation and it must remain so in the future.’

The debate of balancing disparity in access between the rich and poor and incentivizing innovation with a limited period of exclusive profits is not a new one. COVID-19 has only intensified it. Boris Johnson might have jokingly (or crudely) accredited UK’s vaccination success to ‘capitalism and greed’ but there may be some unpalatable truth to it. The UK has not publicly endorsed the waiver but has instead encouraged pharmaceutical companies to participate in voluntary licensing agreements, which AstraZeneca has done with Indian vaccine manufacturer Serum. However, compulsory licensing (or Crown use) is also a legal option in the UK. But what are the difference between waivers, compulsory licensing, and voluntary licensing agreements? What are their practical implications, and do they really provide a solution to the disparity in access or are there other more relevant concerns? This article will consider these questions within the context of COVID-19 vaccines.

Intellectual Property Waivers

IP waivers involve suspending intellectual property protection where governments will not enforce IP rights. The IP rights proposed in the new WTO waiver include patents, copyrights, trade secrets, and designs. However, it is uncertain how far US support for the proposal will go in the difficult negotiations ahead. It is worth noting that the proposal for the inclusion of trade secrets is of particular importance. Proprietary knowledge of manufacturing and testing information is often vital to vaccine production. However, even if we assume such a broad waiver is passed, it is unlikely to provide a swift solution. The mRNA technology used to manufacture Pfizer, Moderna, and Johnson & Johnson vaccines is complex and relatively new. Manufacturers around the world will likely have a steep learning curve and require extensive research capital. This is best illustrated by the fact that Moderna’s vaccine has not been reproduced despite their public pledge to not enforce their COVID-19 vaccine patent rights during the pandemic. Moreover, the limited availability of raw materials needed for production remains challenging. Therefore, the practical benefits of a temporary vaccine IP waiver, despite it being in the right direction, will be slow. As Sir Robin Jacob, chair of Intellectual Property Law at UCL, contends, there is ‘no evidence’ companies will suddenly be able to manufacture vaccines upon release of intellectual property. Thus, one might question whether the efforts dedicated to negotiating this solution might not necessarily assist prompt and equal vaccine distribution.

Compulsory Licensing

Rather than suspending IP protection, under the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (‘TRIPS’), governments may order domestic manufacturers to make a patented product without permission from the patent holder. This practice is known as compulsory licensing. In the UK, compulsory licensing is covered under sections 46-49 of the Patent Act 1949 labelled as ‘Crown use.’ Though it also recognises the right for companies to claim compensation on the loss suffered. Whilst Crown use is not restricted to emergencies by legislation, Former Health Minister Steven Brine, in 2019, opined that it was ‘intended and designed to deal with emergencies.’ The most recent example of Crown use being invoked in the pharmaceutical industry was in 1965 in Pfizer Corporation v Ministry of Health [1965] AC 512 when the government had to import drugs from Italy due to lack of supplies in the UK. Even in the current pandemic emergency, Clifford Chance has observed and anticipate a ‘more conciliatory approach’ citing the prospects of ‘adverse publicity fallout’ if companies actively blocked access to vaccines. Thus, it is unsurprising that the UK government has resisted calls for compulsory licensing and favours voluntary licensing. Whilst Brazil recently passed a COVID-19 compulsory licensing bill, it remains difficult to see how the practical barriers to speedy production of vaccines can be addressed by compulsory licensing.

Voluntary Licensing Agreements

Voluntary licensing involves privately negotiated agreements between companies to share proprietary knowledge including trade secrets and typically involve considerable loyalties. However, AstraZeneca and Johnson & Johnson have pledged to not profit from COVID-19 vaccines during the pandemic. Under such circumstances, it is arguable that voluntary transfer of knowledge will be more effective and open than compulsory measures. Whilst these privately negotiated agreements limit the transfer of knowledge within bilateral partnerships (compared to a universal WTO waiver), the direct involvement of the companies with proprietary knowledge will enhance the quality of production and ensure vaccines are being manufactured by companies with the requisite capacity. The obvious disadvantage here is its voluntary basis. Voluntary licensing relies on the consciences and commercial decisions of pharmaceutical companies rather than any legal obligation. These agreements are often shrouded in secrecy and allow companies such as AstraZeneca to decide who gets vaccines. On the other hand, the practical benefits and success of AstraZeneca’s voluntary licensing agreements with Indian and Brazilian manufacturers are manifestly clear.

The Future

It is unclear how the WTO negotiations will develop or what the eventual waiver might look like if it is ever passed. What is clear is that compulsory licensing, with no provisions for trade secrets under TRIPS, can do little to ensure prompt and equal vaccine distributions. Voluntary licensing agreements, with all their faults, remain a significant practical mechanism contributing to such an aim. It is worthy to note that Financial Times reported that in a memorandum of understanding between AstraZeneca and a Brazilian manufacturer, its pledge to not profit from COVID-19 vaccines during the pandemic was defined to end on July 1, 2021, subject to AstraZeneca’s good faith consideration that the pandemic is not over. When drafting voluntary licensing agreements with temporary royalty-free arrangements, lawyers advising pharmaceutical companies will have a duty to protect the legitimate interest of their clients post-COVID-19.

It is conceivable that the usage of IP waivers or compulsory licensing regarding medications to treat COVID-19 may be more effective than for vaccines, particularly where the technology is less complex or new. However, the need for compulsory legal obligations to share propriety knowledge during COVID-19 might not be as crucial as anticipated. This has been evidenced in Gilead’s royalty-free voluntary Remdesivir licensing agreement with 9 manufacturers with distribution to 127 countries. Perhaps the most pressing issue regarding COVID-19 vaccines is not IP protection but the practical difficulties of producing vaccines manufactured using complex new technology.

Lastly, one might wonder whether the loosening of intellectual property protection in the pharmaceutical field will extend beyond COVID-19. In 2018, The NHS saved nearly £300m after the patent on adalimumab expired. Persuasive policy reasons will remain and public funding in R&D in the field will further complicate the issue. However, it is unlikely we will see a general weakening of IP protection post-COVID-19 as governments continue to recognise it as a vital source of innovation.

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