October 15, 2021
In the past few days, two documents have been leaked regarding the European Union (EU)’s positions at the World Trade Organization (WTO), in negotiations over which rules if any at the WTO should be waived or modified to address the current COVID-19 pandemic. (A nine page September 30, 2021 memo; and a one page EU non paper).
Commentaries by Ellen ‘t Hoen and Pascale Boulet in Medicines Law & Policy, and Brook Baker in InfoJustice provided tough critiques, calling the EU’s proposals “mostly meaningless” and “wholly inadequate.”
The Following are comments by KEI.
1. The EU wants to replicate the 2003/31bis approach on importing products on a compulsory license to countries without domestic production capacity. The 2003/31bis mechanism has been considered a very bad option by EVERYONE who has tried to use it, due to its complexity and the need to simultaneously engage health and trade officials from importing and exporting countries as well as the WTO and to consistently involve everyone in the prediction and reporting of production and demand. For COVID, there are these other problems:
- With the pandemic, time is of the essence, and arguments over whether or not a country has manufacturing capacity are irrelevant if the time it takes to implement manufacturing is significant. Also “capacity” is not just a static technical requirement, economies of scale and economic feasibility are important.
- The 2003/31bis mechanism does not deal with rights in data or access to know-how or cell lines, matters that everyone acknowledges are very important in scaling manufacturing of countermeasures.
- The opt-out procedure as an importer is clearly protectionist, designed to limit economies of scale in developing countries. An April 7, 2020 Open Letter on the opt-out discussing the problems with the opt-out was signed by 30 groups and three dozen experts. (https://www.keionline.org/32707)
- The 2003/31bis mechanism was limited to pharmaceutical products, which is more restrictive than the broader set of countermeasures that are or might be important. Diagnostic tests are referred to in the 31bis and the Annex to the TRIPS Agreement but are defined there as those needed for the use of a product. Clearly, any quick and accurate diagnostic test is useful, even if that use is not connected to a product. In the current pandemic, countermeasures so far include protective masks, tools to sterilize rooms, respirators, oxygen, diagnostic tests, drugs and vaccines, and beyond this, some countries have been asked to implement special exceptional rules for distance education when schools and libraries were forced to close due to the pandemic.
- When the EU says that 31(b) of TRIPS requirements for prior negotiations can be waived, it’s an odd “concession” since 31(b) already states: “This requirement may be waived by a Member in the case of a national emergency or other circumstances of extreme urgency or in cases of public noncommercial use.” How is this something new?
- NOT waiving Article 39 of the TRIPS means not waiving the most useful part of the current waiver proposal, since this is one most relevant to manufacturing know-how and regulatory data.
- The EU does not mention Article 27.1 of the TRIPS, which requires that “patents shall be available and patent rights enjoyable without discrimination as to . . . the field of technology. . . .“, even though this presents an unwanted area of ambiguity regarding measures to create pandemic related exceptions.
- It is a bit confusing for the EU to suggest “Article 31(f) – requirement to supply predominantly the domestic market – to be waived.” but then propose modifications to 31bis, since the much disliked 31bis becomes completely irrelevant if 31(f) is waived.
2. The EU wants the WTO to get involved in remuneration issues, and that just adds another area of complexity, delay and uncertainty. The original TRIPS text gives governments considerable discretion in setting remuneration, and there is no compelling reason to change that. Article 31bis created a system where the exporting country decides what the royalty should be in the importing country, an outcome that is designed to allow countries with capacity to manufacture to pre-empt policies on remuneration from the developing country importers. This was a mistake and should not be replicated.
3. The EU wants to exclude from the Waiver Part III of the TRIPS, which deals with enforcement of rights. This too is designed to narrow the waiver considerably, since the role of injunctions in particular and also damages from infringement are important, not to mention the time consuming procedures that can take place resolving disputes. Indeed, Moderna is arguing in multiple lawsuits in US courts that the enforcement of third party patent claims is a threat to their ability to manufacture vaccines. (See: Perry Cooper and Susan Decker, Moderna Wants Fed. Cir. Help to Avoid Covid Vaccine Patent Suits, Bloomberg Law, Oct. 6, 2021 https://news.bloomberglaw.com/ip-law/moderna-wants-fed-cir-help-to-avoid-covid-vaccine-patent-suits)
4. The 3 year period makes it more difficult for any new entrants in manufacturing vaccines or drugs to amortize investments, particularly given the lead time in bringing manufacturing online and gaining regulatory approvals.
The 2003 WTO decision to implement Paragraph 6 of the 2001 Doha Declaration came after a long negotiation where WTO delegates were determined to have an outcome, instead of acknowledging a failure to reach a consensus. Every single group working on access to medicine lobbied against it, and big drug companies and high income countries lobbied for it. The USTR and US State Department pressured countries to ratify this into 31bis, which was even a worse outcome because unlike a waiver, it was subject to dispute resolution. The result was a stain on the 2001 Doha Declaration and the WTO. Article 31bis explicitly allows high income countries to block imports from developing countries under a compulsory license, even during a pandemic or other emergency, and it is designed to be rarely if ever used. Canada, which has touted its 31bis mechanism as a solution in the WTO TRIPS waiver negotiations, even refuses to list COVID-19 as a health problem eligible for its use — a stunning but rarely acknowledged hypocrisy.
In the current negotiation, the TRIPS waiver has so far acted as an excuse for many countries to hold off on the use of compulsory licensing or other measures allowed under the agreement. The issues are sufficiently complicated that few members of the general public are even aware of the benefits or limits of a good waiver, or the cynically meaningless or worse outcomes that are possible. It is important that proponents of a TRIPS waiver hold out for something that unambiguously moves things in the right direction, and makes it easier to scale manufacturing and increases access to countermeasures. In particular, removing limitations on exports of countermeasures and actions by governments to provide access to manufacturing know-how should be the priority, and broader measures, such as the 2020 legislation in Germany to restrict patents* should be clearly understood to be consistent with any new waiver of the WTO rules.
*The 2020 Act for Protecting the Population in the Event of an Epidemic Situation of National Importance, (Gesetz zum Schutz der Bevölkerung bei einer epidemischen Lage von nationaler Tragweite). See: Sebastian Fuchs, COVID-19: New German legislation to fight pandemic may affect granted German patents, Bird & Bird. May 2020. https://www.twobirds.com/en/news/articles/2020/germany/covid-19-new-german-legislation-to-fight-pandemic-may-affect-granted-patents