Proposed WTO waiver of IP rights

Since 2 October 2020, the WTO has been considering a proposal by India and South Africa to waive TRIPS Agreement IP protections for COVID-19 related medical products. In their request, India and South Africa cited the global nature of the COVID-19 pandemic, saying “it is important for WTO Members to work together to ensure that intellectual property rights such as patents, industrial designs, copyright, and protection of undisclosed information do not create barriers to the timely access to affordable medical products including vaccines and medicines or to scaling-up of  research, development, manufacturing, supply, and distribution of medical products essential for combatting COVID-19.” 

The proposal has since acquired approximately 60 co-sponsors, mostly developing countries, but until recently was blocked by the United States, European Union, Japan, UK, Switzerland, Singapore, and South Korea, among others. However, the Biden Administration has come under increasing pressure to support a waiver from a variety of sources, including letters from 100 former Heads of State and Nobel Laureates and from 109 House Democrats arguing that a waiver is needed to assure sufficient and equitable worldwide access to COVID-19 vaccines and therapeutics, and thus to safeguarding U.S. public health and a U.S. economic recovery. 

The U.S. biopharmaceutical industry (including trade associations such as PhRMA and BIO), Congressional Republicans, and some outside organizations (e.g., originally, the Gates Foundation) have opposed a waiver, arguing it won’t make COVID-19 vaccines more readily available, given other significant barriers to production, and that the breadth of the waiver will result in a major transfer of U.S. biomedical technology to China and Russia. 

On 5 May 2021, Ambassador Tai reversed course and announced the Biden Administration’s support for a waiver. Administration officials say the issue went up to the “highest levels” and was ultimately decided by President Biden. Ambassador Tai issued the following statement:

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.

She cautioned that “those negotiations will take time given the consensus-based nature of the institution and the complexity of the issues involved.” 

Implications for innovators of COVID-19-related technologies

The upcoming negotiations over a TRIPS waiver will impact a wide variety of products, technologies, and companies. India and South Africa’s proposed waiver is extremely broad.  Unlike the WTO’s earlier Declaration on the TRIPS Agreement and Public Health, (Doha Declaration) regarding the proposed compulsory licensing of HIV/AIDS drugs, the pending waiver request is not limited to patents, but also covers copyrights, industrial designs, and trade secrets. The Indian and South African draft is equally broad in terms of product coverage and specifically references “diagnostic kits, medical mask, other personal protective equipment, and ventilators, as well as vaccines and medicines for the prevention and treatment of patients in dire need.” Finally, the draft waiver does not limit exports, and would allow developing country WTO Members with major vaccine and pharmaceutical industries, e.g. India, Russia, and China, to export to other WTO markets.

Accordingly, the waiver potentially has far-reaching implications for a wide range of innovative COVID-19-related products, including diagnostic tests, therapeutics for treating COVID-19 patients (antivirals and MABs), medical products and devices used in the prevention and treatment of COVID-19 (ventilators), and productions for the administration (hypodermic needles), storage, and distribution of vaccines (refrigeration systems). The reference to copyrights appears designed to cover software applications used to track the spread of COVID-19 or monitor patients. Finally, as drafted, terminating the waiver would require a decision by the WTO’s General Council, which like other WTO bodies, operates on the basis of consensus. Achieving a consensus of the WTO’s 164 Members is difficult in the best of circumstances, but getting one to end a TRIPS waiver is likely to be particularly challenging, since China, India, Russia, South Africa almost certainly would resist ending the waiver because doing so would cut off of their rights to freely copy valuable COVID-19-related technology from other WTO Members.

Implications for future global access to COVID-19 vaccines

While the proposed request for the WTO waiver stirs up political theater, it is unlikely to lead to meaningful improvements in developing country access to vaccines in the near-term.  Months of difficult negotiation regarding the scope and the duration of the waiver are likely before a WTO consensus can be achieved.  

More important, patents and other forms of intellectual property are not the main (or even a significant) barrier to improved developing country access at this time. Leading U.S. and EU vaccine developers have already licensed their technologies to Indian, Chinese, Russian, and South African vaccine manufacturers. Instead, the problem has been that the unprecedented global demand for COVID-19 vaccines has far outrun limited global production capacity. Even with access to IP, ramping up new vaccine production would require construction and qualification of new facilities to manufacture vaccines, a difficult, specialized, and exacting process, given the high stakes and the potentially life-threatening costs of failures. It also requires access to critical inputs, many of which are in short supply because of the unprecedented demand. Making advanced mRNA vaccines requires mastering new forms of vaccine production, given that it represents a new technology. And vaccine production requires critical know-how, raising questions about whether a WTO waiver will involve forced technology transfers. Finally, to date, one of the biggest challenge to developing country access has been that much of the worldwide supply of COVID-19 vaccines was bought up by the U.S., EU, and other wealthy economies, who have limited exports until their own populations are fully vaccinated.   

Despite its political appeal, a waiver involves risks of inadvertent consequences, since it would discourage future investments in new vaccine technologies and treatments at a time when they may be urgently needed to deal with new variations of the virus. It appears at odds with the Biden Administration’s “Build Back Better” initiatives to move production of key medical technologies back onshore, build more resilient U.S. supply chains, and support U.S. global leadership in biomedical innovation, since it would transfer leading U.S. technologies abroad to China, India, Russia, and South Africa, among others.

Conclusion

While the U.S. has bought into the idea of a waiver, a difficult and protracted WTO negotiation lies ahead over the waiver’s scope, product coverage, and duration. India, China, and South Africa have very capable trade negotiators and will be riding high after the U.S. reversal. While COVID-19 puts unprecedented pressures on the WTO to reach an agreement, achieving a consensus of the WTO’s 164 Members – which is necessary to effect the waiver – is likely to be a complicated and time-consuming effort.  

Next steps

For COVID-19 innovators who may be impacted by the proposed WTO waiver, concerns about possible adverse effects on existing IP rights should be raised in short order.  Engagement with the Office of the United States Trade Representative (USTR), Commerce, the White House, State Department, other parts of the Biden Administration, Congress, and/or foreign governments and stakeholders (both at the WTO and in key WTO Member countries) may be considered. Hogan Lovells is closely following WTO waiver developments and has a global team of attorneys and specialists standing ready to assist companies as this challenge unfolds.

Authored by Warren H. Maruyama, Kelly Ann Shaw, Nitya Anand, Celine J. Crowson, Alice Valder Curran, Ajay Kuntamukkala, Meredith Manning, Jonathan T. Stoel, Joy E. Sturm