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TRIPS Decision comes up short Arguably the most pressing need facing WTO member states at MC12 was to reach agreement on lifting intellectual-property-related barriers to the supply of COVID-19 medical products. Blunted by developed-country intransigence, the eventual decision is a major disappointment that could end up costing lives. Sangeeta Shashikant THE MC12 Ministerial Decision on the TRIPS Agreement (WTO document WT/MIN(22)/30) gavelled in the wee hours of the morning of 17 June may perhaps best be described as a bittersweet outcome for developing countries. Bitter, for even after 20 months of intensive discussion and negotiation, the outcome falls severely short of the comprehensive TRIPS waiver proposed by India and South Africa in October 2020. That proposal sought a waiver of at least 35 articles of the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) covering patents, protection of undisclosed information, copyright and industrial designs in relation to health products and technologies for the prevention, treatment and containment of COVID-19. The proposal was motivated by the ‘growing supply-demand gap’ since the onset of the COVID-19 pandemic, arguing that ‘[t]he rapid scaling up of manufacturing globally is an obvious crucial solution to address the timely availability and affordability of medical products to all countries in need’, and stressing the need for ‘unhindered global sharing of technology and know-how in order that rapid responses for the handling of COVID-19 can be put in place on a real time basis’. At its core, the comprehensive TRIPS waiver proposal sought to create ‘freedom to operate’ to scale up and diversify global manufacturing to address the global inequity in access to all health products and technologies for the prevention, treatment and containment of COVID-19. The proposal, which was co-sponsored by 65 WTO Members and supported by many other Members, received tremendous backing from various international organisations such as the World Health Organization (WHO) and UNITAID, civil society, intellectual property (IP) experts, parliamentarians, Nobel laureates and world leaders.1 However, persistent opposition and uncompromising positions of developed countries, especially the European Union (EU), the United States, the United Kingdom and Switzerland, amply supported by the WTO Secretariat’s manoeuvring, ultimately resulted in a very limited and conditional TRIPS Ministerial Decision at MC12. This outcome was inevitable once negotiations commenced on the basis of a narrow draft text communicated by the WTO Director-General (DG) to the WTO’s TRIPS Council on 3 May. The DG’s text (already publicly circulating following a leak in mid-March) was globally criticised for its ‘TRIPS-plus’ elements that went beyond TRIPS Agreement requirements and for its inadequacy in times of a global pandemic.2 It reflected the obstructive positions of the EU, which could agree only to a decision framed in the context of a compulsory licence of patents, and the US’ insistence that the decision should cover only COVID-19 vaccines (and not therapeutics and diagnostics) and set criteria limiting which Members can make use of the decision (in particular excluding China). While the TRIPS Ministerial Decision that was eventually adopted does not deliver the desired comprehensive TRIPS waiver, it is nevertheless a marked improvement over the DG’s text. It is worthy of note in view of the vicious hostility of developed countries that had been observed in the course of the negotiations leading to its adoption. The UK and Switzerland in particular had relentlessly sought to narrow the scope and application of the Decision.3 Making sense of the Ministerial Decision The TRIPS Decision is built on the existing compulsory licensing flexibility under Article 31 of the TRIPS Agreement, and waives the limit on quantities of vaccines that may be exported when produced under a compulsory licence issued to override potential and existing patent barriers for the manufacture of COVID-19 vaccines. Article 31 of the TRIPS Agreement allows governments to issue a licence to authorise a third party to use and exploit a patented product/process without the consent of the patent holder. This important flexibility is often referred to as a non-voluntary licence or compulsory licence (CL); where a CL is issued for public non-commercial use, it is also commonly known as a ‘government use’ licence. The use of a compulsory licence is subject to various conditions. Among these, Article 31(f) of the TRIPS Agreement states that CLs must be used predominantly for supplying the domestic market, thereby limiting the quantities of the licensed products that may be exported. Paragraph 3(b) of the TRIPS Ministerial Decision now waives this condition; with this waiver, most or all of the production may be exported. This is the only waiver contained in the TRIPS Decision. Previously, a mechanism to waive the Article 31(f) condition was adopted on 30 August 2003, and in 2005 it was translated into a permanent amendment of the TRIPS Agreement as Article 31bis. But this mechanism has mostly proven to be ineffective and unworkable due to the numerous rigid procedures attached to its use. 4 The MC12 TRIPS Decision offers a mini-version of that mechanism. Another interesting element in the TRIPS Decision is paragraph 4, which relates to Article 39.3 of the TRIPS Agreement concerning protection of test data. Historically, developed countries and developing countries have held different interpretations of Article 39.3. Developed countries have typically argued that Article 39.3 requires the granting of exclusive rights for a specified time-frame over test data submitted by the originator pharmaceutical companies to regulatory authorities for purposes of obtaining marketing approval, thereby delaying the entry of generic and other follow-on manufacturers.5 Developing countries maintain that such an interpretation is not supported by Article 39.3 and most developing countries do not implement such a requirement at the national level. However, often due to pressure exerted especially through free trade agreements, some developing countries have implemented data exclusivity at the national level. Evidence suggests that implementation of data exclusivity delays generic competition, enabling the originator company to charge monopoly prices with significant implications for public sector budgets and access to affordable medicines.6 Against this background, paragraph 4 of the TRIPS Decision confirms developing countries’ interpretation of Article 39.3 that undisclosed test data submitted by originator companies to regulatory authorities may be relied on and used for purposes of granting rapid regulatory approval. Article 39.3 also allows disclosure of data in certain circumstances. Paragraph 4 reinforces that flexibility in the context of ‘timely availability of and access to COVID-19 vaccines’. Towards that end, paragraph 4 states that Article 39.3 does not prevent a Member from ‘enabling the rapid approval for use of a COVID-19 vaccine’, which also supports disclosure of undisclosed test data for the purpose of rapid approval for use of a COVID-19 vaccine produced under this Decision. Paragraph 3(a) of the Decision reinforces the existing flexibility in Article 31(b) of the TRIPS Agreement that an eligible Member may grant a compulsory licence without first having to make attempts to get a voluntary licence from the patent holder. Paragraph 3(d) of the Decision adds elements which may be considered when determining payment of adequate remuneration to the patent holder under Article 31(h) of the TRIPS Agreement. Payment of adequate remuneration is in any case subject to national discretion under the Agreement. Use of the Decision is subject to several conditions that are not normally applicable when using the compulsory licensing flexibility under the TRIPS Agreement. Hence these can be said to be TRIPS-plus conditions: • Paragraph 3(c) prevents re-exportation of products manufactured under the authorisation in accordance with the Decision that have been imported under the Decision, with exception made for situations of ‘humanitarian and not-for-profit purposes’ (footnote 3). In a public health emergency, there is no logic or basis for such a condition, and yet despite the opposition of most developing countries to the condition, the EU had insisted on maintaining this paragraph, only making leeway for the small exception in footnote 3. However, this condition is only applicable when both the manufacturing and importing countries are using the Decision. • Paragraph 5 and footnote 5 of the Decision require notifications to the WTO’s TRIPS Council. These notifications will be post facto, i.e., after adoption and implementation, as paragraph 5 refers to ‘after the adoption of the measure’ while footnote 5 refers to ‘shall be notified as soon as possible after the information is available’. On several occasions during the negotiations, the UK had insisted on pre-shipment notification, which was in the end not agreed to by WTO Members. • The eligibility criteria in footnote 1 of the Decision reflect the US’ intent that China legally commit to opting out of using the Decision. The DG’s text had reflected the US proposal that ‘For the purpose of this Decision, developing country Members who exported more than 10 percent of world exports of COVID-19 vaccine doses in 2021 are not eligible Members’. China was not agreeable to this formulation, which was clearly targeted at singling it out. A counter-proposal was reflected in the DG’s text: ‘For the purpose of this Decision, all developing country Members are eligible Members. Developing country Members with capacity to export vaccines are encouraged to opt out from this Decision.’ On 10 May China formally announced to the WTO General Council that it was opting out of using the Decision. However, the statement was insufficient for the US. Due to domestic anti-China sentiment, the US sought a binding commitment that would exclude China, although China had significant production capacity that could have greatly supported access in developing countries. The final text of footnote 1 in the TRIPS Decision states: ‘For the purpose of this Decision, all developing country Members are eligible Members. Developing country Members with existing capacity to manufacture COVID-19 vaccines are encouraged to make a binding commitment not to avail themselves of this Decision. Such binding commitments include statements made by eligible Members to the General Council, such as those made at the General Council meeting on 10 May 2022, and will be recorded by the Council for TRIPS and will be compiled and published publicly on the WTO website.’ This final text was the outcome of a bilateral negotiation between the US and China; most WTO Members had not even seen the text of footnote 1 even as the TRIPS Decision was gavelled. While the stated objective of the Decision is ‘production and supply of COVID-19 vaccines’, footnote 1 discourages developing countries with manufacturing capacity from using the Decision, revealing the absurdity, irrational power politics and Big Pharma interests that influenced the textual negotiations. In implementing the TRIPS Decision, paragraph 2 may be useful for it presents a simplified approach to implementation. It makes clear that the ‘law of a Member’ referred to in Article 31 of the TRIPS Agreement is not limited to legislative acts such as those laying down rules on compulsory licensing, but also includes other acts, such as executive orders, emergency decrees, and judicial or administrative orders. Paragraph 6 of the TRIPS Decision provides that the duration of the Decision is for five years. The duration effectively applies to the waiver of Article 31(f) of the TRIPS Agreement contained in paragraph 3(b) of the Decision, as the other elements of the Decision are mere clarifications and reiterations of existing TRIPS Agreement flexibilities. Importantly, nothing in the Decision prevents any Member from issuing a compulsory licence for a period beyond five years. Paragraph 7 safeguards against ‘non-violation and situation’ complaints for the duration of the TRIPS Decision. For the time being until MC13, there is a moratorium on non-violation complaints with respect to the TRIPS Agreement. The Decision does not however stop challenges under the usual WTO dispute settlement mechanism for failing to comply with the TRIPS Agreement pursuant to Article XXIII.1(a) of the General Agreement on Tariffs and Trade (GATT). Paragraph 9 clarifies that except for the granted waiver lifting the restriction on export of vaccines, the Decision does not affect the rights and flexibilities of WTO Members provided by the TRIPS Agreement. As noted above, the final outcome in the shape of the adopted TRIPS Decision is an improvement over the DG’s text for several reasons, including: • reference in the DG’s text to ‘patented subject matter’ was changed to ‘subject matter of a patent’, ensuring consistency with Article 31 of the TRIPS Agreement and that the Decision is applicable not only in situations where the subject matter to be licensed is patented but also to subject matter at the application stage, i.e., pending patents; • deletion of the requirement to list all patents to be covered by the CL, which if maintained would have been difficult to comply with, given the uncertainty over the patent landscape of a particular product and process; • addition of an exception in footnote 3 to the re-export restriction in paragraph 3(c) of the Decision; • amendment of paragraph 4 of the Decision; • addition of a new paragraph 9. What next for developing countries? Footnote 1: Setting the record straight On 22 June, the WTO Secretariat issued WTO document IP/C/W/690 titled ‘Record in accordance with footnote 1 of the Ministerial Decision of 17 June 2022’. It states: ‘This document provides a record of developing country Members that have made a binding commitment not to avail themselves of the Ministerial Decision on the TRIPS Agreement of 17 June 2022. This record will be updated as appropriate.’ China’s opt-out statement at the May General Council meeting is mentioned. The Secretariat’s approach of unilaterally creating such a record is inconsistent with the text in footnote 1, which lists a two-step process: ‘will be recorded by the Council for TRIPS’ ‘and will be compiled and published publicly on the WTO website’. Footnote 1 requires that any intention to opt out of using the Decision should officially be communicated to the TRIPS Council by the Member concerned, for only then can it be recorded by the TRIPS Council. The Secretariat’s role is to compile and publish it publicly once it has formally been recorded by the TRIPS Council. WTO Members should set the record straight with the Secretariat. Therapeutics and diagnostics WHO has said that ‘it is simply not acceptable that in the worst pandemic in a century, treatments that can save lives are not reaching those that need them’, calling the inequitable access a ‘moral failing’ and adding that ‘We’re playing with a fire that continues to burn us.’7 On 29 June, WHO Director-General Tedros Adhanom Ghebreyesus noted: ‘On COVID-19, driven by BA.4 and BA.5 in many places, cases are on the rise in 110 countries, causing overall global cases to increase by 20% and deaths have risen in three … WHO regions.’ He stressed that ‘Now is the time for Ministries of Health to integrate tests and anti-virals into clinical care so that people that are sick can be treated quickly.’8 The crucial role of therapeutics and diagnostics in controlling COVID-19 is undisputed. They are recommended by WHO as well as by national strategies, increasingly as part of test-and-treat strategies. Yet timely, affordable access remains a challenge in most developing countries. According to Airfinity data as at February 2022: ‘Current global outpatient treatment production is less than what is needed if 10% of the high-risk population contracts SARS-CoV-2. Using estimates of the population with at least one co-morbidity for progression to severe COVID-19, a total of 1.7 billion people globally are at high-risk. If 50% of those at high-risk were infected, 872.8 million courses of outpatient treatment would be needed if there was equitable access to diagnostics and treatment. Current global production of outpatient treatment stands at 160 million courses which is currently less than the 174.6 million courses needed to treat 10% of the global high-risk population.’9 Most of the limited supply of COVID-19 therapeutics has been procured by wealthy countries that represent a mere 16% of the global population. Even when available, they are unaffordable to most developing countries. For some products, voluntary licences (VL) have been offered by originator companies to some developing-country manufacturers but these VLs are subject to various conditions that are often difficult for the developing-country manufacturers to comply with, such as that the latter have to be prequalified by WHO. The VLs also exclude supply to many developing countries. Supply constraints are thus expected to continue for most of 2022 even for products where VLs exist.10 Expanding supply options requires lifting the intellectual property barriers to the entry of generic manufacturers, especially as patent filings related to therapeutics considerably outnumber those on vaccines by some fourfold. Extending the scope of the TRIPS Decision beyond vaccines to cover therapeutics and diagnostics could secure the availability of compulsory licences to override the patent barrier to production and export. It is a no-brainer from a public health perspective and yet it was one of the most contentious aspects of the negotiations on the Decision. Paragraph 8 of the Decision states: ‘No later than six months from the date of this Decision, Members will decide on its extension to cover the production and supply of COVID-19 diagnostics and therapeutics.’ This two-track approach of ‘vaccines first, therapeutics and diagnostics later’ reflects the US’ obstinate position during the negotiations. Even when the US concerns were addressed with the two-track approach, paragraph 8 was bitterly disputed till the end of the negotiations as the UK and Switzerland attempted (although unsuccessfully) to dilute the definitive commitment to address therapeutics and diagnostics, proposing ‘whether to extend this decision’ instead of ‘on its extension’. Clearly, the challenge for developing countries in the next six months will be to extend the Decision to therapeutics and diagnostics, without the addition of further conditions or narrowing of the Decision. Implementing and using the Decision Compulsory licensing is one of the most important tools that developing countries have to address patent barriers to production and access. The Decision motivates the use of compulsory licences for COVID-19 vaccines. The main beneficiaries of the Decision are developing countries manufacturing or planning to manufacture COVID-19 vaccines with the intent to export the majority or all of the vaccines and facing existing or potential patent barriers. Countries that are importing vaccines or exporting a non-predominant portion under a compulsory licence need not use the Decision. These countries may continue to import or export under Article 31 of the TRIPS Agreement. Least developed countries (LDCs) enjoy full exemption from the TRIPS Agreement obligations at least until 1 July 2034 and should utilise this exemption to import, export or use any patented products.11 They do not need to use compulsory licensing, including under the Decision, to address potential/existing patent or other IP barriers. For other products (beyond COVID-19 vaccines), developing countries that wish to import and export may continue to use compulsory licences under Article 31 of the TRIPS Agreement to override any patent barriers. Article 31 limits neither the products that may be compulsory licensed nor the duration of the licence, which may be for the duration of the patent term. Apart from compulsory licensing under Article 31, developing countries may also use other TRIPS Agreement flexibilities to address patent or other IP barriers to access. At the global level, the process that began in October 2020 has provided a platform for developing countries and the international community to highlight the challenge of timely and affordable access, exposing the hypocrisy of developed countries and their failure to deliver on promises of global solidarity and equitable access. Most notably, it has brought immense global visibility and awareness to the IP monopolies that underpin and enable highly concentrated supply chains that are unsuitable for addressing public health needs in developing countries especially during a public health emergency, and consequently the need for greater freedom to operate for local manufacturers to diversify production and expand supply options. Sangeeta Shashikant is a legal advisor to the Third World Network and Coordinator of its Development and Intellectual Property Programme. Endnotes 1. https://www.twn.my/title2/intellectual_property/trips_waiver_proposal.htm 2. See ‘Proposed TRIPS waiver outcome not yet agreed among the Quad’; and ‘WTO DG’s proposed solution unsuitable for global public health crisis’ 3. ‘UK & Switzerland attempt to limit scope of COVID-19 TRIPS Decision’; ‘Intense IP negotiations are underway, resolution on eligibility criteria outstanding’ 4. ‘Neither Expeditious nor a Solution: The WTO August 30th Decision Is Unworkable’. Also see paragraph 28-53 of WTO document IP/C/W/673 5. For example, see https://trade.ec.europa.eu/doclib/docs/2019/june/tradoc_157937.pdf, in which it is reported that the ‘EC [European Commission] reminded Turkey, as a member of the WTO, that Article 39 of the TRIPs Agreement provides data exclusivity for medicines.’ 6. Malpani R (2009), ‘All costs, no benefits: how the US-Jordan free trade agreement affects access to medicines’, Journal of Generic Medicines, 6(3): 206-217, http://jgm.sagepub.com/content/6/3/206.short; Cortés Gamba M, Rossi Buenaventura F, Vásquez Serrano M (2012), ‘Impacto de 10 Años de Proteccion de Datos en Medicamentos en Colombia’, IFARMA and Fundación Misión Salud, Bogota, http://www.mision-salud.org/wp-content/ 10. https://launchandscalefaster.org/covid-19/therapeutics 11. See ‘Lessons from the pandemic for LDCs: Implementing intellectual property flexibilities’ at https://twn.my/title2/briefing_papers/twn/LDC%20IP%20flexibilities%20TWNBP%20Mar%202022%20Shashikant.pdf *Third World Resurgence No. 351, 2022, pp 16-20 |
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