TRIPS IP waiver: One country’s meat is a pharmaceutical corporation’s poison

IP Waiver

The Issue

The debate between promoting commercial interests of patent holders and protecting the public health and interest has been long-standing. The present-day pandemic has brought states and pharma-companies at loggerheads, adding issues and arguments to the long-standing question about the balance between the commercial interests and public health.

When it comes to IP, specifically pharmaceutical patents, activists have urged that The IP rules and laws need to be relaxed in light of public interests, especially in third-world and developing countries where access to cheap drugs is often problematic. Au contraire, capitalists would argue that IP rights are necessary to protect the interests of the drugmakers – to incentivize their time spent and investment made in coming up with ground-breaking yet essential medicines and medical equipments.

The present pandemic has blown this debate into new proportions, bringing nations together, against others, in a move to waive off IP rights, albeit temporarily, for vaccines and other drugs essential for the global fight against COVID-19.

Introduction and Reception of the Proposal for Waiver

On October 02, 2020, India and South Africa approached the WTO TRIPS Council with a proposal with a request for a “a waiver from the implementation, application and enforcement of Sections 1, 4, 5, and 7 of Part II of the TRIPS Agreement in relation to prevention, containment or treatment of COVID-19.” The proposal also outlined a draft decision for the WTO General Council.

The Council convened in October 2020 to discuss, inter alia, the joint proposal. Kenya and a number of developing countries and LDCs backed the joint proposal. The same was met with strong opposition and criticism by EU, US, Switzerland, and Japan among others. Surprisingly, Brazil also opposed the waiver of IP rights. Later that month, the WTO extended its support to the waiver.

In May 2021, the present US Trade Representative, Katherine Tai, issued a brief statement which spoke about the US’s change in stance in support of the waiver. Following this, the European Union said it is open to negotiations. While Germany continues to push back against the waiver, some other WTO members remain skeptical.

In May 2020, coalition of countries requesting the waiver submitted a revised proposal. The contents were more or less the same as the first, specifying that the waiver would be in force for three years (with an opportunity for extension) and would apply to pandemic-related health products and technologies.

On June 08, 2021, the World Bank opposed the proposed waiver, on grounds that such a move would hamper innovation in the pharmaceuticals sector. Meanwhile, in Geneva, negotiations over revised waiver proposals from India and South Africa are in process.

Why the Request for Waiver?

The members adhering to the TRIPS agreement are committed to guarantee, among other things, a 20-year safeguard for patent rights. The countries supporting the waiver (the Proponents) argue that these stipulations are preventing increase in production of vaccine and other medical products, by limiting the access of the know-how to patentees and their licensees.

The proposal for the waiver emphasized that the rapid development in drugs and vaccines for COVID-19 related concerns brought with it concerns as to the affordability and the availability of the same. While most nations have outsourced medical products to satisfy the surging demands, other have taken to domestic manufacturing of the same.

However, the import-export requirements under Article 31 proves to be taxing and cumbersome for countries who have no manufacturing capacity and have to resort to importing the medical products, whereas, domestic production has been seeing many hindrances, especially those in the form of patent rights.

The proponents have argued that voluntary licensing is an insufficient measure since, quite naturally, for financial and other reasons, pharmaceutical bigheads would prefer to tie-up with other giants (mostly in the developed countries). This further leads us to the issue of “vaccine nationalism” where wealthy nations have purchased a significant future supply of the vaccines from the limited COVID-19 vaccine producers, thereby leaving the well dry for the developing countries and the LDCs. This means that unless the remaining countries get rights to produce generics, total global vaccination in the near future is impossible.

Why are Nations Opposing the Waiver?

The Opponents argue that the waiver will not lead to significant improvement, but rather, disincentivise pharmaceutical companies from investing in future R&D, and let’s face it, they do invest a lot in R&D.

Vaccine makers and pharmaceutical industries argue that this move will not solve the problems of vaccine shortage since other factors, such as trade barriers, shortages of components and raw material supplies, lack of manufacturing capabilities, and lack of infrastructure would still hamper vaccine production and supply.

The countries backing the waiver are mostly developing countries or LDCs and have little or no capacity to take up vaccines/drugs/equipment productions. While some lack the technology, other lack raw materials, and some did not have access to both.

Ironically, some the opponents to the waiver are also the biggest “hoarders” of the vaccines and life-saving drugs which are already in short supply. World Bank President, David Malpass, reiterated his calls for the developed countries to donate their excess vaccine doses to the developing countries. Even though international collaboration and effort put COVAX in the playing field to ensure equitable vaccine distribution, donation of doses to COVAX still fall short of the required number, prompting countries to back the waiver.

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