• Mansi Gupta

The TRIPS Waiver: A Necessary But Not A Sufficient Measure

[Mansi is a student at National Law School of India University, Bengaluru.]


The COVID-19 pandemic has electrified the age-old debate of access to health resources between Global South and Global North. More evidently, the second wave has laid bare the dire consequences of insufficient vaccine production and inequitable distribution. Amidst this, the developing nations led by India and South Africa proposed a revised waiver of the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement for “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.” In the latest development, WTO members following the USA have agreed to text-based negotiations regarding the waiver as it identifies the “urgent need to diversify and scale-up production.”


The proposed waiver gives immunity to member countries from a legal challenge if their domestic intellectual property rights (IPR) laws suspend or do not enforce IP protection guaranteed under the TRIPS Agreement. This waiver becomes particularly important in light of “vaccine nationalism” by high income countries (HICs) who got preferential access to vaccines, and it has stymied the international supply chain. In this article, the author argues that the TRIPS waiver is a legitimate, necessary and proportional measure to the pandemic, but without the cooperation by nation states, it would be a half-baked attempt at best.


Legality of TRIPS Waiver


Under the neoliberal regime, the TRIPS Agreement is the key legal instrument which harmonises IP rights across WTO nations and guarantees minimum standards of cross-border IP protection. International and national laws compliant with TRIPS Agreement enable innovators to monetise their intellectual property in multiple countries. However, even though the agreement was meant to spur innovation and incentivize manufacturers to make pathbreaking discoveries, this has become a significant roadblock in this unprecedented situation. In this section, the author explains how the gravity of the situation necessitates and legalizes the use of such a waiver.


The present waiver is well within the powers of the sovereign WTO nations. Since this measure relates to multilateral TRIPS Agreement, the TRIPS Council has jurisdiction over it as per Annex 1C of the WTO Agreement. Under Articles IX.3 and IX.4 of the Marrakesh Agreement, the Ministerial Conference may justify under “exceptional circumstances” and waive an obligation imposed on a WTO member country if supported by three-quarters of the members. Even though there is no definition of “exceptional circumstances”, the power can be used by members in concrete situations of urgency. For a limited period of time, the WTO allows the affected countries to take WTO non-compliant measures. The COVID-19 pandemic as a ‘global health crisis’ could fall under a legitimate exceptional circumstance.


Next, the opponents argue that the waiver would be superfluous given the in-built flexibilities and exceptions in the TRIPS regime. Specifically, the HICs argue that the provision of compulsory licensing (CL) under Article 31 of the TRIPS would resolve the institutional and legal IP barriers. CL is the right of a government to issue a license so that other manufacturers make use of the patent for public, non-commercial, domestic use during the patent’s term without the patent holder’s consent. Additionally, for LDC’s Paragraph 6 of the Doha Declaration recognized that the WTO members with insufficient or no manufacturing capacities can face difficulty while resorting to CL. Therefore, Article 31bis was introduced in TRIPS. This exception allows the grant of special CL exclusively for the production and export of affordable generic medicines to LDCs which cannot domestically produce the needed medicines in sufficient quantities.


However, it is argued that given the unprecedented nature of the crisis and the complex nature of health supplies, CL is an ineffective method. The ‘IP stack’ not just comprises final patent product but the process, web of unpublished research, manufacturing equipment, trials etc., difficult to be identified at once. This makes a case-by-case CL approach can be futile and cumbersome. Even if a compulsory license is issued against use of a patented product, the undisclosed information on the product will still be protected. For LDCs the implementation of Article 31bis is restrictive because of the pressure exerted by developed countries and restrictions therein. Moreover, medical devices like ventilators, dialysis machines etc. may not be covered under Article 31bis. While Article 66.2 of the TRIPS does talk about transfer of technology from the HICs to LDCs, it is neither justiciable nor mandatory and is silent on such transfer to developing countries. Lastly, alternatives to IP licensing were adopted earlier including- technology pooling initiative such as COVID-19 Technology Access Pool (C-TAP) of WHO, but till date, not a single company committed to it. Thus, in these circumstances, the TRIPS waiver becomes necessary to ease global IP rules allowing governments to collaborate without fearing trade-based retaliation.


Finally, the proposal is proportional in measure compared to the earlier draft. The revised proposal specifies the scope, timeline and review mechanism for the waiver. The waiver would be in effect for a limited period of three years and would be reviewed on an ongoing basis by the WTO General Council. Further, Paragraph 1 specifically includes “health products and technologies including diagnostics, therapeutics, vaccines, medical devices, personal protective equipment, their materials or components, and their methods and means of manufacture for the prevention, treatment or containment of COVID-19” as opposed to any all-encompassing exemption. Moreover, the argument that the waiver would have a disproportional impact on innovation is also unfounded. Certain advocates of waiver use the moral rhetoric that scientists and researchers must develop lifesaving vaccines without the promise of patent monopolies on humanitarian grounds. However, it adds up commercially as the R&D in vaccines and drugs for COVID-19 has not been limited to pharmaceutical industry alone but rather governments are also investing here. Thus, it only makes logical sense to use the public-money fuelled development for public welfare. Even though TRIPS waiver does not require the importing states to pay for royalties as in case of CL, the COVID-19 situation is different as states have already, in most cases, taken over the liability of the pharmaceutical companies and paid them enough for profit-making. Hence, the waiver is a justified and a legally valid proposal enabling the WTO member states resolve the crisis.


Will the Waiver Really Impact the Status Quo?


The waiver, if effective, posits a legal certainty for moving beyond the status quo. The countries cannot deny patent information and its usage by other manufacturers who may reverse engineer or replicate these drugs to sell cheaper mass-produced generic versions. Moreover, for the waiver to be truly operative, member states would have to modify their domestic laws in compliance with the waiver. This will ensure that other member states will have the freedom to operate without the risk of litigation for alleged patent infringement. However, it is to be borne in mind the sharing of trade secrets and relevant data will not be automatic, unless the governments willingly use a ‘carrots and stick’ approach. On the one hand, they need to incentivize companies to share their relevant trade information which is revenue generating for the firms; and on the other hand, they need to make to adopt strict compliance standards – such as asking for full disclosure in the patent information available for access. These measures coupled with the waiver will empower the LDCs and developing countries to trade with HICs and obtain access to the essential medical supplies.


However, it argued that the waiver by itself is not a sufficient measure and does not replace the additional measures of co-operation required for revamping the situation. Even after the waiver, the HICs can remain protectionist and deny the entire pharmaceutical cookbook to others by invoking domestic IP laws. They may follow different standards for information disclosure, requiring only sufficient and not full disclosure, which may not be of utmost utility to carry out production. Even though text-based negotiations would begin on all these aspects, the European Union is still not on board with the idea of waiver as they see the waiver as a ‘false good idea’ incapable of quickly resolving the vaccine deficit. This is important because EU’s position can heavily influence and delay the negotiations. Therefore, volition of these nations would be necessary for rendering trade secrets accessible for manufacturing the vaccines, build technology and production facilities, and conduct clinical trials.


BITs signed by the countries can also become another potential challenge for implementation of IP waiver. It is unclear if the waiver can do away with the additional layer of protection to the IP of the investor against expropriation by the host state. Further, even if the IP barrier is crossed, the waiver cannot override national policy decisions of the opponents who may continue to impose export restrictions and tamper with the supply chains. The HICs have started easing these restrictions but they can exploit their sovereign power to impose tighter rules based on national vaccination requirements and lobbying by the big pharma who oppose the waiver. Consequently, the new manufacturers in LDCs and other developing nations may not have raw materials and know-how to work on which would defeat the purpose of amplifying vaccine growth. If the components are not procured in time, it could lead to a vaccine shortage in future and disrupt the delivery commitments. Therefore, without a favourable regulatory environment by all member states, there will not be a significant shift in the narrative.


The final challenge to the efficacy of the TRIPS waiver would be the “consensus-based-nature” of the WTO and consequent time required for negotiations. Even after 9 months of proposal of the waiver, it is still difficult to get all the member states to the table. The real issues will surface when the nations actually start discussing these issues. Hence, it is feared that the dilly-dallying will consequently make the waiver too late to be effective.

Conclusion


It is acknowledged that the TRIPS waiver is not a panacea for the global vaccine inequity but it is a crucial socio-economic and political lever which paves way for scaling up the vaccine production and technology transfer, if pursued in time. In light of uncertainty of the waiver, countries can resort to a multi-pronged approach such as nudging voluntary licensing, investing in C-TAP and WHO’s mRNA transfer hub, etc. Alternatives may also be pursued, such as licensing agreements between vaccine manufacturers and LDCs, easing export restrictions and tariff regulations. In addition to the waiver, these measures can increase distribution efficiencies temporarily, provided the countries unitedly work for public good.

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