TWN Info Service on Trade, IP and Health
2 May 2022
Third World Network
www.twn.my

WTO DG’s proposed solution unsuitable for global public health crisis
(An earlier version of this article was published in SUNS #9566 dated 2 May 2022)

London, 2 May (Sangeeta Shashikant) — Non-voluntary licenses or compulsory licenses as they are commonly known, form the core of the proposed solution that is only targeted at “vaccines” and for “eligible members”, that Ngozi Okonjo-Iweala, the Director-General of the World Trade Organization (WTO), is expected to be introducing to the WTO membership in the coming days.

The WTO Secretariat has in the past few months been facilitating discussions among the European Union, the United States, India and South Africa. However, there is no agreement among these so-called “Quad” members on the proposed outcome that is widely considered to be drafted by the WTO Secretariat.

Following a media leak in mid-March, the proposed outcome has been unpacked and scrutinized by experts globally. There is consensus that the proposed solution is too meagre to make a positive difference to access, with elements that introduce further conditions and uncertainties with respect to use of non-voluntary licenses, and harmful negative precedents on how to address global public health emergencies.

As opposition to the proposed outcome builds, the Director-General’s sales pitch has ranged from “it’s a workable solution” to “WTO [….] not a diktat forum”. And if that fails to convince, “no one likes it”, pointing to resistance from all sides including by civil society and Big Pharma against the text, though for very different reasons.

Desperate to be relevant, the WTO is ready to push forward any outcome. Whether or not it will meaningfully contribute to scaling up production and to bridging access gaps for COVID-19 or provide a credible solution for further health emergencies, appears to be an unimportant secondary issue for the Secretariat.

The raison d’etre of the TRIPS waiver proposal co-sponsored by 65 WTO Members and supported globally is to address the massive supply-demand gap for COVID-19 medical tools and chart the way forward for how a world working in solidarity could address health emergencies.

In 2020, global demand outstripped supply, leaving many developing countries facing acute shortages of all medical tools needed to contain COVID-19 as supply to rich developed countries was prioritized. In October 2020, UNCTAD highlighted the “staggering” difference in access whereby each resident of high-income countries benefitted on average, from an additional US$10 per month of imports of COVID-19 products compared to US$0.10 to US$1.00 worth of imports for developing countries. The lower the income, the less access a country had.

The vast inequity continued in 2021 and persists even today.

WHO has once again sounded alarm bells over the repeat of inequality with regard to therapeutics. In its statement on 22 April, WHO expressed that it was “extremely concerned that – as occurred with COVID-19 vaccines – low- and middle-income countries will again be pushed to the end of the queue when it comes to accessing this treatment”.

The statement also points out the average daily testing rate in low-income countries which is as low as one-eightieth (1/80) the rate in high-income countries, emphasizing that “Improving access to early testing and diagnosis in primary health care settings will be key for the global rollout of this treatment”.

In anticipation of continued inequities, when submitting the original waiver proposal, the proponents flagged concerns that as new diagnostics, therapeutics and vaccines for COVID-19 are developed, “how these will be made available promptly, in sufficient quantities and at affordable price to meet global demand”.

The Waiver co-sponsors and experts globally have concluded that diversifying and scaling up manufacturing globally is the obvious crucial solution to address the timely availability and affordability of medical products to all countries in need. For this to happen, the barriers of intellectual property (patents, trade secrets and beyond) have to be temporarily waived; as the co-sponsors point to “institutional and legal difficulties” in using TRIPS flexibilities, and the need for greater policy and operational space at the national level to address access needs during a global public health crisis such as COVID-19.

WHAT IS NON-VOLUNTARY LICENSE?

Article 31 of TRIPS governs the issuance of non-voluntary license (also usually referred to as compulsory license). Essentially it is a license issued by a government to a third party or third parties to allow exploitation of the patent without the consent of the patent holder. When the purpose of the license is for “public non-commercial use” (e.g. for supply to government hospitals), such a license is also commonly referred to as a “government use license”. Article 31 of TRIPS does not use any of these terms. Its title simply refers to “Other Use Without Authorization of the Right Holder”, meaning non-voluntary license.

The use of non-voluntary license (NVL) is subject to several conditions.

Prior to issuance of NVL, the user of such a license would have to show that efforts to obtain a voluntary license from the patent holder on reasonable terms have not been successful. However, this requirement of prior negotiations is waived in situations of “national emergency, or other circumstances of extreme urgency or in cases of public non-commercial use” under Article 31(b) of TRIPS.

The Doha Declaration on TRIPS and Public Health (Doha Declaration) adopted by the WTO ministerial conference in 2001 has also clarified the right of each WTO Member to determine “what constitutes a national emergency or other circumstances of extreme urgency” [paragraph 5(c) of the Declaration].

Nowhere in Article 31 is there any requirement to identify all patent holders or to list all patents. In fact, Article 31(b) only requires the right holder to be “notified as soon as reasonably practicable” where NVL is issued in situations of “national emergency, or other circumstances of extreme urgency”. Where NVL is issued for “public non-commercial use”, the obligation is only to inform the patent holder promptly but only to the extent the government knows about the existence of a patent “without making a patent search”.

The issuance of NVL has to be considered on its “individual merits” which simply means based on assessing the particular situation. Importantly, TRIPS is not prescriptive as to the details that should be included in the NVL.

In addition, Article 31(f) states that any use authorized under the NVL should be “predominantly for the supply of the domestic market”. In effect, this limitation does not prevent exports. It simply prevents the export of the majority or all of the production.

[In 2001, the concern that this limitation would create a challenge for countries with insufficient manufacturing capacity, was captured in paragraph 6 of the Doha Declaration. On 30 August 2003, the WTO General Council adopted a decision to waive Article 31(f) of TRIPS, but subject to numerous procedures which unfortunately have largely made that decision unworkable. However, despite the numerous criticisms of the decision, it was converted unchanged into a permanent amendment of the TRIPS in the form of Article 31bis of TRIPS.]

The use of NVL also requires payment of “adequate remuneration” to the patent holder and governments have full discretion to determine the amount. In practice, remuneration as low as 0.5% of sales value has been offered to the patent holder.

THE PROPOSED OUTCOME COMPLICATES USE OF NVL

The proposed TRIPS Waiver outcome could have further simplified the use of NVL by straightforward waivers of the conditions attached to the use of NVLs. Such a move would have been welcomed in a global pandemic.

Instead, the proposed outcome further complicates use of NVL for COVID-19, by introducing additional onerous conditions such as the following:

* The use of NVL is linked to “patents necessary for the production or supply of a COVID-19 vaccine” in paragraph 3(a) of the proposed outcome. A “necessity” test is a difficult standard to meet in the WTO and its inclusion throughout the proposed outcome should be a cause for concern. Such a test has never been the basis for using Article 31 of TRIPS, which allows NVL for any patent.

* The same paragraph requires listing of “all patents covered” by the authorization. This is another impossible condition to comply with given the hundreds of components involved in the development of a vaccine and a complex patent landscape that is often not publicly visible and is constantly evolving. Such a requirement leaves potential manufacturers unprotected, for there is always a risk of infringement if a particular patent is not listed in the authorization.

* Anti-diversion measures are linked to the use of NVL for COVID-19, although such measures are not required under Article 31. It is bewildering that restrictions on re-export are being applied when pooled procurement and sharing of doses are important aspects of equitable access especially during a pandemic.

* There are notification measures that require providing information about authorized entities, products, quantities, countries supplied to be provided to the TRIPS Council, although such measures are not required under Article 31. While on first sight these may seem harmless, in practice it may have a deterrence effect, as even prior to such a measure, pressure to not use NVL is already significant.

On a positive note, the proposed decision waives Article 31(f), i.e. the condition that requires that non-voluntary authorisations under Article 31 are subject to the condition that the authorisation is “predominantly for the supply of the domestic market”. This waiver could be useful when most of the production is for export. Its utility is however hindered by other conditions attached to the use of NVL for production as without production, there cannot be any export. In addition, the absence of clarification on the inapplicability of Article 31bis of TRIPS and related procedures may also be a hindrance.

WHY IS NVL INSUFFICIENT TO ADDRESS GLOBAL PUBLIC HEALTH CRISES?

The Waiver proponents have described at great length the unsuitability of simply relying on NVL to address a global public health crisis, arguing that “Article 31 will not leverage uninterrupted collaboration for countries to share production and supply capacity and to walk out of this pandemic together”.

Article 31 offers a country-by-country, case-by-case solution: whenever and wherever there is a patent barrier, each country will need to issue NVL either to manufacture, import or export the product or its components.

Manufacturers and procurement agencies will wait for government action to issue a NVL, before any production or procurement of “generic” versions can take place. In many countries, inter-ministry coordination, other national procedures, as well pressure from Big Pharma and even developed countries, often mean that NVL are not realised. In contrast, in countries with full freedom to operate (in the absence of patents), as soon as there is indication that a pharmaceutical could work, a manufacturer is immediately able to produce the product.

Importantly, NVL under Article 31 only overrides patents, but does not address other intellectual property barriers such as trade secrets, copyright and industrial designs.

From an access perspective, NVL is an extremely important tool to override patent barriers. Over the years its use has enabled access to affordable medicines. Unwarranted procedures in national and regional legislation and practices, largely the result of ill-advised technical assistance and persistent pressure from developed countries, in particular the US and the EU as well as Big Pharma has obstructed its easy wide use.

There can also be disputes over whether to grant a NVL or over the legal validity of the authorized NVL, impeding expeditious production and supply.

The TRIPS waiver co-sponsors have thus argued that “In the current situation [meaning during a global public health emergency such as COVID-19] where every country is suffering and in desperate need of adequate supplies, relying mainly on Article 31 to address [intellectual property] challenges in ensuring global access is seriously ill-advised”, stressing that “country-by-country, case-by-case approach offered by compulsory licenses hinders North-South, South-South, regional and international collaboration to achieve economies of scale and ramp up global manufacturing and supply.”

In contrast, as argued by the co-sponsors, the proposed waiver requires only a “one-time implementation and, for the duration of the waiver, will remove legal barriers and facilitate collaboration at the regional and global levels, allow the inclusion of multiple technologies in its scope, allow economies of scale to be achieved, motivating further manufacturing, and consequently lower prices. With a waiver, the administrative and procedural delays and conditions linked to Article 31 and 31bis will be avoided, meaning that countries will have full freedom to collaborate, manufacture and supply the required products”.

DISPUTES AND PRESSURE AGAINST USING NVL

Pfizer’s opposition to a petition by Knowledge Ecology International (KEI), for a government use and an open public interest NVL under Article 46 of Law 20-00 of the Dominican Republic to manufacture, import, sell, and export PF-07321332 (nirmatrelvir), perfectly illustrates the challenge in using NVL to meet access needs.

The nirmatrelvir/ritonavir combination marketed by Pfizer has been recommended by WHO “for patients with non-severe COVID-19 who are at highest risk of developing severe disease and hospitalization, such as unvaccinated, older, or immunosuppressed patients”.

In November 2021, Pfizer entered into a voluntary license with the Medicines Patent Pool to facilitate the global production and distribution of PF-07321332, but the license contains restrictive provisions regarding the sale and use of this medicine, in particular excluding the Dominican Republic and many other developing countries from supply under the license.

KEI’s petition dated 3 December 2021 is vehemently resisted by Pfizer and five months on the petition continues to be pending at the National Industrial Property Office.

This is not an isolated incidence.

In May 2021, Biolyse, a Canadian company, agreed to produce and supply Bolivia 15 million doses of COVID-19 vaccine, should a compulsory license for exportation be issued by Canada. However, to date (one year on) there has been no progress or decision from the Canadian government with respect to the issuance of the license. In any case, according to an MSF analysis, Canada’s implementation of Article 31bis NVL for export “contains over 19 sections and over 100 clauses and sub-clauses” and “[s]imply understanding the legislation requires legal training or support”.

Thus, the history of TRIPS is littered with attempts to frustrate the use of NVL. In 2017, faced with the high prices of sofosbuvir against a commitment to heal her people and eradicate Hepatitis C virus, Malaysia issued a NVL for government use that allowed the government to import affordable generic sofosbuvir (the backbone for HCV treatment) from Egypt. In the many attempts to get the Malaysian government to withdraw the NVL, the government faced relentless hostility from the patent holder, Gilead Sciences, as well as various agents of Gilead and the US, including the American-Malaysia Chamber of Commerce (AMCHAM), the US Chamber of Commerce, Global Innovation Policy Center, the White House Coordinator for Intellectual Property, and the Office of the US Intellectual Property Enforcement Coordinator.

In 2015, Ambassador Livia Leu, the Swiss Head of Bilateral Economic Relations and Delegate of the Federal Council for Trade Agreements, sent a letter to Colombia’s Ministry of Health, with the intent to block the issuance of a compulsory license on imatinib, a leukaemia medicine that costs approximately US$20,000 in Colombia while its GNI per capita is only US$7,780.

In various WTO submissions (IP/C/W/670, IP/C/W/672 and IP/C/W/673) the TRIPS waiver co-sponsors have highlighted these pressures that happen at the behest of pharmaceutical corporations including the annual USTR Special 301 Report on intellectual property enforcement that has over the years threatened trade sanctions against many developing countries for issuing NVL to access lower-priced versions of desperately needed medicines. The European Commission has also issued repeated warnings to countries deterring the use of NVLs.

PROPOSED SOLUTION FOR VACCINES ONLY

WHO and global health experts including from the US and the EU are all in agreement that therapeutics and diagnostics are equally important to control COVID-19 and save lives. President Joe Biden himself has launched the “test to treat” initiative domestically. Dr. David Kessler, Chief Science Officer for the Biden Administration’s COVID-19 Response, acknowledged that “An easily administered oral antiviral drug would be an important part of our therapeutic arsenal that would complement the great success of our vaccine efforts.”

The EU COVID-19 therapeutic strategy also states that “vaccines will not eliminate the disease overnight and therapeutics will still be needed for patients in hospitals and at home, including people suffering from “long COVID” (the long-term effects of COVID-19 infection)”. And yet, astoundingly, the leaked proposed solution only applies to vaccines.

To appease the critics, the proposed outcome adds the possibility that the same flawed solution may be extended to therapeutics and diagnostics no later than 6 months. Those who understand the WTO know that the possibility of another decision in the organization concerning public health within the next 6 months is extremely slim. The WTO is notorious for its false promises and missed deadlines.

There is no public health logic as to why developing countries should not have options for accessing therapeutics and diagnostics. Yet, to date, most WHO-recommended treatments for COVID-19 (with patents filed/granted in many jurisdictions) are either unavailable and/or un-affordable in most developing countries.

In July 2021, WHO recommended IL-6 receptor blockers (tocilizumab or sarilumab) for patients with severe or critical COVID-19 infection but many developing countries, e.g. Kenya, Jamaica, India and South Africa, have struggled with affordable access to tocilizumab. In South Africa, despite an expert panel finding that tocilizumab reduced deaths, the recommendation was for the drug to not be used because it is “not affordable at the current offered price”. At the cost of around US$2,000 per patient, this life-saving therapy is largely out of reach for African populations, according to WHO’s regional director for Africa, Matshidiso Moeti.

In September 2021, WHO issued a non-conditional recommendation for the use of a combination of neutralizing monoclonal antibodies (casirivimab and imdevimab) in non-severe COVID-19 patients at the highest risk of severe disease and in severe and critically ill COVID-19 patients with seronegative status. Recognizing the problem of access, it urged “producing companies and governments to address the high price and limited production of the Regeneron antibody combination”.

Baricitinib, patented in 50 developing countries, is another WHO-recommended oral treatment for severe COVID-19. In countries where it is patented, it is priced prohibitively by Eli Lily: US$1,109 (list price), US$371 (France), US$551 (UK), US$886 (Argentina) for a 14-day treatment. The estimated generic price for the same course including 10% profit margin, and 26.6% tax on profit is US$2.

Another example is nirmatrelvir/ritonavir, recently recommended by WHO. Much of Pfizer’s supply has been bought up by high-income countries. Its voluntary licenses excludes the majority of Latin American countries and several other middle-income countries from getting supply. In any case, any generic supply under the license is only expected to happen in 2023, if the conditions of the license are met by the licensees.

Supply constraints can be unlocked, if generic manufacturers in developing countries are engaged, by providing more straightforward legal options to addressing the barrier of intellectual property, i.e. a meaningful TRIPS waiver outcome. With more suppliers in the market, affordability would also increase as prices drop with an increase in competition.

A false solution like the proposed approach, “denying access challenges and [intellectual property] barriers on therapeutics and diagnostics in a global pandemic puts lives at risk while setting a negative precedent for future health emergencies”, the MSF Access campaign has warned.

ELIGIBILITY CRITERIA

It is sheer common sense that during a public health emergency, there can be no place for criteria that deliberately excludes countries with production capacity from using the system to support other countries. From this perspective, the inclusion of a criterion that arbitrarily excludes any developing country WTO Member that exports more than 10 percent of world exports of COVID-19 vaccine doses in 2021, and all developed countries from using the proposed system not only as importing countries but also exporting countries is reprehensible. Clearly, petty politics are in play.

Such a criterion is a major step backwards for addressing global public health concerns and a significant departure from the Doha Declaration on TRIPS and Public Health adopted at the height of the HIV/AIDS crisis that is applicable to all WTO Members. Even Article 31bis of TRIPS is applicable to all WTO Members, with countries having the option to self-opt out from using the mechanism for purposes of importing products. There is no exclusion of any country for purposes of exporting products.

NOT FIT FOR PURPOSE

COVID-19 brought most countries to a standstill, shutting down schools, economies, lives and livelihoods with massive socio-economic consequences. And it is still far from over. Continued timely and affordable access to vaccines, therapeutics and diagnostics is at the heart of keeping economies and schools open, controlling infections, managing hospitalisations and limiting the emergence of a new and more lethal variant.

The lesson we should be learning is that the current system for producing vaccines, therapeutics and diagnostics is highly concentrated and unsuited to respond to access needs for COVID-19 and for future global health emergencies. We need to create a robust enabling environment to diversify and expand production in developing countries, and that will expedite timely and affordable access, hence the urgent need for a meaningful TRIPS waiver outcome that reflects the direction and vision as proposed by the co-sponsors.

For this, Ngozi’s proposed solution is not fit for purpose.+