Patent monopolies and the pandemic emergency: Obstacle or opportunity?

Thanks to Rosa Maria Torraco for collaborating on this article

The debate over patents in health care

The outbreak of the Covid-19 pandemic generated extensive debate regarding equitable access to vaccines and medical treatments. In this framework, discussion of the role of patents in health care came to the fore: Are patents a resource, or are they instead an obstacle to the widespread protection of public health during a pandemic emergency?

Indeed, while patents certainly offer an incentive for research and reward pharmaceutical companies that invest in innovative but expensive projects with uncertain outcomes, they have also been criticised for slowing down dissemination of vaccines and new medical treatments needed to combat the pandemic.^[1]

The TRIPS Agreement

In the context of this debate, there has been intense discussion over the role of the TRIPS Agreement (The Agreement on Trade Related Aspects of Intellectual Property Rights), promoted in the 1990s by the WTO to set the standard for intellectual property protection.^[2]

Section 5 of part II of the TRIPS Agreement contemplates several specific types of limitations in the context of patent protection that may prove beneficial in a medical emergency.

First, according to art. 30 of the TRIPS Agreement, Member States may provide limited exceptions to the exclusive rights conferred by a patent, provided that such exceptions do not unduly conflict with normal exploitation of the patent in light of the legitimate interests of third parties.^[3]

In addition to this, when state legislation permits it and certain conditions are met, art. 31 grants Member States the ability to provide for ‘other uses’ of the subject of a patent that lie outside of the monopoly, without requiring the consent of the owner. Though that provision does not explicitly mention this term, it provides a definition of what are commonly known as ‘Compulsory Licenses.’^[4] However, this provision also sets some limitations for the issuing of such licenses.

More specifically, art. 31(f) states that ‘any such use shall be authorized predominantly for the supply of the domestic market of the Member authorizing such use,’ and, according to art. 31(h), ‘the right holder shall be paid adequate remuneration in the circumstances of each case, taking into account the economic value of the authorization.’^[5]

Compulsory licenses are specifically cited in the Doha Declaration on TRIPS Agreement and Public Health, a declaration adopted by the WTO Ministerial Conference of 2001 that acknowledges some flexibility regarding the TRIPS Agreement.

Indeed, according to paragraphs 5(b) and 5(c) of the Doha Declaration, each Member has the right to grant compulsory licenses, the freedom to determine the grounds upon which such licenses are granted and the right to decide what counts as a national emergency. It also states that a public health crisis can be considered a national emergency.^[6] In the light of these statements, there is no doubt that Covid-19 can be regarded as a national emergency and Member States have the opportunity to use compulsory licenses as a tool to fight the pandemic.

Moreover, paragraph 6 of the Doha Declaration recognised that WTO members with insufficient or no manufacturing capacities in the pharmaceutical sector could face difficulty making effective use of compulsory licensing under the TRIPS Agreement,^[7] which led to the introduction of art 31-bis of the TRIPS Agreement.^[8]

Art. 31-bis of the TRIPS Agreement establishes two main waivers: a) the obligations under article 31(f) shall not apply with respect to its granting a compulsory license to the extent necessary for the purposes of production of a pharmaceutical product and its export to an eligible importing Member; and b) where a compulsory license is granted for the same products in the eligible importing Member, the obligation of that Member under article 31(h) shall not apply with regard to those products for which remuneration in accordance with the first sentence of this paragraph is paid in the exporting Member.^[9]

Compulsory licensing: the Italian case

Although some countries already had a framework in place that effectively allowed them to issue compulsory licenses,^[10] other TRIPS Agreement signatories chose to introduce new rules or amend their laws in order to equip themselves with strong frameworks that could prove essential in a health emergency like the Covid-19 pandemic.^[11]

Italy, among other countries, has legislation that provides compulsory licenses: articles 70–73 of the Italian Industrial Property Code (‘IP Code’), deriving from articles 30–31 of the TRIPS Agreement. However, these articles do not contemplate the case of granting a compulsory license to deal with a national health emergency. They also require a complex and lengthy procedure for issuance of a compulsory license. For example, a compulsory license cannot be obtained until at least three years have passed since the granting of the patent or four years since the filing of the patent application. These requirements are obviously incompatible with a health emergency.

For this reason, through the law converting Decree-Law No. 77/2021 (known as the ‘Simplification Decree’), article 70-bis was introduced into the IP Code.^[12]

Under this new provision, in the event of a declaration of a state of national emergency motivated by health reasons, in order to face proven difficulty with the supply of specific medicines or medical devices deemed essential, compulsory licenses may be granted without waiting three years from the issuance of the patent or four years from the filing of the application, as for an ordinary compulsory license. These licenses are non-exclusive, non-alienable and primarily geared to supply of the domestic market. They remain valid for the extent of the emergency period or up to a maximum of 12 months after the emergency period ends. The owner of the intellectual property rights must be provided with appropriate remuneration, based on the economic value of the authorisation. The licence must be granted by decree of the Minister of Health, in consultation with the Minister of Economic Development, after obtaining the opinion of the National Agency for Regional Health Services on the essentiality and availability of the devices with respect to the current health emergency and after hearing the holder of the intellectual property rights.^[13]

Article 70-bis represents a major step forward for Italy in the implementation of compulsory licenses as a tool in an emergency, as set forth in the TRIPS Agreement.^[14]

The WTO waiver

Several developing countries have deemed insufficient the tools provided by the TRIPS Agreement to face the pandemic, implemented as described above in Italy. These countries have raised concerns about the adequacy of intellectual property rights in view of the need to deal with the pandemic.

Indeed, at the Council Meeting of 15 and 16 October 2020, India and South Africa proposed waiving the obligations of Member States in the implementation, application and enforcement of the TRIPS Agreement (Sections 1, 4, 5, and 7). According to these countries, that waiver should remain in place until universal vaccination was achieved and most of the world’s population had acquired immunity.^[15]

Subsequently, on 25 May 2021, given the proliferation of new variants, India and South Africa presented a revised proposal with the support of other developing countries. The preamble text had been amended to reflect the concern over continuous mutations and the introduction of new variants, as well as the need for access to vaccinations globally.^[16]

On 18 June 2021, the EU responded with three suggestions in relation to article 31bis of the TRIPS Agreement. First, the EU suggested that for the purposes of issuing a compulsory license pursuant to Articles 30 and 31 of the TRIPS Agreement, a Member State could waive the requirement to make efforts to obtain authorisation from the rights holder provided in article 31 (b). Second, the EU proposed that for the purposes of determining the remuneration to be paid to the rights holder, a Member could provide that it reflects the price charged by the manufacturer of the vaccine or medicine produced under the compulsory license. Third, it proposed that the exporting Member could provide in a single notification a list of all countries to which vaccines and medicines are to be supplied by the exporting Member directly or through indirect means.^[17]

Subsequently, in November 2021, the WTO engaged in informal negotiations with key actors, and on 17 June 2022, it issued a decision about a partial waiver of some IP rules in light of the Covid-19 pandemic.^[18]

The WTO decision contains a major waiver and some clarifications meant to remain in place for five years. The WTO determined that an eligible Member may authorise the use of the subject matter of a patent under Article 31 without the right holder’s consent through any instrument available in the law of the Member State (such as executive orders, emergency decrees, government use authorisations and judicial or administrative orders), whether or not the Member has a compulsory license regime in place. Moreover, it specified that an eligible Member does not need to require the proposed user of the subject matter of a patent to make efforts to obtain authorisation from the rights holder as set out in article 31(b). Furthermore, an eligible Member may waive the requirement of article 31(f) that the authorised use under article 31 be primarily for the supply of its domestic market and may allow any proportion of the products manufactured to be exported to eligible Members. Finally, determination of adequate remuneration under article 31(h) may take into account the humanitarian and not-for-profit purposes of certain vaccine distribution programmes aimed at providing equitable access to Covid-19 vaccines to support manufacturers in eligible Member States to produce and supply these vaccines at affordable prices for eligible Members.^[19]

Reaction was swift and contrary.

Several NGOs expressed disappointment with the decision, as they had been looking for a stronger waiver of IP regulations. For instance, MSF argued that many critical points were not properly addressed in the 17 June decision, including the issues of pharmaceutical monopolies and access to life-saving medical tools.^[20] Amnesty International argued that the WTO did not make an actual decision, but rather provided clarification, and that without a stronger waiver, there is a risk that the right to health will lose out to intellectual property rights.^[21]

For their part, leading representatives of the pharmaceutical industry were not satisfied either. They claimed IP rights do not constitute an obstacle to the dissemination of Covid-19 vaccines and therefore didn’t need to be waived. Thomas Cueni, director general of the IFPMA, the body representing biopharmaceutical companies in Geneva, stated, ‘The decision is a disservice to the scientists who left no stone unturned and undermines manufacturing partnership on every continent. The single biggest factor affecting vaccine scarcity is not intellectual property, but trade. This has not been fully addressed by the World Trade Organization.’^[22]

Final observation

Providing tools that allow a (limited) waiver of intellectual property rights, such as the new compulsory license introduced in Italy, is certainly a positive step in dealing with any health emergency, not merely the one linked to Covid-19.

However, a more decisive waiver, or worse, a total loosening of intellectual property rights could involve more risks than benefits.

As mentioned above, there is a strong risk of discouraging investment in research on the technologies subject to the patent waiver.

And that’s not the only risk in play. It is not easy to identify which patents cover technologies of interest. For example, with respect to Covid-19, there is not just one patent concerning the anti-Covid vaccine. Instead there are clusters of patents that were filed even before the outbreak of the pandemic and concern technologies in use with respect to more than just the anti-Covid vaccine.

Finally, the patent waiver does not seem sufficient to guarantee large-scale production of the products covered by patents. In fact, parallel to the patents there is an entire set of technology and know-how for the production of drugs and vaccines that is not described in the patents and that only the owners of the patents know. This know-how can only be transmitted with the consent of the patent owner through commercial agreements. Add to that the lack of production sites, especially in developing countries with insufficient or no manufacturing capacities in the pharmaceutical sector.

In short, there are many fronts on which to act, including via commercial agreements with patent holders to facilitate the transfer of know-how and the creation and management of new production sites. Political choices will be crucial to more equitable distribution of vaccines and drugs.^[23]

Notes

[1] Albano, L. (2021). ‘La cura della salute. Quali prospettive per un più equo accesso al farmaco, oggi?’ Rivista Di BioDiritto, 2021(3), 353.

[2] WTO | intellectual property (TRIPS) – agreement text – contents. (2022). World Trade Organization. Retrieved August 24, 2022, from www.wto.org/english/docs_e/legal_e/27-trips_01_e.htm.

[3] TRIPS Agreement, art. 30 (1994). www.wto.org/english/docs_e/legal_e/27-trips_04c_e.htm.

[4] Haugen, H. M. (2021). ‘Does TRIPS (agreement on Trade‐Related aspects of intellectual property rights) prevent COVID‐19 vaccines as a global public good?’ The Journal of World Intellectual Property, 203–204.

[5] TRIPS Agreement, art. 31 (1994). www.wto.org/english/docs_e/legal_e/27-trips_04c_e.htm.

[6] Doha Declaration, § 5(b) and 5 (c) (2001): www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_trips_e.htm.

[7] Doha Declaration § 6 (2001): www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_trips_e.htm.

[8] Vincent, N. G. (2020). ‘Trip-ing up: The failure of article 31bis.’ Gonzaga Journal of International Law, 11–12.

[9] TRIPS Agreement, art. 31-bis (2005): www.wto.org/english/res_e/publications_e/ai17_e/trips_art31_bis_oth.pdf.

[10] In the 2000s, Brazil, Ecuador, Ghana, Indonesia, Malaysia, Mozambique, Thailand, Rwanda, Zambia, and Zimbabwe each issued compulsory licenses for antiretroviral drugs to meet the needs of their HIV-infected citizens who could not afford antiretroviral therapy. See Beall, Kuhn (2012, January). ‘Trends in compulsory licensing of pharmaceuticals since the Doha declaration: A database analysis.’

[11] For instance: Canada, Chile, Ecuador, and Israel. For further details, see Wong, H. (2020). ‘The case for compulsory licensing under Covid-19.’ Journal of Global Health, 10(1), 2.

[12] Simplification decree, no. 77/2021, art. 56-bis (2021): www.gazzettaufficiale.it/eli/id/2021/07/30/21A04731/sg.

[13] Jacchia, Stillo (2021, July 21). ‘Licenze obbligatorie per i brevetti ed emergenze sanitarie. Via libera col nuovo emendamento al decreto recovery.’Www.Dejalex.Com. Retrieved August 23, 2022, from www.dejalex.com/2021/07/licenze-obbligatorie-per-i-brevetti-ed-emergenze-sanitarie-via-libera-col-nuovo-emendamento-al-decreto-recovery/?lang=it.

[14] On the topic, see Grillo, G. (2021, July 23). ‘Sanità sostenibile, le licenze obbligatorie come primo passo per superare la pandemia.’ Sanità24. Retrieved August 24, 2022, from www.sanita24.ilsole24ore.com/art/in-parlamento/2021-07-23/sanita-sostenibile-licenze-obbligatorie-come-primo-passo-superare-pandemia-092257.php?uuid=AEA8RqY.

[15] World Trade Organization. (2020, October). ‘Waiver from certain provisions of the TRIPS Agreement for the prevention, containment and treatment of Covid-19-Communication from India and South Africa.’ https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/IP/C/W669.pdf&Open=True.

[16] World Trade Organization. (2021, May). ‘Waiver from certain provisions of the TRIPS Agreement for the prevention, containment and treatment of Covid-19-Revised Decision Text.’ www.keionline.org/wp-content/uploads/W669Rev1.pdf.

[17] World Trade Organization. (2021, June). ‘Draft general council declaration on the TRIPS Agreement and public health in the circumstance of a pandemic-communication from the European Union to the Council for TRIPS.’ https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/IP/C/W681.pdf&Open=True

[18] Balasubramaniam, T. (2022). ‘TRIPS Waiver Negotiations Go Down to the Wire in the Run-Up to MC12.’ International Institute for Sustainable Development. Retrieved August 24, 2022, from www.iisd.org/articles/policy-analysis/trips-waiver-negotiations-mc12.

[19] Draft ministerial decision on the TRIPS agreement. (2022, June). https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/WT/MIN22/W15R2.pdf&Open=True.

[20] ‘Wto trova un’intesa sulla sospensione dei brevetti per i vaccini anti-covid, inadeguata per Msf.’ (2022, June 17). AboutPharma. Retrieved August 23, 2022, from www.aboutpharma.com/sanita-e-politica/wto-trova-unintesa-sulla-sospensione-dei-brevetti-per-i-vaccini-anti-covid-inadeguata-per-msf.

[21] ‘COVID-19: la decisione ministeriale dell’OMC sull’Accordo TRIPS non stabilisce delle regole che potrebbero salvare vite umane.’ (2022, June 20). Amnesty International Italia. Retrieved August 23, 2022, from www.amnesty.it/covid-19-la-decisione-ministeriale-dellomc-sullaccordo-trips-non-stabilisce-delle-regole-che-potrebbero-salvare-vite-umane.

[22] Jacchia, Stillo, R. A. M. (2021, July 21). ‘Licenze obbligatorie per i brevetti ed emergenze sanitarie. Via libera col nuovo emendamento al decreto recovery.’ Www.Dejalex.Com. Retrieved August 23, 2022, from www.dejalex.com/2021/07/licenze-obbligatorie-per-i-brevetti-ed-emergenze-sanitarie-via-libera-col-nuovo-emendamento-al-decreto-recovery/?lang=it.

[23] Formoso, Mancini (2021). ‘Accesso ai vaccini anticovid: Ricerca, sviluppo e ruolo dei brevetti.’ Recenti Progressi in Medicina, 112(7), 50; Biggi, C. (2022), ‘Brevetti farmaceutici e life science di fronte alla sfida del Covid’, Il Diritto Industriale 2/2022, 168.