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IP Waiver and the COVID-19 Vaccines

It’s not often that patents make the headlines in mainstream media, but that is what has happened  since 5 May 2021 when the US administration expressed support[1] for a temporary waiver of intellectual property rights relating to COVID-19 vaccines.

The proposal was originally made in early October 2020 by India and South Africa in a joint communication[2] to the World Trade Organisation (WTO) under Article IX-3 of the Marrakesh Agreement Establishing the World Trade Organization[3].  The proposal goes beyond waiving just patent rights, which have been the subject of the headlines, and proposes waiving member states’ obligations to provide copyright protection, design protection, patents and protection for confidential information (under sections 1, 4, 5 and 7 of Part II of the TRIPS Agreement[4]) and waiving the obligation to provide corresponding enforcement rights (Part III of TRIPS), in respect of intellectual property rights ‘in relation to prevention, containment or treatment of COVID-19’.

Whilst US support for the waiver appears to be limited to waiving protections for COVID-19 vaccines, the proposal from India and South Africa extends further, encompassing other technologies.  Notably, their submission to the WTO was supported only by references to reports from two US news sites, anecdotally suggesting that patents relating to N95 respirator masks were having an impact on supply of the N95 masks in the US.

Will a waiver of intellectual property rights in relation to prevention, containment or treatment of COVID-19 have the desired effect of improving availability and access to the COVID-19 vaccines?

As at April 2021, fourteen vaccines have been authorised by at least one regulatory authority worldwide, and a further 16 are in Phase III trials.[5][6][7]

The developer of one COVID-19 vaccine, Moderna, announced in October 2020 that it would not enforce its COVID-19 related patents against third parties using its patented mRNA technology during the pandemic and that it is willing to licence its intellectual property for COVID-19 for the post-pandemic period[8].  Anecdotally, it appears that, despite that offer, no third parties have taken up Moderna’s offer.  This may be because there are other patents relating to mRNA vaccines which would be equally problematic for Moderna licensees, but some commentators, including Alex Tabarrok[9], Professor of Economics at George Mason University, and chemistry and life-sciences commentator, Derek Lowe[10], have suggested that it is because of the complexity of the manufacturing process.

That takes us to a further argument against the usefulness of a patent waiver as a means for increasing the supply of vaccines.  Lowe argues that patents are not a primary cause of current vaccine supply constraints – ‘they’re not the bottleneck or the “rate-limiting step”, to use the language of chemistry. IP could be, if several other bottlenecks would get out of the way, but for now I don’t think that it is.’  Lowe goes on to list numerous bottlenecks to ramping up vaccine production, from available hardware, consumables and reagents to a shortage of the highly skilled scientists and engineers required to produce the vaccines.  He notes that cell culture bags have been a limiting step in the manufacture of the Novavax vaccine, as have filtration membranes for it and a number of other vaccines.  Lowe observes that waiving vaccine patents will not change the availability of these necessities of the manufacturing process.

Similar arguments are made by Tabarrok, who has highlighted that a US embargo on vaccine supplies to India under the Defense Production Act  have affected production of US-based Novovax’s COVID-19 vaccine, a point also reported elsewhere[11][12].  Novavax has delayed seeking approval of its COVID-19 vaccine until July 2021 due to manufacturing issues related to an assay needed in order to obtain regulatory approval[13].

This highlights a further issue – that, even if there were a patent waiver, there would be no waiver of the regulatory requirements for vaccine marketing authorisation.  Although the SARS‑CoV‑2 (coronavirus) pandemic has seen the majority of vaccines initially granted emergency use authorisation in most jurisdictions before the grant of full authorisation, the authorisation process is necessarily time-consuming and presents a block to release of a vaccine even once the development hurdles have been overcome.

The US administration’s use of the Defense Production Act to protect supplies of raw materials and consumables within the US takes us to a different aspect of the sphere of the WTO’s activities – tariff and non-tariff measures (NTMs) in international trade.  The UN Conference on Trade and Development has noted[14] 190 trade-restricting NTMs applied to global trade in COVID-19 related goods, principally in respect of pharmaceuticals, PPE and basic foodstuffs, compared with 112 trade-facilitating NTMs.  They also note that trade-restrictive NTMs are starting to appear in respect of COVID-19 vaccines.

Accordingly, whilst there are anecdotal suggestions that patents are impeding production of COVID-19 vaccines, there appears to be factual evidence that insufficient production capacity, either at a plant level or in terms of raw materials and consumables, as well as national protective measures, such as NTMs, has had, and continues to have, a significant impact on the world’s ability to increase the supply of COVID-19 vaccines.

The main argument in support of a patent waiver appears to be that the timely supply of vaccines, in sufficient quantity and affordability, should not be hindered during a pandemic by patents.

As noted by Lowe, whilst IP is currently not a bottleneck in the manufacturing and distribution of vaccines since there are many more substantive impediments, it is true that IP could become a bottleneck in the future once the current issues of production capacity and supply chains have been solved.  The proposal from India and South Africa requires the agreement of three quarters of WTO members to come into effect and must specify a termination date.  A waiver granted for a period of more than one year must be reviewed annually.  The US has acknowledged that agreement on a waiver will take time to negotiate.  It is therefore a valid argument that discussions around a waiver should happen now with a view to ensuring that intellectual property never does become the ‘rate-determining step’ (in Derek Lowe’s words) in the development, production and distribution of COVID-19 vaccines, even if it is difficult to contemplate a situation where IP could play this role. However, current evidence appears to suggest that a waiver introduced at this stage would be, at best, ineffectual, and at worst, potentially damaging to future vaccine development.

Additional justifications for the waiver include the fact that considerable amounts of public money has been used to fund research and development of the vaccines and the public purse should not be required to pay twice. Such an argument is based, of course, on penalising the companies involved in the development of vaccines, or at least not allowing them to be rewarded, rather than improving the production and distribution of vaccines.

Whilst some pharmaceutical companies, such as Pfizer, are generating substantial profits from their COVID-19 vaccines[15], others, such as AstraZeneca and Johnson & Johnson are foregoing profits by producing and selling their vaccines at cost price and are not profiting from the public investment in the vaccine or from their own investment in the vaccine.

Vaccine development is expensive and notoriously difficult.  Pharmaceutical companies invest a substantial proportion of the profits they make on any individual product in future research and development, often without success in terms of producing a new income-generating product.  As Lowe notes: ‘Remember, there was no guarantee that any of these things would work – several large and very competent drug companies (Merck, GSK, Sanofi) failed in their own vaccine efforts.

Whether for companies such as Pfizer, that have planned to generate profits, or companies such as AstraZeneca and Johnson & Johnson, who are selling their vaccines at cost price, or companies such as Merck, GSK and Sanofi, who have tried but failed, so far, to produce a COVID-19 vaccine, the risk that they could be deprived of patent protection for their innovations would act as a disincentive for companies to invest in vaccine research in the future.  The development of COVID-19 vaccines in such a short space of time since the virus was detected and sequenced shows what can be achieved in healthcare with substantial investment, both public and private, and substantial focus on one target.

That success, however, was largely built on the investment in inventive work carried out over many, many years by the vaccine companies and the subject of many patent applications filed long before coronavirus was characterised.

The coronavirus, like so many viruses, is expected to be at least one step ahead of humanity in its determination to beat our vaccines.  We will need new vaccines, possibly very soon and possibly regularly. Incentivisation of new vaccine production surely offers more hope of controlling the virus.

 

Alternative approaches

The US has acknowledged that it is likely to take a substantial period of time to gain the agreement of three quarters of the members of the WTO to acceptable terms of an IP waiver.  Is there an alternative that might be quicker or represent a better balance of risk and reward, as the vaccine companies might see it?

Compulsory licensing would be an obvious option and is an option already provided for under Article 31 of the TRIPS agreement[16] in the case of a national emergency or other circumstances of extreme urgency; and, consequently, is incorporated already into the national patent law of many countries.  See, for example, ‘Compulsory licensing in Europe’ published by the EPO[17] and see also ‘Compulsory licensing of pharmaceuticals and TRIPS’ by the WTO[18].

Compulsory licences, like patents, are territorial.  As such, where one country wishes to import a vaccine under a compulsory licence but is not in a position to produce the vaccine itself, it will need the cooperative granting of a compulsory licence in a potential exporting country.  Although a patent holder will not have any control over the granting of compulsory licences, the patent holder is entitled, under Article 31(h) of the TRIPS agreement to ‘be paid adequate remuneration in the circumstances of each case, taking into account the economic value of the authorisation’.

On 29 April 2021, the Brazilian Senate approved the adoption of a bill facilitating the compulsory licensing of COVID-19 vaccines.  The bill will now be voted on by the Brazilian House of Representatives before being submitted, if approved, to the President for approval and publication.

 

Summary

Whilst there may be arguments in favour of removing intellectual property as an impediment to the broadest possible development, production and distribution of COVID-19 vaccines, there is no evidence that intellectual property has acted as any impediment in conquering coronavirus to date, whilst there is evidence that production capacity, supply chain issues and non-tariff measures have had, and continue to have, a concrete impact on the rate of increase in production capacity of the vaccines.  Most commentators express the view that a patent waiver will be unlikely to have any short-term impact on vaccine production volumes and is also unlikely to have any long-term impact, especially in view of the evidence of the collaborations that the COVID-19 vaccine companies’ have already entered into, with a view to maximising the production of their vaccines.  A patent waiver may however, have serious unintended consequences for future vaccine development.

Further reading

Covid-19 and the Role of Intellectual Property. A position statement of the Max Planck Institute for Innovation and Competition (7 May 2021)[19]

[1] https://ustr.gov/about-us/policy-offices/press-office/press-releases/2021/may/statement-ambassador-katherine-tai-covid-19-trips-waiver

[2] https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/IP/C/W669.pdf&Open=True

[3] https://www.wto.org/english/docs_e/legal_e/04-wto_e.htm

[4] https://www.wto.org/english/docs_e/legal_e/trips_e.htm

[5] https://en.wikipedia.org/wiki/COVID-19_vaccine

[6] https://en.wikipedia.org/wiki/List_of_COVID-19_vaccine_authorizations

[7] https://www.who.int/publications/m/item/draft-landscape-of-covid-19-candidate-vaccines

[8] https://investors.modernatx.com/news-releases/news-release-details/statement-moderna-intellectual-property-matters-during-covid-19

[9] Patents are Not the Problem – https://marginalrevolution.com/marginalrevolution/2021/05/ip-is-not-the-constraint.html

[10] https://blogs.sciencemag.org/pipeline/archives/2021/05/06/waiving-ip

[11] https://www.fiercepharma.com/manufacturing/lack-grow-bags-a-hefty-problem-for-novavax-s-covid-19-vaccine-production-push

[12] https://www.bloomberg.com/news/articles/2021-03-04/largest-vaccine-maker-warns-of-delays-as-u-s-prioritizes-pfizer?sref=XGjS8839

[13] https://www.fiercebiotech.com/biotech/novavax-delays-covid-19-vaccine-regulatory-submissions-again

[14] https://unctad.org/topic/trade-analysis/non-tariff-measures/covid-19-and-ntms

[15] Pfizer expects Covid vaccine demand for years – https://www.bbc.co.uk/news/business-56979406

[16] https://www.wto.org/english/docs_e/legal_e/trips_e.htm#art31

[17] http://documents.epo.org/projects/babylon/eponot.nsf/0/8509F913B768D063C1258382004FC677/$File/compulsory_licensing_in_europe_en.pdf

[18] https://www.wto.org/english/tratop_e/trips_e/public_health_faq_e.htm

[19] https://www.ip.mpg.de/fileadmin/ipmpg/content/stellungnahmen/2021_05_07_Position_statement_Covid_IP_waiver.pdf

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