TRIPS waiver, circa (Feb 7) 2022

On October 2, 2020, India and South Africa tabled IP/C/W/669 before the World Trade Organization (WTO) Council for Trade-Related Aspects of Intellectual Property Rights (TRIPS). The title of the tabled paper was “Waiver from certain provisions of the trips agreement for the prevention, containment and treatment of COVID-19.”

WTO Director-General Ngozi Okonjo-Iweala last week expressed hope that the WTO would reach a consensus at the end of the month, one year and five months after the waiver was first proposed.

The 2020 TRIPS waiver proposal set off a public debate. While many of the loudest voices portrayed the waiver as a looming elimination of intellectual property on COVID-19 countermeasures, the actual proposal, in its 2020 form, was limited. The WTO does not grant or enforce patents or other relevant intellectual property rights. Instead, that happens at the national level, albeit regulated, to some extent, by the WTO through the TRIPS Agreement. What South Africa and India proposed was a temporary waiver of some of the WTO’s rules on intellectual property, “in relation to prevention, containment or treatment of COVID-19.” The proposal put forth that:

1. The obligations of Members to implement or apply Sections 1, 4, 5 and 7 of Part II of the TRIPS Agreement or to enforce these Sections under Part III of the TRIPS Agreement, shall be waived in relation to prevention, containment or treatment of COVID-19, for [X] years from the decision of the General Council.

2. The waiver in paragraph 1 shall not apply to the protection of Performers, Producers of Phonograms (Sound Recordings) and Broadcasting organizations under Article 14 of the TRIPS Agreement.

The India and South Africa proposal was just that, a proposal. If the WTO is able to act on the issue, it will come through consensus, and after negotiations. The European Union has voiced the strongest opposition, and the United States, while supporting some type of waiver, has insisted it be limited to vaccines, despite the relevance and importance of therapeutics, diagnostics and other technologies in addressing the pandemic.

Not every WTO negotiation on intellectual property and health ends well. The 2001 negotiation that resulted in the Doha Declaration on TRIPS and Public Health produced an important and consequential declaration. On a key issue, however — the WTO rules on exports under a compulsory license — the resolution only promised that the WTO would “find an expeditious solution” to one of the most obvious flaws in TRIPS. Article 31.f of the TRIPS limits exports under a compulsory license to less than half of national production. This restriction was designed to limit the economic viability of compulsory licenses by restricting economies of scale, a jarring disconnect with the core mission of the WTO, which is to promote trade and economic efficiency. Making things worse, paragraph 6 of the 2001 Doha Declaration described the problem as “insufficient or no manufacturing capacities in the pharmaceutical sector” as if this was purely a technical issue, having nothing to do with economics. This is the WTO, of course, an institution whose whole existence is based upon the insight that comparative advantage and economies of scale are important enough to justify a form of world government with enforcement powers that no UN agency has for any issue.

The unfinished business of paragraph 6 was then the subject of a negotiation that occupied all of 2002, was formally adopted on August 30, 2003, and which later turned into Article 31bis of the TRIPS. 31bis is a monstrosity of bad faith, hypocrisy and bureaucratic red tape. The “fix” for the problem in the 20-word Article 31.f was the 468-word Article 31bis, a 1042-word Annex to the TRIPS Agreement, 220 words in nine footnotes in the Annex, plus a 136-word Appendix to the Annex to the TRIPS Agreement.

In addition to creating a complicated, burdensome and so far unworkable text, 31bis provided that Australia, Canada, the 27 member states in the European Union, Iceland, Japan, New Zealand, Norway, Switzerland, and the United States all agreed they would not use the system, as importing countries, even in an emergency or other circumstances of extreme urgency.

Early in the pandemic, the 37 WTO members who had opted out of using Article 31bis as importing members were asked to “notify the WTO that they have changed their policy and now considers itself an eligible importing country.” None did.

As the WTO closes in on a possible agreement (and there is no certainty on that), it’s important to note how narrow the original waiver proposal was. Unlike the 2001 Doha Declaration on TRIPS and Public Health or the 31bis “solution” to the export issue, the proposal was for a waiver for only a single disease (a major area of controversy in 2001–2003, when the U.S. and the EU sought to limit the scope to a number of infectious diseases, but failed). The waiver was also proposed to be limited in time, perhaps for only a few years.

There are concerns that the negotiations will produce an outcome even more limited. On November 18, 2021, KEI wrote a letter to USTR head Ambassador Katherine Tai, identifying three topics of concern in the negotiations. KEI said that for the waiver to be useful, it should include:

1. An unconditional waiver of Article 39. This is the TRIPS article that deals with trade secrets and undisclosed information, including rights in clinical trial test data and protection of manufacturing know-how.
2. An unconditional waiver of Article 31.f. This is the 20 word restriction on exports under a compulsory license.
3. The waiver should not be limited to vaccines. Therapeutics, diagnostic tests and other technologies should be included if one is serious about dealing with the current pandemic.

On December 3, 2021, KEI wrote another letter to Ambassador Tai at USTR, asking that the U.S. government unilaterally make concessions in bilateral and plurilateral trade agreements, including in particular, the provisions in such agreements that required five years of exclusive rights in test data used to register drugs or vaccines. This has been an under-discussed topic in the negotiations, although clearly these agreements, if enforced, would eliminate or narrow any benefits of the TRIPS waiver for many countries.

Now in 2022, the negotiators have been asked to consider proposals to limit the number of countries that can use the waiver, raising the specter of a 31bis or even worse outcome regarding the limits in ambition and protectionist design, and running counter to efforts to rapidly scale up global access to new products (reports here and here).

A lot has happened since the waiver was proposed on October 2, 2020. Effective vaccines and therapeutics were then not yet approved by regulators. In 2020, everyone was promised that COVAX would ensure a timely and equitable supply of vaccines for the developing world. Since then we have seen several vaccines and therapeutics reach the market, and stark inequality in terms of access to those products, particularly in 2021, but persisting to this day. While the European Union, Canada, the UK and other countries have sought to run out the clock, the waiver is still relevant, because the pandemic may last a long time, and the waiver may be useful in connection with some of the newer countermeasures, such as some of the new therapeutics or diagnostic tests, or for vaccines, for both the products themselves and some of the patented inputs.

What would make the work on the waiver more interesting is if governments also address the obvious need to create cooperation on the sharing of R&D costs of new countermeasures, and built-in mechanisms to de-monopolize access to the technology and manufacturing know-how. These are topics the WHO may address in its current negotiations on a pandemic treaty, but given the disappointing WTO effort on the waiver, one has to be concerned of the lack of leadership and good will.

If governments can’t effectively regulate drug or vaccine monopolies in a global pandemic like COVID 19, or implement exceptions to intellectual property rights in the face of glaring and globally harmful inequalities of access, it becomes even more important to begin to think more seriously about the more transformative reforms associated with delinking R&D incentives from high prices and government granted temporary monopolies. That’s a topic for another article.