Profits over People: Intellectual Property Barriers and the Equitable Distribution of COVID-19 Vaccines

July 12, 2021        Reading Time: 6 minutes

Reading Time: 6 min read

Image Credits: Wikimedia Commons

*Chathuni Pabasara

The effective and equitable rollout of COVID-19 vaccines is a prerequisite for an inclusive and resilient global recovery. Yet, the developing world’s ability to inoculate its populations against COVID-19 has been undermined by financial constraints, logistics and infrastructure challenges, advance purchase agreements between wealthier nations and vaccine producers and intellectual property (IP) barriers. Advanced economies have received more than 87% of the 700 million vaccine doses administered globally while low-income countries have only received 0.2%. The waiver of IP rights to COVID-19 vaccines and therapeutics is a crucial first step in scaling up global production to ensure the universal and timely delivery of vaccines. But most advanced economies, where many pharmaceutical companies are based, firmly oppose such a waiver. This blog reviews that the arguments made against the waiver are unfounded and why the waiver is a necessity in ramping up global production. 

In October 2020, India and South Africa proposed the waiver of IP rights of COVID-19 vaccines and therapeutics at the World Trade Organization (WTO). The proposal states that IP rights hinder the timely provision of vaccines and therefore, seeks to waive the implementation, application and enforcement of certain rules of the WTO’s Trade-Related Aspects of Intellectual Property (TRIPS) agreement until a majority of the world’s population has been vaccinated. The waiver, which would have allowed generic manufacturers in developing countries to produce vaccines at lower costs without the fear of IP liability, was blocked by the U.S., U.K, Switzerland, E.U. member states, Japan, Norway, Canada, Australia and Brazil. The waiver is supported by more than 100 members but as WTO decisions require consensus, all 164 members need to agree. And while the United States recently reversed its position and announced support of the waiver, pharmaceutical companies, the EU, U.K. and other advanced nations remain opposed.

The Case Against the Waiver

Opponents of the waiver claim that supply shortages are a result of limited advanced manufacturing capabilities in developing countries, particularly in the production of mRNA vaccines such as Pfizer and Moderna, rather than the pharmaceutical industry’s monopoly control over IP rights. But this couldn’t be further from the truth. The successful production of cutting-edge HIV drugs in low and middle-income countries is a testament to what can be achieved through technology transfers and overcoming patent barriers. Serum Institute of India currently produces the Oxford-AstraZeneca vaccine while Aspen Pharmacare in South Africa produces the Johnson and Johnson vaccine. Vaccine manufacturers in developed countries have retrofitted production lines within months of receiving the know-how to produce mRNA vaccines and manufacturers in developing countries possess similar capabilities and yet, have been overlooked by pharmaceutical companies. The COVID-19 Technology Access Pool (C-TAP) scheme launched by the WHO to facilitate the sharing of production technologies with poorer countries has not been utilized by a single pharmaceutical manufacturer to date.

Pharmaceutical companies advocating against the waiver claim that the protections granted through IP rights are a crucial element in the development of vaccines given their costly and risky nature. However, it can be argued that any successful vaccine maker would profit immensely, regardless of the waiver, as the demand for COVID-19 vaccines is of a global scale. One such vaccine maker, Pfizer, estimates its vaccine to generate US$26 billion in revenue this year. Furthermore, pharmaceutical firms received more than US$110 billion in public funds to finance the research and development of COVID-19 vaccines and therefore, faced little risk in its development. Companies also insist that monopoly rights are necessary to foster innovation and that the waiver could hinder their ability to respond to future disease outbreaks that require large R&D investments. Yet despite claims about investments into future preparedness, it was the very same industry that admitted that there was ‘no financial incentive’ in producing a COVID-19 vaccine at the onset of the pandemic. 

Despite announcing its support for the waiver, U.S. officials and the pharmaceutical industry are now citing concerns that the waiver on IP rights would allow the transfer of novel pharmaceutical technology, such as mRNA, to China and Russia. They fear that this technology could be used by China to develop vaccines and therapeutics for diseases such as cancer and heart disease, diminishing U.S. competitiveness in biopharmaceuticals. This reasoning is morally wrong, revealing that the real motivation behind the opposition to the waiver has always been about exerting monopoly control over market share and profits. The U.S. and its pharmaceutical industry are willing to risk the lives of millions as long as it is able to retain monopoly control in the industry. Innovation must be rewarded but certainly not at the cost of millions of lives. 

Flexibilities granted through TRIPS

When the TRIPS agreement came into effect in 1995, its provisions were mainly derived from practices in industrialised economies and were oriented towards their commercial interests. As such, its provisions were not focused on public health. In 1996, the advent of antiretroviral (ARV) drugs transformed HIV from a death sentence to a manageable condition. Pharmaceutical companies that controlled the patents on ARVs were able to set high drug prices, making ARVs largely inaccessible to millions of patients in the developing world. The public health implications of TRIPS and its provisions on IP rights drew widespread attention with the rising number of AIDS-related deaths. Under pressure from civil society, public health officials, developing countries, donors, and intergovernmental organisations, the WTO adopted the Doha Declaration on TRIPS and Public Health in 2001, albeit after the HIV/AIDS epidemic had claimed millions of lives. The Doha Declaration affirmed the rights of member nations to implement TRIPS in a manner that protects national public health interests. 

The flexibilities introduced in the landmark Doha Declaration have been critical in enhancing the availability of lower-cost generic versions of patented medicines to alleviate the suffering of millions. Compulsory licensing is one such flexibility used to override patents and allow the domestic production of generic medicines at affordable prices. However, these flexibilities were not designed for a public health emergency of the scale of the current COVID-19 pandemic and therefore, would prove insufficient if implemented. Biopharmaceutical technologies are also protected by multiple layers of IP barriers (patents, copyrights, and industrial designs) and rely on components sourced through complex global supply chains, undermining the ability of developing countries to effectively implement compulsory licenses. 

What’s more, as per Article 31bis of TRIPS, several restrictions are placed on the exporting country to medicines produced under a compulsory licence: drugs should only be exported to an eligible importing nation; the drugs should be identifiable through a different colour, or shape; only an amount meeting the requirements of the importing country should be manufactured; the WTO’s TRIPS council should be notified by the importing country. Compulsory licences generally disincentivise generic manufacturers from exporting to countries with limited manufacturing capabilities, which are often those with smaller domestic markets, as proven by the fact that the system has only been used once since it came into effect. Therefore, the cumbersome procedures attached to compulsory licences would hamper, rather than support vaccination efforts. 

Conclusion

The Doha Declaration and subsequent amendments to the TRIPS agreement demonstrate that unprecedented changes to the regulation of IP rights are warranted during times of crisis. Pharmaceutical companies continue to exercise monopoly control over life-saving vaccines and medicines, through patents and IP rights that guarantee market exclusivity, allowing them to set high drug prices. While the cost to human life as a result of monopoly powers wielded by the industry has been impossible to understate, pharmaceutical companies will continue to do what is needed to preserve monopoly control and make profits. The argument that a waiver on IP rights would curb future innovations is baseless. Pharmaceutical companies made little to no investments into pandemic preparedness as evidenced by COVID-19 and benefited from billions of dollars in public funds to finance vaccine research and development. Pharmaceutical firms are also assured of profits given the scale of demand for COVID-19 vaccines. 

With so many countries relying on India for vaccines, the extension of the export freeze on the Oxford-AstraZeneca vaccine produced by the Serum Institute of India is likely to further undermine vaccination efforts in developing nations such as Sri Lanka. While negotiations are under way for a potential agreement, the process remains protracted, and the longer that large parts of the developing world remain unvaccinated, the higher the chances are for deadlier or vaccine-resistant strains to develop. Therefore, as a member of the WTO, Sri Lanka should advocate for the waiver of IP rights, which has become the need of the moment, while highlighting the need for accelerated negotiations to attain a practical solution. The waiver would facilitate the transfer of production technologies to manufacturers around the world, allowing them to ramp up production and boost the supply to developing countries. The waiver is the crucial first step in increasing global vaccine production and must be supplemented by efforts required to overcome financial and logistical barriers and enhance the institutional capacities of countries to efficiently administer vaccines and ensure the timely and equitable distribution of vaccines. 

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*Chathuni Pabasara was a Research Assistant at the Lakshman Kadirgamar Institute of International Relations and Strategic Studies. The opinions expressed in this article are the author’s own and not the institutional views of LKI, nor do they necessarily reflect the position of any other institution or individual with which the author is affiliated.