The patent waiver on Covid vaccines is welcome, writes Ajit Ranade

Last October, India and South Africa proposed in the World Trade Organisation that intellectual property rights for Covid-related drugs and vaccines be suspended. This proposal was supported by 60 countries. However, the United States, still under the Trump administration and the EU, were opposed to the proposal. The US presidential candidate Joe Biden had declared in early July itself that he supported such a proposal. So, there was expectation, but the pressure from the pharma lobby was intense too. Besides, abruptly curtailing patent rights is against the basic sanctity of contracts. You can’t renege on a sovereign promise, which is what patent rights are.

Then, last month, more than 100 Nobel Prize winners and several prominent world leaders, including former heads of state, urged the United States to support a waiver of the TRIPS (Trade Related Aspects of Intellectual Property Rights) clause in the WTO. Such a waiver they said, would vastly increase inoculation rates and would legally allow developing countries to make their own vaccines, which were currently developed and produced by global pharma companies.

The signed letter also said that vaccine knowhow and technology should be shared openly and industry monopolies should not be allowed to create artificial supply shortages. This is seen as essential to winning the war against the pandemic. Winning over US support for a patent waiver is crucial because it entails taking on the might of major pharma companies like Pfizer, Moderna, Novavax, Johnson & Johnson and AstraZeneca.

Compulsory licensing

Of course, there is the argument which has been examined by India as well, that the current TRIPS regime of the WTO has an escape clause in case of emergencies. This is called compulsory licensing, wherein a company can be forced to disclose and license its patents to others, for the sake of national emergencies. But developing countries have been reluctant to use this clause for fear of displeasing the United States, which could counter the move with some other diplomatic or economic punitive measures.

It must be remembered that during the anthrax scare of 2001, the Canadian government had threatened to break the patent protection of Bayer and use compulsory licensing to produce ciprofloxacin on a mass scale through a small company. Bayer, however, settled the matter with the Canadian government by donating large amounts of ciprofloxacin and offering more in case of an emergency. This led the Canadian government to agree to acquire cipro exclusively from Bayer, for the duration of the patent agreement. So, there is a precedent, but many developing countries of Africa have been reluctant to use this route, even for genuine national emergencies like AIDS.

An interesting success story without breaking any patent rules was that of CIPLA, an Indian pharma company, which in 1993 developed and sold a drug at one-tenths of the then prevailing price. By 2001, CIPLA had developed an anti-AIDS drug cocktail and sold it at a very low cost, upending the hitherto monopolies and vastly contributed to the effort to combat and control AIDS.

So, in the present context of Covid, the compulsory licensing avenue is only of academic interest. Besides, the US has been increasingly under diplomatic pressure to relax the restrictions on the export of vaccines which lie unutilised.

TRIPS waiver

Last week, President Biden announced that he would support a TRIPS waiver. This is a historic decision. It comes after surmounting the challenges and pressures mounted by the pharma lobby, including the scare that the Russians and Chinese would get the American pharma technology, and that if there was an indiscriminately large production of vaccines all around the world, it would create a big stress on supply chains. As of this writing, 120 of the 164 member countries in the WTO are supporting the TRIPS waiver for vaccine patents. Added to this is the statistical evidence that 60 per cent of the world’s supplies have been cornered by the rich countries, or only about 16 per cent of the world’s population. There is excess stock sitting around in the US, which will remain unutilised.

Sure enough, the US decision was opposed by many pharma companies and leaders like Chancellor Angela Merkel. She said that patents were not the limiting factor responsible for the vaccine shortage. It was production capacities and high-quality standards. But she surely misses the point, that patent waiver allows production to happen on a massive scale, so that the current capacities are no longer the bottleneck, since newer capacities will come up, without fear of infringing on patents.

German company BioNTech also echoed similar sentiments, saying that replicating the manufacturing process and mastering that technology could take years. It also added that it was committed to selling the mRNA vaccine to developing countries on a no-profit basis. But that no-profit price surely has the value of the patent, which itself makes it prohibitive. Strangely, even Brazil has opposed the patent waiver proposed by Biden and so has Bill Gates. Of course, if Covid vaccine patents are going to be breached now, the world has to find a way to compensate the pharma companies for the breach of contract.

Digital divide in India

How this waiver proposal will travel through the WTO’s voting process remains to be seen. Crucial time may be lost, so India cannot count on this proposal to help its cause. It needs to rapidly ramp up vaccine production and imports, and immediately go for universal and free vaccinations. It should not only depend on portal-based booking, because given the great digital divide, it puts the poor and underprivileged at a great disadvantage. Imagine the areas where telecom connectivity is poor, digital literacy is low (can you do a captcha in 20 seconds), and when an open slot on the CoWin website is as elusive as a passing comet in the sky.

The issue of the TRIPS waiver for Covid vaccines is also the right time to examine excessive patent protection, and overall exorbitant monopoly drug prices. There is now abundant research which shows that the maxim ‘no patents, no drugs’ is false. And the billions of dollars needed to develop a new drug is mostly due to costs incurred in Stages 2 and 3 of the clinical trials, which are actually in the nature of ‘public goods’. That’s because once the safety and reliability of the new drug is established in those trials, it deserves to be public knowledge. Hence, that cost should simply be reimbursed and patent-induced monopoly rights should be drastically reduced. This is a longer-term plan. Right now, the Covid vaccines are on the agenda.

The writer is an economist and Senior Fellow, Takshashila Institution

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