US-Kenya FTA Impact Series: US Backs Push for Waiver of IP Rights for COVID-19 Vaccines at WTO

The WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) is a multilateral agreement that governs how member states afford protection to IP rights within the context of trade, and resolve disputes that arise over IP during such trade. India and South Africa have proposed that during the pendency of the COVID-19 pandemic, countries should be exempted from applying or enforcing certain parts of TRIPS, namely, IP protections over COVID-19 related solutions.

Growing Support
The proposal by India and South Africa gained significant traction shortly after it was tabled at a TRIPS Council meeting. For example, Kenya and Eswatini joined them as official cosponsors, and it is estimated that 100 of the 164 member states support the proposal with the US being among the latest additions to this list. This support has also extended to civil society and intergovernmental bodies such as the African Commission of Human and Peoples’ Rights and the African Union Commission. 115 members of the European Union (EU) Commission urged the EU to support the proposal.

Securing a Waiver
While the Agreement Establishing the World Trade Organisation (WTO Agreement) permits a waiver of obligations under TRIPS in exceptional circumstances, a request for such a waiver is only the first step. Certain hurdles must be overcome for a waiver to take effect. In fact, the US has warned that it would not be an easy process. Under Article IX of the Agreement Establishing the World Trade Organization (WTO Agreement), requests for a waiver are first submitted to the TRIPS Council for a consideration period not exceeding 90 days. The TRIPS Council would then table a report at a Ministerial Conference for the eventual decision to be made. This decision may also be rendered by the General Council where such a request is made during the two-year interval period between Ministerial Conferences. Requests have to receive unanimous support in order to pass.

In India and South Africa’s case, the TRIPS Council tabled a report at a WTO General Council meeting held on 16 December 2020. Multiple meetings have taken place, with no breakthrough. The latest meeting was held on 30 April 2021, and shortly thereafter, the US announced its support. This backing by the US could change things significantly. Following the USTR’s press release, France and New Zealand – which previously opposed the proposal – changed tact. Negotiations are expected to ramp up with the next WTO Ministerial meeting scheduled for June.

While it may be a tall order to achieve unanimous approval, it is not impossible. In 2003, the WTO adopted the Doha Declaration on the TRIPS Agreement and Public Health, which waived IP rights over drugs used to treat HIV.

Implications: Can a Waiver Increase Vaccine Supply?
There have been a number of arguments both for and against the proposal. Proponents largely argue that IP protections serve to hinder large scale and liberalised manufacturing of COVID-19 products such as the vaccine. IP protections serve as monopolies, permitting only the rights holders to use and license the use of their inventions. Some have argued that this has led to a situation where the demand far outstrips the supply. With the looming threat of infringement claims by patent holders, manufacturers cannot easily take up the task of producing vaccines. Those in favour also argue that it is unconscionable for patent holders to enforce monopolies during a global pandemic, particularly when there is a glaring disparity between vaccination rates in developed and developing countries.

However, the Pharmaceutical Research and Manufacturers of America have opposed the waiver on the grounds that it would compromise the quality and safety of vaccines. This appears to be the core argument adopted by representatives of the pharmaceutical industry. Likening the IP information to ingredients, and the manufacturing know-how to recipes, they have argued that waiving protections does not necessarily translate to generic manufacturers being able to produce vaccines. A key example often cited in furtherance of this argument is the challenge currently being faced by AstraZeneca, a ‘non-specialist’ in vaccine manufacture.

Pharmaceutical industry representatives have instead suggested that bilateral agreements with generic companies would better allay the world’s supply concerns. Through such agreements, experienced vaccine developers can exercise some quality control and supervision, while transferring the know-how and technology to generic manufacturers. The larger basis for this opposition is the fact that pharmaceutical companies have spent large sums of money to develop these vaccines on the expectation that they would receive IP protection and recoup their investment.

While the incentive theory that pervades IP rights holds water, proponents of the proposal have argued that pharmaceutical companies have received considerable support through public funding. Not only that, some have argued that patents, and the monopoly they offer, are inherently incompatible with the nature of the pandemic, given that maximum cooperation and joint effort is required to alleviate the impact of the virus. Drawing on previous examples of compulsory licensing within the context of public health emergencies, they put forth that a temporary IP waiver should be considered.

The 2003 waiver under the Doha Declaration had the effect of reducing the prices of HIV drugs by breaking up monopolies. From this, one could surmise that the know-how and technical expertise did not serve as a further barrier as pharmaceutical companies have suggested. However, the waiver under the Doha Declaration, and the one currently being considered, are not comparable. For one, the COVID-19 vaccines were developed in a relatively short period and are apparently complex, particularly the mRNA vaccine. Secondly, there is evidence of manufacturers struggling with quality. This is not limited to inexperienced manufacturers. In the US, Emergent BioSolutions, a vaccine manufacturer previously producing the anthrax vaccine, has had to discard millions of vaccine doses following cross-contamination between the AstraZeneca and Johnson & Johnson vaccines. Separately, AstraZeneca has faced a number of issues in the recent past. It would appear that the potential for error is higher where the developer – AstraZeneca in this case – is relatively inexperienced.

A waiver of IP protections would surely obviate some of the existing supply concerns, but it would not necessarily translate to increased supply. Should the WTO adopt the waiver, member states would need to supplement it with investments in vaccine manufacture, and by incentivising patent holders to cooperate with generic manufacturers. Without IP guaranteeing a return on investment, investors are likely to shy away from providing financial support. Countries need to consider if, absent IP protections, generic manufacturers would readily take up the cost of converting manufacturing lines to cater to vaccine development. They also need to consider if pharmaceutical companies would be willing to share their technology and build the capacity of these generic manufacturers. Kenya for example would need to consider if it has the expertise, infrastructure and regulatory environment to encourage local manufacturing. Aside from the manufacture of vaccines, countries would also need to consider other barriers to cross border supply such as limits on exports that we have seen come up.

What does this mean for the US-Kenya Free Trade Agreement?
In the recent past, the US has adopted a maximalist approach to IP protection, often pushing for protections that surpass those provided in TRIPS. This maximalist approach may sometimes compromise access to medicines. While this may not necessarily change with the US’s recent support of this waiver proposal, Kenya can leverage the US’s push for credibility and goodwill to negotiate a balanced FTA.

Should you have any questions on this legal alert, please do not hesitate to contact Luisa Cetina or Daniel Ngumy.