At the end of July, and far away from the front lines where health workers were battling to extinguish the deadly fires ignited by the coronavirus, the World Trade Organization (WTO) convened a meeting of the forum that deals with the world body’s agreement on trade-related aspects of intellectual property rights (TRIPS).
On the agenda of the TRIPS council was a plea from developing and least-developed members of the WTO for medicines, vaccines and other medical appliances to be accessible to all during the Covid-19 pandemic. “Given this present context of global emergency, it is important for WTO members to work together to ensure that intellectual property rights such as patents, industrial designs, copyright and protection of undisclosed information do not create barriers to the timely access to affordable medical products including vaccines and medicines,” South Africa’s submission implored.
Held at the request of South Africa, there was an expectation that the meeting would take steps to ease the dispersal of medicine, appliances and equipment to where there is desperate need. Unfortunately, the urgent plea went into the one ear of developed countries and slipped out of the other.
They argued that any pooling of knowledge outside the existing rules governing intellectual property rights would discourage investment in the research and development necessary to create vaccines as well as the resources required for the manufacture of medical equipment. They cautioned against any arrangement that makes it possible to produce patented medicines and medical equipment without the consent of patent owners. Under specific circumstances such as national emergencies and through a practice known as compulsory licensing, the WTO permits the production of and trade in pharmaceutical products – including medicines, vaccines and diagnostics – needed to fight an epidemic, without the approval of patent holders.
Referencing the Covid-19 Technology Access Pool, a World Health Organization (WHO) initiative for the open, collaborative sharing of scientific research and data, developed countries argued that respect for intellectual property rights, industry-led collaborations and voluntary sharing of knowledge were the best mechanisms to ensure access to personal protective equipment such as masks, face shields and sanitisers, as well as the distribution of vital appliances like ventilators across the globe.
Selfish banning and hoarding
The developed countries’ response is unsurprising. During the pandemic, government responses have mainly been twofold. First, there was the jingoistic and kneej-erk reaction prompted by the preoccupation to protect a country’s citizens at the expense of everyone else. A good example of this inward-looking approach is how, at the outbreak of the pandemic, a number of countries used export bans and restrictions to hoard protective and medical supplies that were in short supply worldwide.
A WTO information note issued in April confirmed that 80 countries had imposed prohibitions, with the European Union (EU) in March temporarily restricting exports of protective spectacles and visors, face shields, masks, garments and gloves. The United States followed suit and banned, until August, the export of N95 filtering facepiece respirators, masks and gloves unless there was explicit approval from the Federal Emergency Management Agency.
But more shocking was the US announcement in June to purchase, until September, the entire supply of remdesivir, a drug that shortens the hospital stay for Covid-19 patients. Gilead, the US-headquartered patent owner of the drug, had earlier concluded licence agreements with manufacturers to supply remdesivir in 127 countries with low and middle incomes. Unfortunately, this arrangement excludes over 70 states, including large middle-income countries such as Brazil, China and Mexico.
The second governmental approach we have seen during the pandemic is the dogged protection of the interests of corporations that manufacture medical equipment. Governments, particularly those of developed countries, acted like eagles ready to pounce on behalf of corporations on anyone threatening to infringe on the companies’ patents.
In its submission to the TRIPS council, South Africa drew attention to the case of replica valves for ventilators that an Italian hospital urgently required to treat Covid-19 patients. According to the submission, the original manufacturer declined a request to provide blueprints for the valves, leaving innovators with no alternative other than to use 3D technology to produce replica valves for life-saving ventilators. Despite widespread reports that the cost of the replicas was about $1 each, compared with about $11 000 (about R183 000) for the original valve, the innovators were threatened with litigation for infringements of patent rights.
The rules giving rise to profiteering
Unbeknown to many – and receiving scant attention during the rampant epidemic – is how the WTO and its regime of intellectual property rights lie at the heart of the web of profiteering from the outbreak of diseases. Established on 1 January 1995, the organisation’s TRIPS agreement came into effect that same day, introducing rules to protect inventions through the use of instruments such as copyright, trademarks, industrial designs, patents and trade secrets.
Under the founding agreement, the “WTO members have to provide patent protection for any invention, whether a product (such as a medicine) or a process (such as a method of producing the chemical ingredients for a medicine) … to last at least 20 years from the date the patent application was filed”. Six years later, the Doha Declaration on the TRIPS Agreement and Public Health reaffirmed the right of developing and least-developed countries to use the flexibilities to bypass the restrictive requirements of intellectual property rights imposed by patent holders.
Although adopted in 2001, the Doha amendments were ratified by two-thirds of WTO members and formally accepted as part of the TRIPS agreement only in 2017. In the interim, the use of compulsory licensing had gained ground, with several countries on the African continent issuing licences for the manufacture of antiretroviral (ARV) drugs to combat HIV and Aids.
In South Africa, the Treatment Action Campaign lodged a successful application with the Competition Commission against excessive pricing by pharmaceutical giants such as GlaxoSmithKline and Boehringer Ingelheim. Included in its finding, the commission ruled in favour of the provision of additional voluntary licences, the exportation of ARVs to sub-Saharan African countries, the importation of drugs to South Africa if the licensee does not have the manufacturing capacity, and for a 5% cap on royalties of the net sales of the relevant ARVs.
What Covid-19 has sharply raised is how adequate is the system of compulsory licensing in the overall campaign to deal with the pandemic. Does the WTO system of protecting intellectual property rights help us to respond to the pandemic, or does it facilitate pandemic profiteering?
The lie of accessible, affordable healthcare
South Africa’s call on the TRIPS council to explore measures to “ensure that vaccines and new medical technologies are made accessible and available” to developing and least-developed countries irrespective of their economic status reflected a lack of faith in the adequacy of the current system.
On the surface, Article 31 of the TRIPS agreement, which permits the use of compulsory licences without the approval of patent holders, reflects the altruism of member states to provide medical healthcare for all. However, beneath the surface lies a complex set of legal and institutional measures that ensures that patent holders are financially compensated. Compulsory licences can only be issued if patent holders refuse to grant a voluntary licence and generics may only be produced for the domestic market.
A weighty set of procedures and conditions have to be exhausted before such a licence can be issued, and throughout the process the commercial interests of the patent holder remain paramount. Sections of Article 31 state that “the right holder shall be paid adequate remuneration in the circumstances of each case, taking into account the economic value of the authorisation”. Poorer countries that lack the capacity to manufacture generics are severely prejudiced by these stringent rules and often find themselves at the mercy of pharmaceutical cartels bent on profiteering from long-term patent rights.
A dearth of supplies in the Global South
The coronavirus has revealed how skewed the distribution of medical resources is between developed countries and the Global South. In April, as the pandemic spread across the globe, the demand for Covid-19 medical products and services grew exponentially, with Germany, Switzerland and the US taking up about 35% of medical appliances and medicines available to world markets.
Side by side with this concentration was the dearth of supplies in other countries. According to the WHO, at the height of the pandemic 10 countries had no ventilators, whereas the US had close to 170 000. The same report indicated that public hospitals in 41 African countries shared fewer than 2 000 ventilators among them, with the majority concentrated in South Africa.
A paper jointly sponsored by the United Nations Development Programme and the WHO, Remuneration Guidelines for Non-voluntary Use of a Patent on Medical Technologies, reveals how paltry manufacturing capacities are in the majority of developing countries. Royalty rates vary among countries, with Malaysia having a rate of 4% for such licences, Zambia a rate of 2.5% and Mozambique a meagre 2%.
With medical products in short supply and with trade in them clearly a lucrative business, amounting to about $597 billion in 2019, the question of equitable access remains. The head of policy and advocacy at Global Justice Now, Dorothy Grace Guerrero, believes “the right to health is a basic human right which should have primacy over trade and business interests”. According to Guerrero, South Africa and developing countries could use the TRIPS agreement’s provision on compulsory licensing “to counter intellectual property rights in this time of the global pandemic as they are barriers to access medicines”.
But for Guerrero, whose organisation campaigns on issues of global justice and development for the developing world in the United Kingdom, the alternative to the stranglehold of the TRIPS agreement is to take a route similar to the one that South Africa proposed at the WTO meeting at the end of July and encourage countries to pool their resources to develop Covid-19 vaccines. A step in this direction was taken in May when Costa Rica, with the support of 36 other countries, put forward at the WHO meeting a proposal for a pool that brings together findings and data from research on the coronavirus.