Summary: This article presents the different approaches that States are considering to overcome inequalities in access to COVID-19 vaccines, drugs and medical devices, as well as the advantages and disadvantages each of them pose, such as compulsory patent licensing, the different public and private initiatives that exist, as well as the novel proposal by several WTO countries for a temporary exemption from the application of intellectual property rights on such products.
There is no doubt that investment in R&D has grown exponentially since the patent system was created, with investment by pharmaceutical companies leading the way, investing millions of dollars a year in new drugs or vaccines. In 2019, for example, ROCHE pharmaceuticals invested US$10.8 billion.
Neither is there any doubt that patents are the instrument for the promotion of technological progress and the economies of the most developed States, insofar as innovation and intellectual property rights, in general, are the solution to labour and economic issues caused by the existence of States where labour costs and conditions are much lower than in the aforementioned States.
The tension that exists between pharmaceutical companies and certain States and NGOs over the application of the patent system to drugs is nothing new. However, since the outbreak of the COVID-19 pandemic, the debate has reopened and intensified as to whether the patent system for COVID-19 vaccines, treatments and medical devices should be modified, albeit exceptionally and temporarily.
On the one hand, several countries belonging to the World Trade Organization, (hereinafter WTO) advocate for a temporary waiver of intellectual property rights, including patents on COVID-19-related vaccines, drugs and medical devices. So it is reflected in recent WTO conferences, following the recent IP/C/W/669 Announcement on 2 October 2020 by India and South Africa, in which a Draft Decision is attached to the WTO Council to approve a waiver of certain provisions on the Agreement of Trade-Related Aspects on Intellectual Property Rights (TRIPS), including patents, for the prevention, containment and treatment of COVID-19 which, these States argue, would provide a global, rapid, open and automatic solution to enable the development and intensification of the production and supply of these products.
These countries provide data on the inequality of access to COVID-19 medicines and vaccines that is occurring worldwide. For example, 82% of PFIZER’s COVID-19 vaccine production has been reserved by 14% of the world’s population. Or that the world’s poorest countries will only have access to COVID-19 vaccines and treatments by the end of 2023 or 2024 (WTO document, IP/C/W/672). They also state that for COVID-19, public investment around the world has been high, as in the case of the PFIZER vaccine, in which there has been a public investment of US$546 million and that, in contrast, the States have not gained any benefit from the exploitation of the patents, beyond having set aside several million doses.
Other countries and territories, such as the European Union or the United States of America, are in favour of flexibilization, consisting of the use of existing instruments, such as compulsory licenses, an option permitted under Article 31 of TRIPS and Article 91 and following articles of the Spanish Patent Law 24/15, and most of the countries in our surrounding area, combined with other instruments since, as we have said, the protection of innovative companies and products with added value is essential for the subsistence of these States.
Among these tools, several initiatives around the world can be highlighted that have emerged to alleviate inequalities in access to COVID-19 vaccines and medicines, such as the WHO (and other agencies) ACT Accelerator, which is a global collaborative initiative to accelerate the development and production of COVID-19 vaccines and treatments, including the COVAX project. The purpose of this project is to ensure fair and equitable access to COVID-19 vaccines and treatments so that at least 20% of the population is vaccinated by the end of 2021.
Besides, the European Commission has adopted a European Union Intellectual Property Action Plan, published on 25 November 2020, as a response to the COVID-19 crisis.
Ultimately, these countries consider that a huge effort is being made on a collaborative level between the World Health Organization (WHO), the WTO and the World Intellectual Property Organization (WIPO), who are working closely to create collective recourse systems to ensure that a general exemption from the patent system for COVID-19, even if temporary, will not be necessary.
In both cases, either with a temporary exemption from the application of the patent system or by granting compulsory licenses, the production of the patented drug in generic form would be made possible, regardless of the will of the patent holder, although with different consequences in each case, as will be analysed later in this article.
Finally, pharmaceutical companies are another of the key aspects of this problem, who invested and are still investing large amounts of resources in R&D&I to be able to develop drugs and vaccines, which has led to the fact that, for some time now, national patent laws have allowed them to protect their pharmaceutical inventions, including vaccines, by patent, so that they can recover the investment made and obtain the corresponding profits, on the understanding that this way of proceeding promotes investment in R&D and, therefore, technological evolution. This is why this sector is in favour of maintaining the patent system and granting voluntary licenses.
We already have several examples of this type of licensing, such as the MODERNA company which has issued a press release pledging not to assert patent rights on its vaccines for the duration of the pandemic, or the voluntary licenses granted by the pharmaceutical company GILEAD on the COVID-19 drug Remdesivir.
Each of these approaches should be explored in more detail.
Compulsory licenses have been regulated in the field of intellectual property since this branch of law began to be regulated, since the first International Convention on this matter, the Paris Convention signed in 1883, already regulated them in its article 5 A which states that:
‘(2) Each country of the Union shall have the power to adopt legislative measures providing for the granting of compulsory licenses in order to prevent abuses which might result from the exercise of the exclusive right conferred by the patent, for example, non-exploitation’.
It did not, however, initially foresee its application in cases such as the one at hand, a global pandemic, but rather to avoid the abusive application of the patent right, and as stated in the transcribed article, for typical cases of patent non-exploitation.
Subsequently, the TRIPS Agreement, which constitutes Annex 1C of the Convention establishing the WTO, signed in 1994, which sets out several basic principles on intellectual property aimed at harmonizing intellectual property systems among the signatory countries and concerning world trade, introduced Article 31 to encourage member states to regulate compulsory licensing in their domestic legislation.
Article 31 sets out several requirements for the member states to adopt appropriate legislation on compulsory licensing, and among these, that licenses must be non-exclusive, that they firstly satisfy the domestic market, or that the patent owner must obtain adequate remuneration in keeping with the case’s circumstances.
Many countries in our surrounding area, including Spain, implemented the regulation of compulsory licenses into their legislation, as is already the case in the current patent legislation as a legacy of article 86 of the previous Spanish Patent Law, 11/1986.
Although historically, there have been several health crises around the world, it was not until the HIV crisis in the 1990s that countries began to adopt measures to mitigate the negative effects that the patent system might produce, especially in the face of a global health emergency. However, these measures were slow in gestation and application, resulting in a considerable delay of at least 10 years in fair and reasonable access to AIDS drugs for the most disadvantaged States, during which time pharmaceutical companies became aware that, in exceptional cases, alternative solutions had to be sought within the patent system.
That solution came in the form of Article 31 bis of the TRIPS Agreement. In effect, at the beginning of the 21st century, the States agreed on a waiver related to paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health, consisting of a mechanism to allow countries producing generic medicines under a compulsory license to supply the drugs to other countries that lacked the manufacturing capacity to produce them themselves.
In this regard, it should be noted that one of the shortcomings of the compulsory licensing system is that it is an empty provision for States that cannot produce drugs and vaccines, because no matter how much the State in question decides to apply the aforementioned article 31 and grant compulsory licenses, there will be no national companies to execute the order, and that is why the aforementioned article 31 bis was created.
Article 31bis of TRIPS was reflected in Regulation (EC) No. 816/2006 of the European Parliament and Council of 17 May 2006, which regulates compulsory licenses in the EU territory, as well as in current Article 91 of Patent Law 24/15, which extended the cases provided for in the previous Article 86 PL, with a new section e):
‘e) Manufacture of pharmaceutical products for export pursuant to Regulation (EC) No 816/2006 of the European Parliament and of the Council of 17 May 2006 on compulsory licensing of patents relating to the manufacture of pharmaceutical products for export to countries with public health problems.
This means that it is currently possible in Spain to apply for a compulsory license as an exporting country to cover the needs of an importing country (which does not have production capacity, as has been pointed out).
The procedures for obtaining compulsory licenses are regulated in the aforementioned Regulation (EC) No. 816/2006 and, in short, it is a complex process in which multiple administrative requirements must be accredited, such as the attempt of prior negotiation with the patent owner, quantity control, or the special labelling of the products affected, among many others.
In this regard, authorized sectors of Spanish doctrine advocate a modification of the compulsory licensing system in Spain, as Germany, Canada or Hungary, among others, have recently done, to facilitate administrative procedures, since in exceptional situations such as a pandemic, time is essential and administrative procedures are, by definition, slow.
In particular, in Spain, as in other countries around us, the Government may subject patents to compulsory licenses in the public interest, under Article 95 of the Patent Law, if its requirements are met, which, in principle, fit in with a pandemic such as the one we are currently experiencing.
On the other hand, as mentioned above, several WTO countries have recently submitted a Draft Decision to the WTO Council to approve a temporary waiver, which in practice means not applying the patent system to intellectual property rights on COVID-19 for a certain period, and which has been discussed at length within the WTO since October 2020.
On 15 January 2021, a delegation of countries that have acceded to the initial exemption proposal put forward by South Africa and India, have issued several announcements. In particular, IP/C/W/672, explaining the various reasons why compulsory licenses are not the solution to the problem we are facing, in a global pandemic, because (i) they are partial solutions, State by State, which generates distortions of the patent system, which by definition are territorial, (ii) the administrative procedures established in each country are different, (iii) compulsory licenses are mainly granted to supply the domestic market, and therefore their scope is limited, (iv) compulsory licenses are granted on a product by product basis, and (v) the administrative procedures are cumbersome and make it difficult to obtain the corresponding license quickly and efficiently.
This WTO document also makes the valid point that voluntary licenses that have been granted, such as the GILEAD license on the Remdesivir drug, mean that almost 50% of the world’s population does not have access to this drug (section 7 of document IP/C/W/672), so these are neither real nor global solutions to the issue we are facing. And the same applies to solutions such as COVAX, which, although it is a wonderful initiative that will contribute two billion vaccines by the end of 2021, it is deemed insufficient, with limited access and a short-term fix, considering that the world population exceeds 7.5 billion people.
The main objections raised by countries opposing the exemption are (i) the very need for such a blunt solution, given the legal tools already in place and initiatives being taken worldwide, (ii) the uncertainties surrounding the scope of the measure, given that it would apply not only to patents, but to all intellectual property rights involved, such as trade secrets or designs, except for specific exclusions such as performers’ or broadcasters’ rights, and (iii) the harm to innovation and technological development, by discouraging it, as well as the commercial and economic impact of such a measure.
In our opinion, it is clear that this is a complex problem that will require innovative solutions, based on the existing or available tools that have been discussed throughout this article, and given the dimensions and complexity of the current situation, the proposed exemption is not the definitive solution either, as the States proposing it themselves acknowledge.
We believe that these are not irreconcilable differences and that negotiation based on interests, not positions, could lead to a consensual solution that brings together all the interests at stake. Several factors could accelerate this negotiation, such as several developed States starting to implement public interest compulsory licenses (which is likely at this time of vaccine shortages), which would surely trigger the search for a global solution to the pandemic.
Jean B. Devaureix, Head of Patent Litigation at PONS IP
