Mexico and Switzerland Question Need for Extension of COVID IP Waiver
“Based on the information laid out above, we do not face a situation where we have an IP-induced lack of access to or a lack of manufacturing capacity of COVID-19 therapeutics and diagnostics.”
A communication from the governments of Mexico and Switzerland to the World Trade Organization’s (WTO’s) Council for Trade-Related Aspects of Intellectual Property Rights (TRIPS) on Tuesday raised a number of questions about the prospect of extending a waiver of intellectual property (IP) rights for COVID-19 vaccine technologies to therapeutics and diagnostics.
The Council met informally in September to discuss the extension, which technically has a deadline of December 19, six months after the Ministerial Conference decision finalizing a waiver on “patented subject matter required for the production and supply of COVID-19 vaccines” only. The final agreement contemplated extending the waiver to “the production and distribution of COVID-19 diagnostics and therapeutics” within six months of adoption.
The letter questions the need for such an extension given the current landscape. With respect to supply and demand, the letter notes that “no shortage of therapeutics exists. Instead, large parts of innovators’ production capacity remain idle due to a lack of demand.” According to an Airfinity report compiled for the Pharmaceutical Research and Manufacturers of America (PhRMA), “[g]overnments and NGOs have purchased 35 million COVID-19 treatments for LMIC [Low and Middle-Income Countries] for 2022 but have only been able to administer 10 million as of September this year,” says the letter. It continues:
“Diagnostics companies working closely with WHO, and providing them with sample collection kits, have reported there is a high level of product surplus to order. This involves issues with logistics and distribution, which are not IP-related, but that need to be addressed.”
The letter also notes that 138 bilateral voluntary licensing agreements covering 127 countries have been struck among innovators and companies under the Medicines Patents Pool. These licenses are royalty-free and have resulted in 191 production sites for COVID-19 therapeutics worldwide. Merck/MSD, Pfizer, Shionogi and Gilead have all entered into such agreements for various therapeutics.
Additionally, there are already a number of mechanisms in place to ensure affordability and accessibility for LMICs, including tiered pricing systems and deals with non-governmental organizations (NGOs). For example, in September 2022, Pfizer signed a deal with The Global Fund for the procurement of up to 6 million treatment courses for supply to 132 Global Fund-eligible countries.
Ultimately, the two countries want to ensure that public health is being protected and that TRIPS-related rights are not hindering that goal, but based on the evidence at hand they express skepticism that an extension of the TRIPS waiver will have any practical impact:
“If a systemic problem regarding the access to COVID-19 therapeutics and diagnostics is demonstrated conclusively and such lack of access is caused by the current IP system, steps have to be taken to improve the situation to ensure unimpeded access. However, based on the information laid out above, we do not face a situation where we have an IP-induced lack of access to or a lack of manufacturing capacity of COVID-19 therapeutics and diagnostics. As a consequence, no adjustments to the IP system seem to be required.”
Extending the waiver under these circumstances would leave inventors without incentive to take on the risk of R&D and “jeopardize the further development and the production of many of the over 1,800 COVID-19 therapeutics that are currently in different stages of the R&D-pipeline,” the letter explains. The countries also pose the following five questions based on their assessment of the situation, and are asking that proponents of an extension consider them and respond:
- “Against the background of the demonstrated availability of therapeutics like Molnupiravir andPaxlovid, especially with regard to the idle production capacity, what would be the addedbenefit of an extension of the MC12 TRIPS decision?
- Given that already 138 bilateral or MPP-based voluntary licensing agreements have been signed, many with LMICs, no systemic hurdles seem to exist that prevent other companies from also signing voluntary licensing agreements. Why do proponents of an extension consider it necessary to facilitate the issuing of compulsory licenses that do not contain technology transfers, training and other benefits that come with most voluntary license agreements?
- Given that already a large number of producers for therapeutics and their generic versions exist and that these producers face declining demand for their products, why do proponents consider it necessary to facilitate the issuing of compulsory licenses so that additional producers can produce for an already saturated and shrinking market?
- As the market for therapeutics is already saturated and served by many companies including producers for generic versions of therapeutics, the profit margins are small. How likely do the proponents consider it that a company bestowed with a compulsory license would be willing to make large upfront investments just to have very modest returns on investment and a break-even point in the very distant future?
- For many months, we have discussed a potential waiver and whether such a waiver is necessary to improve access to COVID-19 vaccines. Yet, since the adoption of the MC12 Decision, no country has made use of the possibilities provided for by the Decision to grant a compulsory license for the export of COVID-19 vaccines. Against this background and taking into consideration that supply of therapeutics exceeds their demand, how do the proponents of an extension justify the need for such extension?”
The International Federation of Pharmaceutical Manufacturers and Associations (IFPMA), which provided much of the data relied upon in the Mexico-Switzerland letter, said in an email sent to IPWatchdog that “calls to weaken the very framework that enabled the rapid response [of pharmaceutical companies during the pandemic] serves as a distraction from the real challenges that need to be addressed. There is no evidence or reason to call for a TRIPS waiver on COVID-19 therapeutics and diagnostics.”
The IFPMA also warned that the “unintended consequences” of an extension “will most likely overburden regulatory systems and be borne by patients.”
While the deadline for a decision on the extension is theoretically December 19 (the first business day after six months from the final vaccine waiver agreement), at the last WTO General Council, the United States indicated that their view is a decision on whether to even begin negotiations is all that has to occur within six months, and the Swiss delegation agreed with this.
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Eileen McDermott
Eileen McDermott is the Editor-in-Chief of IPWatchdog.com. Eileen is a veteran IP and legal journalist, and no stranger to the intellectual property world, having held editorial and managerial positions at […see more]
