Intellectual property rights (IPR) on essential drugs, most of which are being held by giant pharmaceutical corporations or “Big Pharma”, is a major issue when it comes to access to affordable, appropriate and efficacious essential medicines. At the highest echelons of international trade, the raging debate is about whether or not the World Trade Organization (WTO) should temporarily waive some IPRs in relation to Covid-19 pharmaceuticals. Developed countries oppose the proposal, but recently the United States (US) has announced its limited support, while the European Union (EU) continues to wrangle over its necessity.
The Covid-19 TRIPS Waiver
In October 2020, South Africa and India formally tabled a proposal for a temporary waiver on some provisions of the Trade-Related Aspect of Intellectual Property Rights Agreement (TRIPS) for the “prevention, containment or treatment” of Covid-19. If the waiver request is granted, WTO members have the power to not enforce patents or other IPRs relating to Covid-19 pharmaceuticals. This proposal includes Covid-19 vaccines, medicines, and diagnostic and medical technologies. It covers four sections of the TRIPS Agreement – Section 1 (copyright and related rights), Section 4 (industrial design), Section 5 (patents), and Section 7 (protection of undisclosed information).
For the proponents, the waiver would speed up and scale up the production of vaccines (especially in countries with more developed domestic pharmaceutical industries) and would contribute to a faster vaccination process in poorer countries. It would also address the impact of ‘vaccine hoarding’ by developed countries.
South Africa has fought against the IPR monopoly on antiretrovirals for persons with HIV/AIDS (human immunodeficiency virus/ acquired immunodeficiency syndrome), claiming that TRIPs was the reason for the failure to secure life-saving medicines during the HIV/AIDS pandemic that had cost at least 11 million African lives. Both South Africa and India have robust domestic pharmaceutical industries that manufacture generic drugs. India has earned the moniker “pharmacy of the developing world” because of its production of generic essential medicines.
Several months after the request was tabled and despite the support of 100 developing and least developed countries (LDCs), WTO members have not yet reached a consensus on the proposal because most rich countries such as Australia, Brazil, Canada, the EU, Japan, Norway, Switzerland, the United Kingdom and the US oppose it.
And then on 5 May 2021, the US government expressed support for the proposal. On 21 May 2021, 62 sponsoring countries (African Group, the Plurinational State of Bolivia, Egypt, Eswatini, Fiji, India, Indonesia, Kenya, the LDC Group, Maldives, Mozambique, Mongolia, Namibia, Pakistan, South Africa, Vanuatu, the Bolivarian Republic of Venezuela, and Zimbabwe) submitted a revised proposal specifying the scope of “Covid-19 prevention, treatment and containment” to include “health products and technologies including diagnostics, therapeutics, vaccines, medical devices, personal protective equipment, their materials or components, and their methods and means of manufacture”, and specifying the duration of the waiver to “be in force for at least 3 years from the date of decision”.
The protection of IPR in relation to trade is contained in the TRIPS Agreement, the most comprehensive multilateral agreement on intellectual property, which came into force with the formation of the WTO. The WTO defines IPR as rights given to persons over the creations of their minds, which usually give the creator an exclusive right for a certain period of time. The TRIPS Agreement is binding to all WTO members (164 countries) and standardizes the practice of protecting inventions among WTO members through copyrights, trademarks, industrial design, and patents held by nationals of fellow WTO members.
The impact of this IPR monopoly has become all the more glaring during this pandemic. Yet, the Big Pharma and developed countries (where most of these corporations are based) continue to hold on to this profiteering weapon despite the apparent and alarming lack of access to Covid-19 vaccines and other pharmaceuticals by poorer countries. In protection of their own interests and that of their corporations in the WTO, developed countries who dominate the organization have been able to block attempts to change the TRIPS Agreement since it needs a consensus.
Intellectual property and public health
Developed countries that oppose the proposal have cited the oft-repeated reason for upholding IPR in trade: IPR provides incentives for innovation, and in this particular context, to fight the current and future pandemics. Existing TRIPS flexibilities may also address the objectives cited by the proponents of the waiver. This means that for them, IPRs are profitable, and without profit incentives, there will be no reason to develop necessary prevention, treatment and containment of diseases and other health issues.
Big Pharma argues that IPR provides the opportunity to earn back investments in research and development (R&D) and testing, thus fuelling more innovation. But many of these innovations have actually been funded by public money. In the case of vaccine development, an early assessment showed that the six most prominent Covid-19 vaccines have received an average of some €1.5 billion in public money. There is lack of transparency on vaccine pricing, but a study on AstraZeneca’s vaccine development calculated that public funding constituted 97% of R&D cost.
For the apologists of TRIPs and neoliberal trade policies, temporary suspension of IPR is not warranted even in this pandemic, because the use of TRIPs flexibilities such as compulsory licensing and parallel importation have not been fully utilized. Compulsory licensing is when a government allows someone else to produce a patented product or process without the consent of the patent owner, or plans to use the patent-protected invention itself. Parallel importation is when products marketed by the patent owner are imported without the approval of the patent owner.
The use of TRIPS flexibilities by members to “protect public health” and to temporarily exempt LDCs in the implementation were underscored in the Doha Ministerial Declaration in 2001. However, the rules-based system of TRIPs only allows for these flexibilities on a case-to-case or product-by- product basis. This has not worked in the past. This also does not correspond to how governments should deal with a pandemic.
Monopoly pricing, patents and inequality
With the control on patents and other IPR, Big Pharma can push prices upwards and determine the prices in the markets where they are present to maximize profits. Both in the past and during the Covid-19 pandemic, IPR figured in blocking access to diagnostics, treatment, medical equipment and vaccines. The lack of access to HIV/AIDS medicines, especially in poorer countries, was one of the main arguments against the monopoly of Big Pharma through IPR. In the late 1990s when South Africa was suffering from an AIDS crisis, only 1 in 1,000 people living with HIV could access treatment, which was produced by innovator companies and cost US$10,000 to US$15,000 per patient per year. Physicians’ group Medecins Sans Frontieres (MSF) has also compiled several cases of IPR hindering Covid-19 diagnostics, prevention and treatment including the threats of patent infringement lawsuits by patent holders against producers of 3D-printed ventilator valves in Northern Italy.
In the EU, the Big Pharma lobby group European Federation of Pharmaceutical Industries and Associations has lobbied the EU to reject the TRIPS waiver proposal. They argue that the vaccine developers and those working on Covid-19 treatments are supposedly already collaborating to “increase manufacturing capacity and the overall supply of vaccines and treatments”.
While developed countries have hoarded vaccines, underdeveloped countries are left behind. This is even with the rollout of the Covax Facility, the international scheme to pool vaccines, in which rich countries offset the costs of getting vaccines to poorer countries. The World Health Organization (WHO) estimates that of the 832 million vaccine doses administered, high- or middle-income countries took 82% of the doses while only 0.2% went to low-income countries.
Neoliberalism in health
The impact of the TRIPS agreement is at the center of the discourse right now, but at the bottom of this is the dominant neoliberal economic paradigm that the WTO and international financial institutions (IFIs) have imposed on poor countries. These impositions, many of which were tied to loans to cash-strapped countries, have resulted in economic underdevelopment and lack of national industrialization.
The World Bank’s 1993 report titled Investing in Health directed poor countries to reduce public expenditures, and promote private financing of essential services, user-fee based health services and individual privately-managed health insurance. These policy prescriptions ushered in the onslaught of neoliberal policies in health that rendered public health systems underfunded, corporatized or privatized. Public health systems collapsed in many countries that restructured their health systems. The Philippine government, for example, has treated health as a commodity subject to a market-driven system. Health services are driven by curative and not preventive care. Health care runs on user fees: only those who can pay can access services.
Ending Big Pharma monopoly
For the Big Pharma, the Covid-19 pandemic is a great opportunity for business. Even when millions have died and are still dying, it will not give up its instruments of monopoly and domination. However, it is an opportune moment as international discourse and campaigns against profiteering in the time of Covid-19 have intensified. It is time for the monopolistic practices and instruments of the developed countries and the Big Pharma to end.
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