[CTC] Increasingly Isolated, EU Struggles to Derail Global Momentum for Emergency COVID Waiver of WTO Intellectual Property Barriers

[Arthur Stamoulis]

Responses to the EU’s latest attempt to derail the TRIPS waiver via Global Trade Watch and Health GAP….

 
REPORTERS MEMO
 
FOR IMMEDIATE RELEASE: June 7, 2021 
CONTACT: Matt Groch mgroch at citizen.org <mailto:mgroch at citizen.org> (202) 454-5111 
 
Increasingly Isolated, EU Struggles to Derail Global Momentum for Emergency COVID Waiver of WTO Intellectual Property Barriers, Submitting Papers in Defense of Big Pharma and Status Quo Rather Than Offering a New Proposal 
 
 On Eve of June 8-9 TRIPS Council Meeting, EU Seeks to Block U.S., Japan, China, and 100+ Nations’ Negotiations on Waiver Needed to Deliver Necessary Manufacturing Scale Up of COVID-19 Vaccines, Treatments and Diagnostic Tests 
 
WASHINGTON, D.C. – Instead of unveiling alternative plans at the World Trade Organization (WTO) to boost production and availability of urgently-needed COVID-19 vaccine, treatments and tests production, the European Union revealed its intentions to block negotiations the rest of the world support to temporarily waive intellectual property (IP) barriers to end the pandemic and save lives.
 
The EU’s latest move is the height of hypocrisy: EU officials say Covid vaccines should be a universal common good <https://ec.europa.eu/commission/presscorner/detail/en/ac_20_749> and no one is safe unless everyone is <https://ec.europa.eu/commission/presscorner/detail/en/SPEECH_21_2284>, yet act <http://infojustice.org/archives/43180> to prioritize Big Pharma demands and block the rest of the world from enacting a critical first step, the WTO IP waiver, to boost production and access.
 
The increasingly isolated EU not only is blocking a waiver that the vast majority of the world’s countries deem necessary to save their people and end the pandemic. It is trying to distract and delay <http://infojustice.org/archives/43180> the rest of the world from moving forward. On Friday, the EU submitted two papers at the WTO that recycle debunked, stale Big Pharma defenses of WTO rules and claim that anything but expansive IP monopolies are causing the dire global shortage of COVID vaccines, treatments and tests. The EU “plan” is to urge current vaccine makers to produce more, an approach that already has failed spectacularly and now imperils the world.
 
As major economies with large pharmaceutical industries such as the United States, Japan and China and other developed nations like New Zealand have joined 100-plus developing nations supporting waiver talks, the increasingly isolated EU is expected to block waiver negotiations during the June 8-9 meeting of the WTO’sAgreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) Council.
While the vast majority of WTO members agree a temporarily waiver is necessary to remove intractable webs of patent, copyright, trade secret, industrial design and other IP barriers pharmaceutical firms have constructed to maintain monopoly control of COVID-19 vaccines and related medicines, the EU doubled down in opposition in May 2021 after German Chancellor Angela Merkel echoed attacks from the pharmaceutical industry when the Biden-Harris administration announced U.S. support for a waiver. 
 
The EU’s latest WTO submissions closely hew to the Big Pharma talking points <https://healthgap.org/debunking-pharmas-talking-points-on-the-trips-waiver/> leaked last month. They  include the colonialist insinuations that developing countriesdo not understand <https://twitter.com/PaulineMuchina/status/1400494937016311812> what is in their own interest and cannot act for themselves <https://twitter.com/JNkengasong/status/1397271885050699787>. They assume that the press and public do not understand that the supply chain “bottlenecks” that the EU claims are the issue are in no small part caused by IP barriers <https://www.nature.com/articles/s41587-021-00912-9#Fig1> that limit production of COVID-19 vaccine inputs as well as finished vaccines not by “trade barriers,” as the EU claims. As Human Rights Watch recently documented <https://www.hrw.org/news/2021/06/03/seven-reasons-eu-wrong-oppose-trips-waiver>: “The TRIPS waiver proposal sponsors <https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/IP/C/W670.pdf&Open=True> and experts at the leading science journal Nature <https://www.nature.com/articles/d41586-021-01242-1>, Médecins Sans Frontières (MSF) Access Campaign <https://msfaccess.org/sites/default/files/2020-12/MSF-AC_COVID_IP_TRIPSWaiverMythsRealities_Dec2020.pdf>, the Third World Network <https://www.twn.my/title2/intellectual_property/info.service/2021/ip210109.htm>, and others have presented many other concrete examples of how enforcement of IP rules blocked, delayed, or limited production of chemical reagents <https://www.statnews.com/pharmalot/2020/03/27/roche-covid19-coronavirus-netherlands/> for Covid-19 tests <https://www.spotlightnsp.co.za/2020/05/05/covid-19-behind-sas-shortages-of-test-materials/>, ventilator valves <https://www.techtimes.com/articles/248121/20200317/maker-ventilator-valves-threatens-sue-volunteers-using-3d-printed-coronavirus.htm>, Covid-19 treatments <https://www.citizen.org/news/remdesivir-should-be-in-the-public-domain-gileads-licensing-deal-picks-winners-and-losers/>, and elements of Covid-19 vaccines <https://www.fiercepharma.com/pharma/pfizer-biontech-regeneron-sued-for-infringement-allele-s-patent-their-covid-19-products>. IP constraints have not only led to vaccine shortages but have also led to shortages of key raw materials like bioreactor bags <https://mattstoller.substack.com/p/why-are-there-shortages-of-plastic> and filters.”
 
They pretend that manufacturing shortfalls are not caused by IP barriers even as a few firms holding vaccine monopolies have refused to license technology to world class drug producers <https://mkus3lurbh3lbztg254fzode-wpengine.netdna-ssl.com/wp-content/uploads/TRIPS-waiver_Facts-vs-Common-Myths042621.pdf> worldwide.
 
Despite the overwhelming evidence to <https://mkus3lurbh3lbztg254fzode-wpengine.netdna-ssl.com/wp-content/uploads/TRIPS-waiver_Existing-TRIPS-Flexibilities-Unworkable-for-Scale-Up-of-Covid-19-Medicines-Production-.pdf> the contrary, the EU paper reviews existing WTO TRIPS  “flexibilities <https://www.citizen.org/article/waiver-of-the-wtos-intellectual-property-rules-existing-trips-flexibilities-unworkable-for-scale-up-of-covid-19-medicines-production/>” and argues these are sufficient.
 
It’s an absurd claim on its face. Countries worldwide support a waiver because, contrary to the claims of Big Pharma and the EU, the existing WTO “flexibilities” for HIV/AIDS treatments that were reaffirmed in the 2001 Doha Declaration after hard campaigning are obviously insufficient in the COVID-19 context.  First, because COVID vaccines have complex global supply chains that rely on numerous inputs subject to patents, and other forms of IP monopoly that are cross-licensed and produced in multiple countries, the existing flexibilities that are focused on compulsory patent licensing are widely recognized to be unworkable for quickly boosting COVID-19 vaccine production.
 
 <https://www.nature.com/articles/s41587-021-00912-9#Fig1>Even leaving aside other IP restrictions, pharmaceutical firms have made sure that webs of patent claims underpin and restrict the marketing of many vaccines, as exposed in a recent Nature article <https://www.nature.com/articles/s41587-021-00912-9#Fig1> that exposes the complex patent and licensing deals for mRNA vaccines and their underlying technologies. This intricated web of patents, licenses and sublicenses eviscerates the UE papers’ claims that somehow existing compulsory licensing flexibilities suffice to ramp up production.  
 
Second, technology has developed rapidly since 2001 and pharmaceutical firms have created IP “thickets,” adding layers of additional copyright, industrial design and other exclusivities that extend beyond the patent barriers that were the focus of the 2001 flexibilities.  Copyright protections on software, algorithms and training materials used to make the drugs and on storage and use guidelines, as well as undisclosed data protections covering some trade secrets, plus perhaps industrial design protections for key machinery used to mix lipids and genetic materials for mRNA vaccines are among the innumerable IP barriers thwarting production by non-originator firms. None of these IP barriers are addressed by the EU plan communication to supposedly boost production and availability of COVID-19 vaccines. 
 
In order to manufacture a COVID-19 mRNA vaccine using compulsory licensing, the relevant producer would have to seek licenses for each IP-protected commodity in its country of origin and for export, which would require the compulsory licensing cooperation of the exporting country and input producer. It would likewise have to seek a compulsory license allowing for import of each such component and allowing for production of the vaccine. These multiple cases of component-by-component and country-by-country licenses result in timing and coordination complexities that are virtually insurmountable even if the existing WTO flexibilities were determined to cover all of the different forms of IP exclusivities involved.  Even for medicines not subject to such complicated supply chains, successfully obtaining a compulsory license requires a time-consuming and administratively burdensome process.
 
The EU touting compulsory licensing as the way forward is even more cynical given decades of developing countries’ attempts to use compulsory licensing being viciously attacked with trade threats and more by rich countries, including the EU and its member nations. In the midst of COVID-19 pandemic, pharmaceutical firms continue to pressure countries over the use of compulsory licensing. Gilead sued Russia <https://makemedicinesaffordable.org/gilead-sues-russia-private-company-challenges-a-countrys-right-to-protect-public-health/> for issuing a compulsory license on remdesivir. The Pharmaceutical Research and Manufacturers Association (PhRMA), the Biotechnology Innovation Organization (BIO) and the U.S. Chamber of Commerce tried to recruit the U.S. government <https://www.citizen.org/article/waiver-of-the-wtos-intellectual-property-rules-existing-trips-flexibilities-unworkable-for-scale-up-of-covid-19-medicines-production/>to threaten countries that have used or planned to use compulsory licenses to incentivize domestic manufacturing of COVID-19 vaccines and treatments.  
 
The EU communications does not address any solution to overcome these problems. In contrast, a TRIPS waiver would simply clear the thorny IP thickets, the related investment-chilling liabilities and threats of trade sanctions. 
 
The EU papers were only novel in the seeming ignorance that what is labeled as reforms in fact are terms that have been in place since the 2001 WTO Declaration on the TRIPS Agreement and Public health: 
 
·               The EU purports that the use of the compulsory licensing system can be eased by formal clarification that COVID qualifies as a national emergency so countries are not subject to requirements to negotiate with patent holders when issuing compulsory licenses. Beyond the absurdity that the WTO must clarify that COVID has caused national emergencies, under existing WTO rules countries self-declare emergencies, and emergencies are not the only basis for waiving the negotiate-first rule. Public non-commercial use is also included, like when governments provide vaccines to their populations. 
 
·                 The EU purports to clarify that WTO Members can set patent holder remuneration under a compulsory license at the price charged by the manufacturer of the vaccine or therapeutic. Yet the TRIPS Agreement already makes that clear. And, the problem with compulsory licensing of COVID vaccines is not related to compensation, but that compulsory licensing is not a workable solution in this context.
 
·                 The EU papers restate as a new reform another existing TRIPS rule <https://www.wto.org/english/tratop_e/trips_e/art31bis_modelnotifs3_e.htm>: That when countries export medicines made under a compulsory licensing to countries with no or insufficient pharmaceutical manufacturing capacity, the exporting country can provide a single notification that lists all the importing countries to which vaccines or therapeutics would be supplied. Yup, that’s been the case for many years…
 
Given the EU is increasing alone against the world in service of Pharma, the latest EU WTO papers that restate existing WTO rules as if they are innovations and recycle old Big Pharma claims that have been so thoroughly debunked are surprisingly lame.
 
Instead of obstructing the world’s progress towards the massive increase in COVID vaccines and medicines needed to save lives and end the COVID pandemic, the EU should just say nein to Germany’s deadly, self-defeating position and join the community of nations in favor of the WTO TRIPS waiver.
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Disinformation, Diversion, and Delay:
The Real Text of the European Union’s Communication to the WTO TRIPS Council – Urgent Trade Policy Responses to the COVID-19 Crisis
Professor Brook K. Baker, Senior Policy Analyst Health GAP
June 5, 20221
 
If the European Union’s Communication to the TRIPS Council – Urgent Policy Responses to the COVID-19 Crisis has no real substance, then it is fair to conclude that its true purpose is disinformation, diversion, and delay.  The Communication purports to address clarifications needed to make existing TRIPS flexibilities more operational for countries that might need to issue compulsory licenses to access COVID-19 vaccines and therapeutics.  However, the proposed clarifications have no substance beyond what is already well established in the text of Articles 31 and 31bis of the TRIPS Agreement and of the Doha Declaration on the TRIPS Agreement and Public Health.  When a powerful group of nations, like the E.U., offers a set of “pseudo” proposals with no substance, we can look beyond the façade to see that their real intention is to misinform decision-makers, the press, and the public and to divert attention from the proposal by India, South Africa and 61 other countries to the WTO to waive intellectual property protections on COVID-19 health products and technologies for at least three years.  (Adopting this substantive waiver would mean that countries experiencing grossly inequitable access to vaccines, medicines, diagnostic, personal protective equipment, and other medical supplies could act on their own behalf to find alternative producers to ameliorate shortages, excessively high prices, and stockpiling by rich countries.)  In addition to muddying the water and diverting attention, the E.U. is also hoping that its empty-package compulsory licensing proposals will delay text-based negotiations of a waiver agreement so long that implementing the waiver would be economically impractical for alternative producers and countries.  Just as the existing 8-month delay in responding to the October waiver proposal has coincided with at least a million extra COVID-19 death, continued prevarication by the E.U. will leave many millions more in its former colonies waiting in line to die.
 
The Table below presents the relevant existing text of the TRIPS Agreement and the Doha Declaration, the pseudo-proposals on compulsory licensing clarifications put forth by the E.U. to the TRIPS Council, and critical commentary on the illusory impacts of what the E.U. has proposed.
 
TRIPS Agreement Article 31 and 31bis and Doha Declaration on the TRIPS Agreement and Public Health
EU [Pseudo] Proposal to the TRIPS Council on Clarification of Compulsory Licensing rules
Critical Comments
Doha ¶4:  “We agree that the TRIPS Agreement does not and should not prevent members from taking measures to protect public health. Accordingly, while reiterating our commitment to the TRIPS Agreement, we affirm that the Agreement can and should be interpreted and implemented in a manner supportive of WTO members' right to protect public health and, in particular, to promote access to medicines for all.

In this connection, we reaffirm the right of WTO members to use, to the full, the provisions in the TRIPS Agreement, which provide flexibility for this purpose.”

 
¶10: “The discussions in the Council for TRIPS since the start of the COVID-19 pandemic have identified aspects related to the use of compulsory licensing that, in the view of a number of WTO Members, limit the use of this tool. In order to address these aspects, provide more legal certainty and enhance the effectiveness of the system, the EU considers that all WTO Members should be ready to agree on the following:
(a) The pandemic is a circumstance of national emergency and therefore the requirement to negotiate with the right holder may be waived;
(b) To support manufacturers ready to produce vaccines or therapeutics at affordable prices, especially for low- and middle-income countries, on the basis of a compulsory licence, the remuneration for patent holders should reflect such affordable prices; and 
(c) The compulsory licence could cover any exports destined to countries that lack manufacturing capacity, including via the COVAX facility.
The EU underplays the concerns that waiver proponents and other expert commentators have advanced concerning the limited effectiveness of existing TRIPS flexibilities.
Critics have pointed to the massive problems of coordination and cooperation in issuing compulsory licenses in multiple territories that must export patent protected components, intermediate products, and final formulations. 
These complexities are doubled with the need to issue coordinated import licenses as well. 
Moreover, the clarification will not be self-effectuating, countries, many of which have not previously adopted Article 31bis provisions domestically would have to do so. 
Finally, TRIPS compulsory license provisions only deal with patent rights and do not address the confidential information, trade secret, regulatory data, and biologic resource protections that act as barriers to alternative producers of vaccines, biologics, and other COVID-19 health technologies, nor associated copyright and industrial design protections. 
Doha ¶5(c): Each member has the right to determine what constitutes a national emergency or other circumstances of extreme urgency, it being understood that public health crises, including those relating to HIV/AIDS, tuberculosis, malaria and other epidemics, can represent a national emergency or other circumstances of extreme urgency.
 
¶10: “The EU proposes to clarify that the circumstances of a pandemic fulfil the requirement of a national emergency and therefore the requirement to demonstrate the efforts to negotiate for a certain period of time can be waived.”
EU proposes nothing that is not already exquisitely clear – countries have absolute sovereign discretion to determine what constitutes emergencies or matters of extreme urgency; epidemics are clearly intended to be covered; COVID-19 is both an emergency and global pandemic, even worse than an epidemic; and thus the EU clarification is worthless.
TRIPS §31(b) makes it clear that the requirement that the proposed user of a compulsory license make efforts “to obtain authorization from the rightholder for a reasonable period of time on commercially reasonable terms” is waived in the case of “a national emergency or other matter of extreme urgency or in cases of public, non-commercial use.”  Article 31(k) states further that prior negotiations for a voluntary license are not required for compulsory licenses addressing competition abuses.
¶10: “Therefore, the EU proposes to clarify that the waiving of the requirement to negotiate with the right holder applies also in the circumstances of Article 31bis.”
The waiver of requirements to negotiate before issuing a compulsory license found in Article 31(b) and (f) already fully apply to Article 31 bis licenses.  No one has ever suggested that Article 31 bis licenses addressing emergencies or government use needs would require prior negotiation.  Once again, the EU clarification is worthless.
TRIPS §31(h): “the right holder shall be paid adequate remuneration in the circumstances of each case, taking into account the economic value of the authorization; …”
 
¶12: The EU proposes to clarify that in the circumstances of a pandemic, WTO Members can set the remuneration to the right holder at a level that reflects the price charged by the manufacturer of the vaccine or therapeutic under a compulsory licence. This would support production and supplies of vaccines and therapeutics at affordable prices to low and middle-income countries.
The TRIPS Agreement already only requires adequate remuneration appropriate to the circumstances taking into account the economic value of the authorized CL.  Adequate remuneration for issued compulsory licenses in the past have always been single digit royalties based on the generic price of the licensed medicine.  Actual rates have varied from a fraction of 1% to 7.5%.  The EU remuneration proposal offers nothing of value.
TRIPS §31bis2(c) the exporting Member shall notify(8) <https://www.wto.org/english/docs_e/legal_e/31bis_trips_annex_e.htm#fnt-8> the Council for TRIPS of the grant of the licence, including the conditions attached to it.(9) <https://www.wto.org/english/docs_e/legal_e/31bis_trips_annex_e.htm#fnt-9> The information provided shall include the name and address of the licensee, the product(s) for which the licence has been granted, the quantity(ies) for which it has been granted, the country(ies) to which the product(s)is (are) to be supplied and the duration of the licence. 
 
¶12: “The EU proposes that in the circumstances of a pandemic, the WTO Members agree that the exporting Member may provide in one single notification a list of all countries to which vaccines and therapeutics are to be supplied directly or through the COVAX Facility.”
Article 31bis already allows notification relating to multiple products and multiple countries.  Nothing in the existing text suggests that exporting countries cannot already rely on a single notification document.  Note, however, that the EU has not proposed a waiver of the requirement to specify quantities, which means, new needs would still require new notices.  As with all its other CL clarifications, the EU’s third clarification is worthless.
 
Conclusion:
 
The E.U. proposal is meaningless and insulting.  Its true purpose is obscuration and postponement of the proposed TRIPS waiver. The best evidence of this intention is found in the E.U.’s Questions and Answers: EU Communications to the WTO – EU proposes a strong multilateral trade response to the COVID-19 pandemic:
[W]e want to maintain the levels of [IP] protection required for investment in innovation, so we can fight against new strains of COVID-19 and any future disease. The EU does not consider that the broad waiver proposed by a number of WTO members is the right response to the pandemic. We are arguing for a different and more targeted approach. …
 
Once again, even in describing the waiver, the E.U. misinterprets its probable impacts: 
Waiving IP rights: All relevant rights are waived, i.e. the protection granted by patents, copyright or other IP rights ceases to exist for the duration of the waiver. The vaccine developer is not remunerated and has no role or information on the product. The absence of interaction between the vaccine developer and the producers makes the transfer of know-how unlikely.
 The revised waiver test does not discount remuneration and in fact says that incentives for innovation are important.  Countries would clearly be free to provide remuneration after taking into account past public and charitable investments in the subject product.  If the IP rightholders were truly interested in having some role with respect to out-licenses, they could join the WHO COVID-19 Technology Access Pool, which will only grant out-licenses to qualified licensees who can meet stringent quality and equitable distribution requirements.  Likewise, the suggestion that transfer of know-how would be unlikely is directly contrary to what the waiver would permit.  It would permit countries to require rightholders to transfer their confidential information, trade-secrets, and manufacturing know-how, as is routinely done is the industry’s regular co-manufacturing and contract manufacturing agreements.
 
The best response would be to ignore it so that countries could move on to the serious task of adopting an effective waiver of IP rules at the WTO, implementing them domestically, and forcing Pharma to the bargaining table to extract new open licenses and technology transfer to speed access to lifesaving COVID-19 vaccines, therapies, tests, and personal equipment.  The E.U. needs a rap on the knuckles to get back to the real business of addressing the abomination of vaccine apartheid.
 


Arthur Stamoulis
Citizens Trade Campaign
(202) 494-8826




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