TWN Info Service on WTO and Trade Issues (Mar21/11)
10 March 2021
Third World Network

WTO DG meets Big Pharma and opts for voluntary licenses
Published in SUNS #9302 dated 10 March 2021

Geneva, 9 Mar (D. Ravi Kanth) – The World Trade Organization Director-General Ms Ngozi Okonjo-Iweala said on 9 March that she fully supports the TRIPS waiver, insisting that she has conveyed to Big Pharma that they need to understand the “practicalities and sentiments” behind the demand for the waiver, said people familiar with the development.

Yet, she maintained that the TRIPS waiver may not be able to address the issue of ramping up production of vaccines to combat COVID-19 due to difficult manufacturing conditions that need to be complied with for producing vaccines, said people familiar with her remarks.

Her continued ambivalent positions seem to have undermined the move towards text-based negotiations on the TRIPS waiver, said people familiar with the development.

In her meeting with the ACP (Africa, Caribbean, and Pacific) group of countries on the morning of 9 March, the DG, for the first time since 15 February when she gave her acceptance speech at a special General Council meeting, said she supports the waiver.

Her sudden admission of support for the TRIPS waiver came just three days after the WHO Director-General Dr Tedros Adhanom Ghebreyesus openly urged for waiving the intellectual property rights (IPRs) enshrined in the TRIPS Agreement.

The delayed statement of support by the WTO DG for the TRIPS waiver has apparently failed to generate confidence in her overall strategy which seems to be aimed at turning her “third way” into a “first way,” said a person familiar with the deliberations at the ACP meeting.

Ms Ngozi informed the ACP countries that, by accident, she has been participating in the two-day meeting with the International Federation of Pharmaceutical Manufacturers & Associations and vaccine manufacturing associations from developing countries being organized by the WHO.

Apparently, she was not included in the list of participants for the two-day meeting that began on 8 March. Ms Ngozi suggested that she brought to the notice of the organizers of the meeting that the issue of export restrictions and the bureaucratic “red tape” on the supply of vaccines are part of the WTO’s mandate, said people familiar with the meeting.

Following her message to the organizers, Ms Ngozi said that she got invited to the two-day meeting, insisting that she told the participants about how committed she is to the TRIPS waiver, said people who asked not to be quoted.

“We (the WTO members) should go on pressing (on the TRIPS waiver)” in a nuanced manner so as to avoid putting everything such as COVID-19 diagnostic tools, therapeutics, and vaccines “in one basket” as they are “very, very different with respect to how we can manufacture them,” said people familiar with the ACP discussion.

Ms Ngozi apparently told the manufacturers that the demand for the TRIPS waiver has arisen from past history when the supply of drugs for the HIV/AIDS epidemic and vaccines for H1N1 flu were not supplied in time to avert huge numbers of deaths.

MANUFACTURING DIFFICULTIES

“I have been in the middle of this (the vaccine issue) for the past five years and I have gathered quite a bit of knowledge and how it works,” Ms Ngozi told the ACP members.

The DG said setting up a vaccine manufacturing facility will take 5 to 6 years while manufacturing in an existing plant would take 18 months, “but now they are managing to do it in six to seven months.”

Manufacturing of vaccines demands safety and quality as the manufacturers are dealing with “live organisms,” she said.

“In light of that, I said let’s push manufacturers so that supplies can be increased in volumes and they must take this into consideration,” Ms Okonjo-Iweala said. “Let me share what I learnt yesterday (at the manufacturers’ meeting on 8 March),” she continued, “that the supply chains for products are very intricate and interconnected.”

The Pfizer-BioNTech vaccine, according to the DG, requires 280 components for manufacturing it, and that it is being manufactured in 19 countries.

According to Ms Okonjo-Iweala, Pfizer and BioNTech complained about “export restrictions, prohibitions, and licensing requirements for exporting them.”

“They are looking to see how the WTO can help them,” the director-general emphasized.

DIFFERING STAND BY DG ON 8 MARCH

In her meeting with the African Group on 8 March, the DG apparently touted voluntary licenses as a solution in addressing Africa’s access problems for COVID-19 vaccines while understating the need for the TRIPS waiver, said people familiar with the meeting.

Her statement at the African Group meeting seemed as an apparent strategy to undermine the move towards text- based negotiations, said people familiar with the development.

Her continued remarks in favour of voluntary licenses to ramp up production of vaccines appears to be a shot in the arm for the developed countries who vehemently oppose text-based negotiations, said people, who asked not to be quoted.

During her meeting on 8 March, Ms Okonjo-Iweala overly praised voluntary licenses for ramping up production of vaccines as an interim solution.

She also suggested that discussions on the TRIPS waiver, co-sponsored by the entire African Union, could continue on a parallel track, hinting that the waiver is not the immediate priority, said people, who preferred not to be quoted.

Asked about the “third way” that she has been propagating since 15 February and how it would work in reality, she apparently chose to dodge the question and did not provide any clarification, according to people present at the meeting.

In her acceptance speech delivered at a special General Council meeting on 15 February, Ms Okonjo-Iweala had said that “there should be a “third way” to broaden access through facilitating technology transfer within the framework of multilateral rules, so as to encourage research and innovation while at the same time allowing licensing agreements that help scale up manufacturing of medical products.”

In that speech, she said that “some pharmaceutical companies are already ahead of the game because they are doing this.”

Ms Okonjo-Iweala gave several examples: “Johnson & Johnson seems willing to follow suit looking beyond contract manufacturing to licensing agreements”, and “the Serum Institute of India, which is set to manufacture up to 1 billion doses of vaccines.”

At her meeting with the African Group of countries on 8 March, she went on to suggest that there is an urgent need for a short-term solution like more voluntary licenses in Africa that could provide immediate benefits, said people familiar with the discussion.

Effectively, ahead of the TRIPS Council meeting on 10-11 March, Ms Okonjo-Iweala appears to have sent a loud and clear signal that voluntary licenses are the best option for African countries, while downplaying the demand by almost two-thirds of WTO members for text-based negotiations on the TRIPS waiver, said people, who asked not to be quoted.

Her increased emphasis on voluntary licenses as a panacea for ramping up production of COVID-19 vaccines appears to give a boost to the opponents of the TRIPS waiver such as the United States, the European Union, Japan, Canada, Switzerland, and Norway among others to kill discussions on the waiver, said people familiar with the discussions.

Even though she said that the waiver discussions must continue in parallel, her canvassing for the voluntary licenses seemed as a sub-text for undermining the waiver discussions, said people familiar with the discussions at the DG’s meeting.

Despite voluntary licenses having failed miserably to address access to antiretroviral drugs to treat HIV/AIDS and their opaque licensing conditions, the DG’s open advocacy for voluntary licenses and how they will deliver results in a pandemic remains a huge mystery and appears unconvincing, said people familiar with the discussions.

More disturbingly, “even if there is voluntary licensing, the terms of the contract are not published,” as “they (the vaccine producers) have price control, they have territorial control where the vaccine ought to be distributed, and they have other negative clauses,” the person said, arguing that in the absence of information and transparency, these companies can play havoc.

However, the African Group, which has co-sponsored the TRIPS waiver proposal, appears determined to raise the stakes on its demand for text-based negotiations, regardless of opposition from the major developed countries, said people who asked not to be quoted.

US ACADEMIA CALLS FOR TRIPS WAIVER

Meanwhile, in a report, titled “Vaccinating the World – Waiving Intellectual Property Rules on COVID-19 Products”, by Boston University’s Global Economic Governance Initiative, the writers – Ms Katie Gallogly-Swan, Ms Rachel Thrasher, and Ms Ozlem Omer – warned that “an inequitable, vaccination program could prolong the pandemic, for many years through cycles of mutation, resistance, and re-infection and will cost the global economy an estimated US$9.2 trillion.”

They pointed the finger at Ms Okonjo-Iweala for “speeding up vaccination” on grounds of her calls of “serious supply scarcity” and that “the world needs additional manufacturing capacity at an affordable price.”

However, the real barrier “to scaling up the COVID-19 vaccine production is the collection of intellectual property (IP) rules relating to patents and technology transfers of key medical products,” the writers argued.

The briefing note issued by Boston University’s Global Development Policy Center considers the shortcomings of the current approach to global vaccination for COVID-19, how the TRIPS waiver could overcome these challenges, and counter-arguments to the waiver.

It concludes that supporting the TRIPS waiver is the best way for WTO members to advance a global vaccination program, and would be most effective with additional financing to develop regional manufacturing facilities and incentives to ensure pharmaceutical companies share patents, industrial designs, and technology.

“To this end, South Africa and India with the co-sponsorship of 56 other WTO Members have proposed a waiver from specific provisions of the TRIPS Agreement for the prevention, containment and treatment of COVID-19 which has the backing of the majority (around 120) of WTO Members,” the writers argued.

However, a few Members have continued to block the waiver since its proposal last year, including the US, the UK, EU, Japan and Switzerland – the same countries who have hoarded the majority of available vaccines at the expense of a coordinated global strategy to end the pandemic, it is argued.

This is despite strong public support in many of these Members’ territories for such an initiative, and the reality that increasing supply would also benefit their citizens, the writers argued.

Further, the public-private vaccine pillar global response – the COVAX facility – is beset with critical failures and it is vastly underfunded, is on track to achieve only around a quarter of its aimed vaccinations, is compromised by the hoarding of wealthier countries, and does nothing to increase global productive capacity of vaccines.

“The “third way” suggested by Dr. Okonjo-Iweala to increase licensing agreements between manufacturers could increase production between existing facilities, however, this proposal would not address the severe global asymmetry where global pharmaceutical production is concentrated in the North, a reality that must be addressed for short- and long-term regional resilience to public health challenge,” the writers pointed out.

Several firms across different regions have claimed that they could make hundreds of millions of doses if IPRs did not stand in the way. Though some argue that building or upgrading manufacturing facilities could take many years, timelines have been much shorter for many of the vaccine manufacturers who have entered into contract manufacturing agreements with dozens of producers in a matter of months.

One such example is the increase in domestic vaccine production that has been enabled in the UK through public investment: at the beginning of the pandemic, they had just two plants which made seasonal flu jabs and a Japanese encephalitis vaccine which has now expanded to four plants, all of which are making COVID-19 vaccines, as well as two additional rapid response centers that can produce vaccines and will be ready by the end of 2021.

With the help of a TRIPS waiver and additional financing, the same increase in productive capacity could happen many times over in different countries and regions around the world. Sticking instead to keeping licenses within the current infrastructure of plants not only creates a ceiling on global production, but prevents resilient, regional public health infrastructure, the writers argued.

Blocking the TRIPS waiver only protects the super-profits of pharmaceutical companies, who have benefited from around $100 billion in public investment to completely de-risk the development of COVID-19 vaccines and whose profits on COVID-19 vaccines are projected to be around $38.5 billion this year.

These companies, according to the writers, have bullied states to put up sovereign assets as guarantees against future legal cases, have charged poorer countries 2-3 times more for vaccines, and are now seeking sanctions for countries attempting to use TRIPS flexibilities to develop generic vaccines.

Since they (the pharmaceutical companies) have rejected the voluntary Technology Access Pool launched by the WHO, it is legitimate to use the waiver to remove barriers to sharing patents, technology, and know-how.

An excess profits tax is common during times of crises and could help to incentivize transparent participation by pharmaceutical companies. A rate of 70% on top vaccine manufacturers would raise around $27 billion, but a preferential rate could be used for companies who proactively share their COVID-19 patents and know-how, said the writers.