TWN Info Service on WTO and Trade Issues (Oct20/21)
20 October 2020
Third World Network

South Africa, India strongly rebut arguments against TRIPS waiver
Published in SUNS #9214 dated 20 October 2020

Washington DC, 19 Oct (D. Ravi Kanth) – South Africa and India on 16 October underscored the importance of the TRIPS waiver in addressing the COVID-19 pandemic, strongly rebutting the arguments advanced by the US and the European Union among others that the international patent system is helpful to developing countries, participants told the SUNS.

At the WTO’s TRIPS Council meeting on 16 October, the United States, the European Union, Japan, Norway and Brazil among others repeatedly raised questions and adopted “stonewalling” tactics, said a participant, who asked not to be quoted.

During the marathon debate that lasted for more than five hours, the US constantly emphasized the importance of innovation during the COVID-19 pandemic for safe and affordable medical solutions, without considering the issues raised by South Africa and India, the participant said.

The EU stated that it doesn’t see IP (intellectual property) as a barrier, maintaining that other factors such as health infrastructure and lack of materials are more relevant. It emphasized its medicines initiative for further liberalization of medical products in the face of the COVID-19 pandemic that as caused more than a million deaths around the world, the person said.

The EU along with other members of the Ottawa Group are soon to launch a plurilateral initiative on trade and health, the EU had said at a recent heads of delegation (HoD) meeting last week.

Responding to the questions/concerns raised by the US, the EU, and other developed countries, the South African delegate stressed that “the protection and enforcement of intellectual property are not absolute, and Article 8 of the TRIPS Agreement recognizes that countries may adopt necessary measures to protect public health,” according to another participant, who asked not to be quoted.

“The COVID-19,” according to the South African delegate, “constitutes an unimaginable global pandemic which requires swift and bold action” and “the COVID-19 is far from over and there is no certainty as to when effective vaccines will be available in sufficient quantities to ensure equitable access.”

Further, the EU had said the COVID-19 pandemic “is here to stay, and developing new vaccines would take up to 10 years.”

“We explained the rationale for our proposal and believe that our proposal demonstrates the existence of exceptional circumstances that justifies our request for a waiver decision, with clear terms and conditions governing the application of the waiver,” South Africa argued.

Further, the proposed waiver does not imply any change of the substantive treaty obligations, the South African delegate said, arguing that the “waiver only temporarily suspends their operation for a period to be agreed by Members and thus will be time-bound.”

The scope of the waiver has been clearly defined in relation “to the implementation, application and enforcement of Sections 1 (Copyright), 4 (Industrial Designs), 5 (Patents), and 7 (Protection of Undisclosed Information) of Part II of the TRIPS Agreement which are aspects critical to the diagnosis, prevention, containment and treatment of COVID-19,” South Africa said.

South Africa further clarified the date on which the waiver will continue to apply until widespread vaccination is in place globally, and the majority of the world’s population has developed immunity.

Hence, the proponents proposed “an initial duration of [X] years from the date of the adoption of the waiver,” suggesting that the period for the duration of the waiver can be negotiated.

In response to the refrain from the EU and others that the TRIPS Agreement is fit for purpose and its flexibilities are usable without limitation or any problem, South Africa said that “the delegations that have taken the floor to condemn this waiver proposal claim that TRIPS flexibilities already include the option to issue compulsory licenses where necessary.”

The US and other developed countries often treated the use of compulsory licence by developing countries for tackling public health emergencies as using “a weapon of mass destruction”, suggesting that considerable political arm-twisting goes on behind the scenes, said an analyst, who asked not to be quoted.

In response to the concerns raised by the EU and other developed countries at the TRIPS Council meeting, South Africa said the joint proposal for “a waiver on certain IP provisions offers an expedited, open and automatic global solution that allows for uninterrupted collaboration in development and scale up of production and supply and that collectively addresses the global challenge facing all countries.”

South Africa clarified that “countries should continue to use TRIPS flexibilities to safeguard public health, including issuing compulsory licenses and placing limitations on, or making exceptions to, exclusive rights.”

However, the “case-by-case” or “product-by-product” approach required when using flexibilities to address IP barriers at the national level could be limiting during the pandemic, South Africa argued.

“Some countries also face limitations with respect to their national laws, pressures from their trading partners, or lack the practical and institutional capacity required to exercise TRIPS flexibilities during the pandemic quickly and effectively,” the South African delegate said.

Further, “the existing mechanisms for compulsory licenses under Article 31 and Article 31bis of the TRIPS Agreement contain territorial and procedural restrictions that make the practice of issuing product-by-product compulsory licenses a complex process, making it difficult for countries to collaborate,” South Africa said.

Also, Article 31 of the TRIPS Agreement requires that compulsory licenses are issued on a case-by-case basis and used predominantly to supply domestic markets, thereby limiting the ability of manufacturing countries to export to countries in need, the South African delegate said.

Moreover, the Article 31bis of the TRIPS Agreement “requires that any product produced and exported under a compulsory license be identified with specific packaging and quantities, which can lead to unnecessary delays in the context of COVID-19 where countries need urgent access to medical tools,” the South African delegate suggested.

More disturbingly, there is even less experience in areas such as industrial designs, trade secrets, algorithms and copyright, and applying compulsory licenses to such areas may be legally complicated and novel, the South African delegate added.

Without naming the US and the EU, the South African delegate suggested that, “Political pressure from two delegations that oppose the waiver proposal have taken action to ensure that countries do not use compulsory licenses.”

The South African delegate cited the EU IP enforcement report of 2020 issued before the COVID-19 pandemic that “put a number of developing countries, including India, Indonesia, Turkey, Ecuador, under the spotlight of criticism for their laws allowing the use of compulsory license if patent holding companies do not fulfil the obligation of supporting production of medicines locally.”

In a similar vein, the USTR’s Special 301 report issued during the middle of the COVID-19 pandemic, inveighed against countries who improve their laws on compulsory license or make use of compulsory license.

It is well known that several countries – Chile, Indonesia, Colombia, Egypt, India, Malaysia, Russia, Turkey, Ukraine, El Salvador – came under intense pressure for their law or their use of compulsory license.

Criticizing attempts to tout “voluntary licenses” as the solution for COVID-19, the South African delegate observed that “IP rights can be exercised by their owners to decide on whether to grant a license or withhold from licensing the technology, designs and knowhow required for manufacturing or for further developing the products required for COVID-19.”

“By enforcing exclusive rights backed by IP, such as patents, pharmaceutical companies slow down research and innovation,” the South African delegate argued.

More so, “the use of restrictive voluntary license terms limits the catching up and innovation made by generic competitors,” the South African delegate said.

“Nine months into the pandemic, voluntary approaches have proven to be insufficient,” South Africa said, suggesting that “despite receiving significant public funding of at least US$70.5 million, Gilead has signed secretive bilateral licenses for Remdesivir (a therapeutic for COVID-19 treatment) with a few generic companies of its choosing that excludes nearly half of the world’s population from its licensed territories.”

“Much of Gilead’s supply has also been reserved for very rich nations. As a result, to date, most developing countries have barely received any supply of Remdesivir and the prices of Remdesivir are also prohibitively high,” the South African delegate noted.

“On the other hand, to date not a single company has committed to the voluntary Covid-19 Technology Access Pool of WHO,” South Africa said.

“In cases where companies have made such commitments to issue voluntary licenses, the lack of transparency of license agreements for products to treat COVID-19 is substantial,” the South African delegate argued, emphasizing that “these initiatives are ad hoc and are not a sustainable way of addressing IP barriers.”

Besides, “such companies can limit the production, quantity and export of products produced under license to certain geographical areas thereby excluding large parts of the world population.”

“Non-profit undertakings are time-bound, while such companies will decide when they think the pandemic is over,” the South African official argued.

“If we are serious to address access issues, production cannot be concentrated in the hands of only a few manufacturers; in order to scale up production, governments have a critical role to play,” the South African official said.

As regards the assertions made by the US, the EU, Japan, Norway, Switzerland, and Brazil that the waiver proposal will impede innovation and that it is improper and ill-conceived by the proponents, South Africa pointedly observed that “never has there been a weaker case for the granting of monopolies.”

In fact, “governments have been funding the development of COVID drugs and vaccines, and no company is able to meet the global demand,” South Africa said.

“In the context of COVID-19, despite the billions of taxpayer dollars invested in R&D, and announcements that COVID-19 vaccines should be considered a public good, no government has openly committed to this undertaking,” South Africa said.

It argued that “monopoly-based and market-driven R&D in biomedical sector ignores unmet health needs – no new medicine was developed for more than 40 years on TB (tuberculosis), no effective R&D in addressing antimicrobial resistance (AMR) – despite the constant increasing of number of IP patents granted in pharmaceutical sector globally for zero value addition.”

“The R&D of drugs is often a joint multi-stakeholder effort, benefitting from significant amounts of public taxpayer money,” South Africa said.

“For COVID-19, the search for an effective treatment or vaccine is a global effort involving multiple actors – it is not the result of the pharmaceutical industry’s efforts alone,” South Africa said, pointing out that governments and public funding agencies around the world have poured billions of US dollars of public money to support COVID-19 R&D, especially for drugs and vaccines.

Sadly, “by and large no conditions for access or affordability have been included as a pre-condition to any of that funding,” South Africa said.

“Governments must attach strings to any public money given for COVID-19 medical tools to guarantee that, if they prove safe and effective, they are available to everyone,” the South African delegate insisted.

“Today, some Members have admitted that some conditions had been set on companies, but none of it goes far enough to ensure that IP rights assigned to companies benefiting from taxpayer money do not abuse such rights down the line,” South Africa suggested.

Commenting on the claims made by the EU and other countries that voluntary cooperative approaches will solve the COVID-19 crisis through generous pledges to multi-stakeholder collaborative platforms, South Africa thanked the EU and other delegations for their generous support for these initiatives, including the donation of vaccines and access to the COVAX facility to cooperate in the purchase of future vaccines for the benefit of vulnerable countries.

However, the COVAX facility for addressing the COVID-19 pandemic is “insufficient”, while the waiver proposal is designed to work synergistically with such initiatives by enabling the rapid scaling of production by multiple producers across many countries, enabling the sharing of knowledge and transfer of technology with the aim of addressing the pandemic, South Africa emphasized.

It acknowledged that “COVAX at best provides very short-term, limited access to vaccines,” suggesting that the underlying approach of the COVAX “is not sustainable in the medium and long term.”

“The global needs are massive and can only be addressed with global sharing of technology, knowledge and related IP,” South Africa said, “not by artificially limiting competition and supply which in turn only results in high prices in the medium and long term.”

South Africa made the following observations about the funding and the difficulties that would arise from the COVAX:

* Notably wealthy nations representing just 13 percent of the world’s population have already cornered more than half (51 percent) of the promised doses of leading COVID-19 vaccine candidates. This creates significant uncertainty for universal access.

* The EU together with some other wealthier nations and regions, have already pre-booked more than 51% of the global supply capacity of the potential future COVID-19 vaccines – leaving a limited share for developing countries and least-developed countries. It is this conduct that has created huge uncertainty to the guarantee of universal access to COVID-19 medical tools and products.

South Africa argued that “global equitable allocation and donation are separate issues from the waiver proposal that we put on the table.”

It pointed out that while some initiatives such as COVAX is aiming to address the initial shortage of supply of medical tools for COVID-19 treatment and prevention, its effects can be limited due largely to the following factors:

* The model and the conducts reinforce the deep inequality in the global health architecture and do not provide a sustainable solution;

* Both the investment to COVAX and donation commitment cannot solve the issue of the need to diversify, to the maximum level the global capacity of development, manufacturing and supplying COVID-19 medical tools;

* COVID-19 reveals the deep structural inequality in access to medicines globally, and one of the root causes is that IP sustains dominating industry’s interests at the cost of lives.

Responding to the claims that “intellectual property is not a hindrance but a help to end COVID-19” and “suspending key protections of the TRIPS Agreement would send the wrong message to industry investors,” South Africa offered the following facts:

* Huge public funding has been poured into R&D for COVID-19 – more than 70 billion USD mostly from governments including many developing country governments; it is taxpayers in different countries who have invested in the COVID-19 R&D;

* People around the world who are taking huge risk of joining in and supporting the unprecedented R&D process and clinical trials;

* The incentive for people to take substantial risks in supporting and joining clinical trials has nothing to do with IP, but the conscience and common sense of contributing to the finding of a cure for all;

* Industry has asked governments to take over their liability and request for indemnity so that industry does not have to bear the risk but can make all the profit without much value added.

In response to claims that intellectual property has enabled collaboration between bio-pharmaceutical innovators and governments, universities and other research partners to speed up progress on our most pressing unmet medical needs, South Africa said that “it is the pandemic – not IP – that has mobilized collaboration of multiple stakeholders.”

Further, “it is knowledge and skills held by scientists, researchers, public health experts and universities that have enabled the cross-country collaborations – not IP!” South Africa said.

Lastly, “it is public funding, again, [that] facilitated these collaborations – not IP!” South Africa added.

It argued that the co-sponsors of the waiver are ready to reach out to other delegations to address more specific issues and questions that may have been raised.

Given the different opinions expressed by members at the TRIPS Council meeting, South Africa said there is a need to discuss this proposal further.

According to Article IX.3(b) (of Marrakesh Agreement), a request for a waiver shall be submitted to the relevant Council for consideration during a period which shall not exceed 90 days.

South Africa requested that “this item remain open for discussion for the intervening period.”