COVID-19 and Emerging Fault Lines in Intellectual Property Regime



Sukanya Thapliyal | Indian Journal of International Economic Law

The coronavirus pandemic has firmly established the strong linkage between a robust healthcare system and a fully-functional economy. The coronavirus infections that first started to crop up in Wuhan, China, in December 2019 has taken more than forty-one lakh people in its fold and is responsible for around three lakh deaths so far. While the numbers continue to sore up with each passing day, we still do not have a stable medication to counter the raging pandemic. Nevertheless, the healthcare sector continues to play an essential role by helping countries in tracking the people contracting this deadly virus and keeping the death toll stable through critical medical equipment such as ventilators, masks and Personal Protective Equipment (PPE). 

The current responses to the pandemic that involves lockdowns and social distancing rules have triggered direct economic shocks to both production and supply, apart from several other indirect aftershocks that continue to have a devastating impact on the lives of people. These effects, however, are proving to be much worse for the developing and least-developed countries (LDCs). While several developed countries have been able to limit the effect of the deadly virus with the help of well-prepared healthcare sector and massive economic rescue programmes for business and struggling families, the developing countries and LDCs are overwhelmed with typical challenges. These countries lack the necessary tools, such as a strong economy and requisite medical capabilities to counter coronavirus. Huge population, poverty and limited government resources further exacerbate the crisis. These specific characteristics also indicate that social distancing and lockdown are not an ideal approach for these countries as these are resulting in unrest, mass-migration and painful deaths. 

As and when the requisite medicine or vaccine will be developed, it will be of immense significance for developing countries and LDCs for eradicating the virus. However, as we have learned from our past, the mere existence of medication is no guarantee that people will be able to access it. The international trading regime has become the primary site for setting the rules for buying and selling of essential medicines but has had profoundly devastating effects on the health of common people. 

The said piece aims at identifying the emerging fault lines in the international intellectual property regime in the wake of COVID-19 pandemic and its impact on the developing countries. The submission begins by briefing the readers about the origin of the relationship between the IP regime and international trade under the World Trade Organization (WTO). Thereafter, it traces several flexibilities enumerated under the WTO’s Trade-Related Agreement on Intellectual Property Rights Agreement (TRIPS Agreement) and how these are of limited effect in empowering the Member States in addressing challenges faced by them. Further, it explains how the current pandemic has exposed all these fault lines that ail the developing and LDCs. The piece then moves towards the conclusion with some observations and suggestions. 

International IP Regime and Access to Essential Medicine 

The intellectual property rights were fastened together with the international trade law in 1995 with the advent of the World Trade Organization (WTO). The TRIPS Agreement laid down the minimum standard of protection for the protection of intellectual property rights, including patents for pharmaceuticals and other allied technologies. These obligations were introduced to cater to the needs of powerful pharmaceutical companies, most of which, were housed in the developed countries. The developing countries and the LDCs saddled with all kinds of pressures, and false narratives were forced to oblige. Few flexibilities were introduced to address the concerns of developing countries and LDCs. Article 7 and 8 of the TRIPS Agreement laid down the social and economic welfare as one of the prime objectives of the said Agreement. The undefined scope of patentability and Article 31 further allowed the Member Countries some scope for manoeuvre and ability to use the patented subject matter without express authorization of the patent holder. Under Article 66 of the said Agreement, LDCs were also promised technology transfer and required assistance to create a viable technological base, although, said provision was, “couched in ‘best endeavour’ terms” and not binding obligations.

In the subsequent years of signing the said Agreement, developing countries and LDCs faced several legal hurdles in making use of the said flexibilities to facilitate the access to antiretroviral medicine (ARV) for the treatment of HIV/AIDS. As the issue became the centre of intense debate both inside and outside trade arena, the Fourth Ministerial Conference took up the issue of TRIPS and Access to Medicine. The WTO Ministerial Conference held a special session in June 2001 to discuss the interpretation of TRIPS Agreement and clearly defined the relationship between intellectual property rights and access to medicine. Despite strong divergent position adopted by the developed countries (including the USA, EU and Switzerland), the developing countries and LDCs successfully secured the Declaration on TRIPS and Public Health by consensus in Doha Ministerial Conference in November 2001. The text of the Doha Declaration recognized the unmitigated right of the Member Countries to take measures to protect public health. The said Declaration, under paragraph 5, clarified that the Members are free to determine what constitutes a national emergency or urgency. The WTO General Council in a decision dated 30 August 2003 also allowed for the suspension of the obligation on the exporting Member Country mentioned under Article 31 (f) to address the manufacturing ability limitation faced by Member Countries. 

With the developments highlighted above, Member Countries incorporated the provision allowing ‘compulsory licensing’ (CL) as a response to health emergencies. After the emergence of the current crisis, several others have amended their patent laws to either enact similar provision or speed up the procedure for issuance of CL. However, as most of the developing countries and all LDCs, except Bangladesh suffer from manufacturing inability and are a net importer of pharmaceutical products including Active Pharmaceutical Ingredient (API), it is highly doubtful as to how these countries will make use of such a provision. In times of pandemic, when the demand is immediate, enormous and global, the production needs to be in large scale and spread across several locations. With several export restrictions in place by countries busy hoarding medical supplies and rampant outbidding by developed countries, there are no definite means to secure access for the dependent countries. It is important to note here that GATT 1994 puts several obligations in respect of the export restrictions; however, there is plenty of leeway for countries to avoid such responsibility in times of pandemic. As for the developing countries with manufacturing abilities, there are peculiar challenges. For Instance: India- ‘the world pharmacy’, is grappling with danger of brownfield investment in the Pharmaceutical sector. India’s Foreign Direct Investment FDI policy allows for up to 74 percent FDI in brownfield investment through automatic route in Indian pharmaceutical sector. This may pave way for acquisition of several generic companies in India, a trend India witnessed few years ago. A more immediate threat comes from the India’s overdependence on China for Active Pharmaceutical Ingredients (API) in the manufacture of drugs. The present crisis has disrupted the pharmaceutical supply-chain effecting the supply of API leaving Indian pharmaceutical companies struggling for raw materials. Besides this, the underperformance of technology transfer provision, unilateral pressures by the developed countries and the emergence of TRIPS-plus provision through Free Trade Agreements (FTAs) have severely inhibited these countries from gaining self-sufficiency in times like these. 

Currently, the best bet for developing countries and LDCs remains with open-science initiatives such as the Global Influenza Surveillance and Response System (GISRS) and voluntary emergency Technology Intellectual Pool (TIPP) as suggested by Costa-Rica at World Health Organization (WHO). The WHO’s GISRS is conducting global influenza surveillance from 1952 and consists of experts from around the world to analyse and discuss the latest data on emerging flu strains that should be included in each vaccine. The TIPP is another recent proposal by Costa Rica for a voluntary pool consisting of patents, test data and other relevant information useful for detection, prevention, control and treatment of the COVID-19 pandemic. However, as the debates around the distribution, pricing and waiver of IP rights are yet to take place, there is danger lurking that developing countries and the LDCs have to wait longer in uncertainty. 

Lessons for Developing Countries and LDCs

The coronavirus crisis has exposed the already existing inequalities among countries and shortcoming in the international trading order that affects the developing countries and LDCs negatively. It is a powerful reminder that healthcare is central to any robust economy and that any trading agreement that attempts to deal in the sensitive area of public health needs to emphasize on the need of reducing the inequality among countries. As the existing mechanisms under the TRIPS Agreement have proved to be of limited help, the Member Countries must undergo a detailed analysis of provisions related to technology-transfer while also embracing the open science initiatives such as GISRS and TIPP. Such open science initiatives, in times of health emergencies, help in removing the obstacles in the free flow of critical information, technologies that are protected under IP regime. Besides, the Member Countries must retain their policy space currently under threat under multilateral and regional trading agreements. The Member Countries also need to evaluate the need for the necessary degree of self-reliance in sensitive sectors such as healthcare. This will not only reduce our chances of being stranded in times like these but will evolve as a better and more effective strategy against similar future events.

Sukanya Thapliyal is a Research Fellow at Centre for WTO Studies, IIFT Delhi.   

To read the original commentary from the Indian Journal of International Economic Law, please visit here.