From late 2019, the media was awash with the news of a cluster of viral pneumonia cases found in Wuhan, China. The responsible virus was later identified as the SARS-CoV2 and this development was officially reported to the World Health Organisation (WHO) in December 2019. WHO later labelled the virus COVID-19. Since early 2020 when the virus was declared a global pandemic, Australia has recorded over 200,000 cases of infection and 2,000 deaths – the statistics are far more gruesome for most other countries.
By January 2020, a Chinese group of researchers led by Dr Yhong-Zhen Zhang, had successfully sequenced the genome of the virus, the result of which was made publicly available with the help of University of Sydney’s Dr Edward Holmes. This transparent and magnanimous gesture later proved instrumental to vaccine discovery, as it helped both academic and industry researchers to better understand the virus. Unprecedently, by December 2020, three COVID-19 vaccines had already received emergency use authorisation (EUA): two (Pfizer/BionNTech and Moderna) in the US, and one (AstraZeneca) in the UK. This success story is replicated in the current vaccine availability in Australia – these three vaccines are some of the vaccine manufacturers whose vaccines have received provisional approval in Australia.
Given the potentially fatal nature of COVID-19 and the global solidarity that resulted in quick discovery, approval and production of overwhelmingly effective vaccines, one would have expected the same solidarity to extend to the distribution of vaccines between high income countries (HICs) and low income countries (LICs). Disappointingly, however, this was never the case. Instead, vaccine availability has become linked to a country’s income status, with HICs being first-in-line, while LICs are down the priority table. To illustrate this sad reality, as of December 2021, the Global Dashboard for Vaccine Equity recorded that 65% of the population in HICs had received at least one dose of vaccine, compared to 8% of LICs’ populations. Given this stark access conundrum, it becomes pertinent to examine whether the current international patent system is to blame for this failure.
International patent system and protection for vaccine inventions
The World Trade Organisation Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) – undoubtedly the most consequential international intellectual property (IP) agreement – establishes a detailed framework for the incentivisation of original creations of human ingenuity through one or a combination of copyrights, trademarks, patents, industrial designs, etc. While most of these rights have some relevance and do offer different layers of protection to vaccine inventions, inventors of vaccine technologies rely more on patent protection to fence off competition and recoup R&D investments. Article 27(1) of the TRIPS Agreement lays the foundation for this by mandating patent protection ‘for any inventions … in all fields of technology…’ provided they meet the tripartite patentability criteria of novelty (that, taken holistically, the invention is new), inventiveness (that the invention constitutes a technical improvement on what is already known and is non-obvious to persons skilled in the same field of technology), and industrial application (that the invention can be used within the industry).
A successful patent applicant acquires a limited monopoly right (a minimum of 20 years – see article 33) which empowers them to exclude unauthorised making, using, offering for sale, selling or importing of the products manufactured from the patented invention. In the current context, the products manufactured from patented inventions will include the Pfizer/BioNTech, Moderna and AstraZeneca vaccines (see article 28). One consequence of this is that any unauthorised copying or dealing in the patented vaccine technology is punitively outlawed; meaning, patent owners solely control where and by whom patented vaccines can be manufactured, as well as the price at which they are sold.
The patent system’s conferment of this humongous, albeit temporary, monopoly power on patent owners offers a much-needed insight into the current inequality in vaccine distribution. Because (with the exceptions of India and China) most of the pioneers and owners of patented vaccine technologies are domiciled in and funded by HICs, vaccine nationalism has become rife, to the detriment of access in LICs. This lopsided outcome presumably (though rebuttably) suggests that the current patent system works more to protect private rights than it does to ensure equitable public access to the fruits of patented inventions.
So, has the international patent system failed?
Given the current vaccine inequity due to the existing patent framework, one may contend that the international framework has failed humanity. A closer look at the TRIPS Agreement, however, suggests otherwise. For instance, while TRIPS rewards patent owners with potentially anti-competitive monopoly rights, it equally entrenches provisions (known as flexibilities) targeted at ensuring that private rights and public interests are fairly balanced. One of the oft-used flexibilities is the Exhaustion Regime (ER, see article 6). ER is especially significant for three reasons. First, it defines the point at which a patent owner (e.g., Pfizer/BioNTech or Moderna) loses their first-sale right (this is the exclusive right conferred on a patent owner to be the first person to place products manufactured from patented inventions – e.g., COVID-19 vaccines – on the market). Second, it demarcates the geographical location covered by such loss (national, regional or international) – for instance, for a national ER, a patent owner’s first-sale right is lost in one country; for a regional ER, this right is lost in a defined region; while for an international ER, the right is lost globally. Lastly, a country’s choice of ER determines whether it can use Parallel Importation (PI) to improve access to medicines. (PI is an exception to a patent owner’s exclusive right of import, as it allows third-parties to import patented pharmaceutical products from cheaper markets. It is only available where a country has adopted regional or international, and not national, ER).
Other oft-used flexibilities include articles 7 and 8 on ‘objectives’ and ‘principles’ which should apply to the construction of TRIPS-conferred rights; article 30 on exceptions to patent owners’ exclusive rights; and article 31 on compulsory licensing (state-granted licence to use patent without patentee’s authorisation). Added to these are copious provisions of the 2001 Doha Declaration on TRIPS and Public Health which reaffirm WTO members’ rights to freely use flexibilities for augmenting medicines availability.
Given this cornucopia of balancing provisions, arguing that the international patent system has failed is therefore likely to be tenuous.
What then is the problem – a rigged system?
If the international patent system is not the problem – given how ‘balanced’ the provisions of the TRIPS Agreement appear to be, what then is responsible for the current access gap between HICs and LICs? Are LICs to blame for not invoking TRIPS flexibilities, particularly compulsory licensing, to break vaccine patents and locally manufacture their own COVID-19 vaccines? Perhaps, a broader question is: why do LICs seem ‘averse’ to leveraging lawfully permissible flexibilities to improve access to medicines in their domains?
For some LICs, lack of or insufficient manufacturing capacity is the reason for not using compulsory licensing to increase access to COVID-19 vaccines. For several others, the flexibility of parallel importation could not be used because their patent laws incorporate the narrowest version of exhaustion regime. Beyond these, however, a more cogent and pervasive reason for the divergence in vaccine access – and access to medicines generally – is what can be termed the ‘behind-the-scenes’ rigging of the international patent system by HICs. One may wonder how this is done! There, on the one hand, is the TRIPS Agreement broadly incorporating flexibilities aimed at cushioning the likely anti-competitive effects of TRIPS-conferred monopoly rights on access to patented inventions like vaccine technologies. Specifically, a community reading of TRIPS articles 6, 7, 8, 30, 31 and the Doha Declaration paints a positive picture of a symmetrical international patent system which defers to members on when and how flexibilities may be invoked in national interests.
On the other hand, however, some HICs (e.g., the US and EU) have perfected the art of dissuading (sometimes, pressuring) LICs from using flexibilities. For LICs with manufacturing capacities, compulsory licensing is often the target, whereas LICs without sufficient manufacturing capacity are usually pressured into entrenching a national ER which precludes the use of PI in their patent laws. The go-to argument of HICs is that use of flexibilities weakens the monopoly rights conferred by patent protection and disincentivises further innovations down the track. Of course, this is no more than a red herring since the main reason for discouraging the use of flexibilities is to protect HICs’ corporate interests.
One weapon that HICs have successfully used to rig the current system is IP-trade linkage. Under a number of preferential trade initiatives in the US (e.g., the African Growth and Opportunity Act, the Generalised System of Preferences (GSP), the Special 301 system, etc.), duty-free access for selected products from LICs is only granted conditional on reciprocal undertakings by LICs to sufficiently protect US IP interests. In the past, recalcitrant LICs (e.g., India, Brazil and China) had either been cut off from preferential trade access or had been placed on one of two US-designated punitive lists created under the Special 301 system – Watch List or Priority Watch List. Similarly, eligibility under the EU GSP, GSP+ and Everything But Arms (EBA) preferential initiatives is subject to numerous conditions including the requirement that benefiting LICs must ensure strong customs control in respect of export or transit of drugs. Because of this skilful IP-trade linkage, LICs like Kenya and Tanzania have ‘willingly’ surrendered flexibilities to incorporate TRIPS-plus border measures, while other LICs like Argentina, Thailand and Brazil who incorporate compulsory licensing in their patent laws could not use the flexibility either, because they want to avoid losing trade access or because they want to avoid being sanctioned by their HIC partners.
Thus, while the international patent system has not failed, the safeguarding principles established thereunder have been rendered nugatory, thanks to the skilful rigging of that framework by HICs.
HICs have found a veritable tool in IP-trade linkage, which they have successfully explored to distort the use of TRIPS flexibilities for boosting access in LICs. The current vaccine access gap evidences what could be the consequence of this carrot-and-stick approach. One thing that LICs can do to alter the current trajectory is to mount the political will required to nationally incorporate and use flexibilities in national interests. This may see them lose some of the duty-free trade accesses which they currently enjoy. However, standing their ground on flexibilities may put their HIC partners on notice of how uncompromisable the issue of access is to them. Any resulting economic ostracization or penalty could be expected to be short-lived, as previous Indian experience seems to suggest. India is one of the few LICs which have repeatedly used flexibilities to increase access to medicines in LICs. In response, the US government has continuously placed India on the Priority Watch List for failing to adequately protect US IP interests. This annual sanction notwithstanding, India continued to benefit under the US GSP scheme until 2019 when former President Trump made the decision to terminate India’s status as a beneficiary. Given this, the international community, including non-governmental access-to-medicines advocates, can play a significant role by mounting vigorous political pressure on HICs to desist from this condemnable practice.
Dr Gbenga Olatunji is a recent PhD graduate from the Faculty of Law, University of Tasmania. His thesis examined the intersection between patent protection and access to medicines in low income countries. During his candidature, Gbenga co-taught and tutored in the Law of Contract, Business & Corporate Law, and Complementary and Alternative Medicines. Gbenga is set to begin a new position as a lecturer at the University of Sydney Law School in January 2022.
Suggested citation: Olugbenga Olatunji, ‘Failed or rigged? The international patent system and access to COVID-19 vaccines in high- and low-income countries’ on ILA Reporter (24 December 2021) <https://ilareporter.org.au/2021/12/failed-or-rigged-the-international-patent-system-and-access-to-covid-19-vaccines-in-high-and-low-income-countries-olugbenga-olatunji/>