Ramping up production of Covid-19 vaccine and its interplay with patent law

The beginning of the year 2021 lured in a long-coveted optimism with decline in reported cases of Covid-19 accompanied with the Government of India’s announcement of roll out of the vaccination drive powered by locally manufactured vaccines, to vaccinate around 300 million priority groups[1] against the coronavirus. However, the lull was only the calm before the storm that was the devastating second wave of the pandemic which grappled the entire country towards the end of March, overshooting capacities of the healthcare system everywhere. As the first phase of vaccination catered only to frontline workers, the rapid surge in infection rate necessitated for amplifying the sphere of inoculation to citizens above the age of 45 years.

As the relentless efforts towards containing the tidal resurge continue being made at all levels, the Central Government has announced a goal to inoculate 300 million people by August 2021. Thus, in a bid to beat back infection rates, as of May 1, anyone over 18 years of age has been made eligible for vaccinations across India.

However, taking into account the persisting circumstances where country’s inoculation programme is racing much faster than production, the main question that arises is how can India ramp up its Covid-19 vaccine production in order to supply vaccines to another 600 million people when acute shortage is already apparent in the previous programme of inoculating aforementioned priority groups? This article will attempt to answer this question by highlighting the options available with the Central Government in terms of provisions contained in the Patents Act, 1970[2] and arrangements in place in other developing and developed nations across the globe.

Covid-19 immunisation structure

At present, the Central Drugs Standard Control Organisation (CDSCO) which is India’s drug regulator has approved two vaccines for emergency use— Covishield and Covaxin.

The former i.e. Covishield, which has been developed by the British-Swedish drug maker AstraZeneca in connection with Oxford University, is being produced locally by the Serum Institute of India (“SII” for brevity), the world’s largest vaccine manufacturer, for the supply of the vaccine to the Indian Government and also to a large number of countries around the world. The University of Oxford holds the patent for the vaccine technology, which is used in Covishield, and AstraZeneca has in turn entered into a licence agreement with SII to share the said technology. Although, the production capacity of SII is promising, it will have a tough time meeting both its national and international obligations.

The other is Covaxin, which is being indigenously developed by the Indian pharmaceutical company based in Hyderabad viz. Bharat Biotech in close collaboration with the Indian Council of Medical Research (ICMR), New Delhi and National Institute of Virology, Pune. Apparently, there seems to be no information in the public domain on who owns the intellectual property rights for Covaxin and the funding agreement between Bharat Biotech and ICMR is also not available online, which makes it unclear as to whether the Government retains the IP rights to Covaxin. However, since Covaxin has been co-developed as part of a public-private partnership between the ICMR – National Institute of Virology (NIV) and Bharat Biotech, the Central Government should have the control over the IP behind Covaxin.

Recently, Dr Reddy’s Laboratories, a Hyderabad based pharmaceutical company has also announced the commercial launch of first 250 million imported doses of Russia’s Covid-19 vaccine candidate viz. Sputnik V which has been developed by Moscow’s Gamaleya Institute[3]. However, supply of Sputnik V vaccine is only expected to scale-up when Indian firms shall begin local production of Sputnik V vaccine under the supervision of Dr Reddy’s Laboratories and till then, India will remain dependant mostly on two previously approved Covaxin and Covishield.

Expansion of vaccine production: A solution

 Presently, immunisation offers to be the surest and most promising exit out of Covid-19; however, in order to achieve the target of immunisation of an entire country of 1.39 billion people which is to be administered in two doses, it is imperative to gear up vaccine production and keep a check on the supply crunch. Thus, need of the hour is to ramp up production of both Covaxin and Covishield.

Expansion of vaccine production is major challenge which is being faced in the country right now as the two vaccines i.e. the Covaxin and Covishield which are being administered in the country are currently being produced by Bharat Biotech at its Hyderabad facility and by SII at Pune respectively. Now in order to ramp-up the production the main legal impediment is patent on these two vaccines which gives only the patent holder, the monopoly to manufacture the vaccines or to licence them to other players and because of this monopoly the vaccine is not being produced in enough quantities to meet the demand owing the limited manufacturing capacity of Bharat Biotech and SII at present. Thus, there arises a need to grant licences to other pharma companies who are willing and have the desired capability to manufacture these vaccines.

As far as the case of Covishield is concerned, as already mentioned in the preceding paragraphs, Covishield has been jointly developed by AstraZeneca and University of Oxford and SII manufactures Covishield in India on a licence with AstraZeneca. However, as far as Covaxin is concerned, it is an indigenously developed vaccine, however, there is no clarity as to who owns the IP rights for Covaxin. As per some news articles, the IP rights for Covaxin are jointly owned by ICMR and Bharat Biotech as the memorandum of understanding entered into between ICMR and Bharat Biotech provides for a royalty sharing clause between the two entities.[4] Thus, in a way the Government of India is the owner of IP Rights of the “Bharat ka vaccine” i.e. Covaxin.

Therefore, it is imperative to discuss the various provisions under the Patents Act, 1970, which the Government of India can invoke in order to ramp-up production of Covaxin so as to make it available to the masses. However, before one delves into such provisions of the Patents Act, 1970, it is necessary to briefly discuss the developments on the diplomatic front which India is trying to achieve through the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Council at the World Trade Organisation (WTO).

India along with South Africa in the month of October 2020 had moved a resolution (Resolution No. IP/C/W/669)[5] in the WTO’s TRIPS Council for a temporary waiver of intellectual property on Covid-19 vaccine and other pandemic related products, so that the production can be ramped up and all the nations can benefit from technology transfer and more producers can enter the market which would result in expediting the fight against Covid-19. However, though the said proposal can be passed only on the basis of consensus of member nations, it was opposed by many developed nations on the ground that IP over the vaccines and drug is least of a barrier when it comes to accessibility and they argue that accessibility can be achieved through voluntary licensing, technology transfer agreements and donor-funded Covax advance market commitment for vaccines.[6] One can get an idea about why was there a need for India and South Africa to move a resolution to the WTO for waiver of IP Rights, from India’s statement at the WTO on 20-11-2020, which is reproduced hereunder for reference of readers:

“On one hand, these countries are buying up as much of the limited supply as they can, leaving no vaccines in the pie for developing and least developed countries. On the other hand, and very strangely, these are the same countries who are arguing against the need for the waiver that can help increase the global manufacturing and supply to achieve not just equitable, but also timely and affordable access to such vaccines for all countries.”

 As far as the status of the waiver requested by India and South Africa is concerned, no consensus has yet been formed amongst the member countries and therefore, it would be important to watch the developments that would take place in the subsequent meetings of the TRIPS Council where this waiver would be on agenda.

In addition, to the said effort on part of the Indian Government on an International level to request for waiver of IP rights on Covid-19 vaccine and other related products and technology so as to make it accessible to all, there are provisions available within the Patent Act, 1970 itself that the Indian Government is within its authority to invoke so as to enable other players to manufacture the patented product resulting in more production so as to meet the demand. Some of such provisions of the Patent Act, 1970 are being briefly discussed hereunder:

Voluntary licensing

 India is globally known for its generic drug manufacturing market on which many nations rely for their supply of cheap and affordable drugs. Not only is India known for drug manufacturing but is also one of the largest vaccine producers in the world. However, despite this the country is facing shortage of Covid-19 vaccine and therefore it is the need of the hour to resort to provisions like voluntary licensing.

Voluntary licensing is an arrangement wherein a patent holder voluntarily grants licence to another party to manufacture and enjoy the patented product upon payment of licence fee and royalty to the patent holder. This licence can be for a specific period and can be exclusive or non-exclusive with respect to the other party. A voluntary licence is like any other licence wherein the patent holder i.e. the licensor agrees to part with his exclusive privilege upon payment of some consideration in form of licence fee.

Voluntary licence is much talked about these days and is seen as potential way to ramp-up production of Covid-19 vaccine. It is indeed a viable option available with the Central Government with respect to Covaxin of which the Indian Government ought to have the IP Rights. It can be used in way that the Indian Government can grant voluntary licences to other pharmaceutical companies who are willing and have the capacity and capability to manufacture Covaxin. This in a way will not only bring down the production cost but at the same time would assist in ramping upon the vaccine production at a much faster pace. Now the question arises if this option is available why it is not been resorted to. The answer to this is the lack of adequate infrastructure required for vaccine production. Vaccines like Covaxin and Covishield require a biosafety level 3 facility for manufacturing and therefore even if voluntary licences are granted the licensee will have to upgrade the manufacturing facility. Moreover, the task does not get over upon voluntary licence being granted, technology transfer is the next important step which the patent holder has to ensure. Therefore, in addition to expediting the process of grant of voluntary licences, it has to be ensured that there is simultaneous transfer of technology and know-how in order for the voluntary licence to be effective and result in ramping up production.

Compulsory licence

Another available alternative way to ramp-up production of vaccines in addition to the above referred arrangement of voluntary licensing, is by resorting to what is known as “compulsory licensing” of the Covid-19 vaccine, which would enable the Central Government to override a patent and grant licence to a local manufacturer to produce a global vaccine for “domestic use” without the authorisation of the patent holder. Many nations including Israel, Canada, Germany and Chile have enacted laws or employed resolutions for the purpose of compulsory licensing of Covid-related medicines.

The TRIPS Agreement to which India too is a signatory clearly lays down the provision for compulsory licensing which can be invoked by a signatory country in case of a national emergency. Article 31 of the TRIPS Agreement makes an explicit provision for compulsory licensing wherein the member nation can allow the use of the subject-matter of patent without the authorisation of the patent holder. Article 31(b) of the TRIPS Agreement, provides that in normal circumstances any third party may approach the patent holder and would make efforts to obtain the authorisation from the patent holder to use the patented subject matter on reasonable commercial terms and it is only when such efforts are not successful within a reasonable period of time that the member nation upon application of the interested third party would permit the use of the patented subject-matter by the third party.

However, there is an exception to the aforementioned normal procedure for grant of compulsory licence wherein, the process is cut short, and the member nation can directly grant licences to third parties for use of the patented subject-matter without requiring the third party to approach the patent holder and to have waited for a reasonable time for the negotiations to not come through. Such a process can be resorted to by a member nation in case of national emergency or other circumstances of extreme urgency or in cases of public non-commercial use.

The provisions with regard to compulsory licensing have been enumerated under Chapter XVI (Sections 84-92) of the Patents Act, 1970[7].  Section 84[8] of the Patents Act, 1970 spells out that “any person interested” after expiration of three years from the date of the grant of a patent may make an application for grant of a compulsory licence to the controller of patents on any of the following grounds:

(a) that the reasonable requirements of the public with respect to the patented invention have not been satisfied; or

(b) that the patented invention is not available to the public at a reasonably affordable price; or

(c) that the patented invention is not worked in the territory of India.

Besides the aforesaid, Section 92[9] of the Patents Act, 1970 is a special provision which enables the Central Government to issue compulsory licence suo moto to local pharma manufacturers to produce generic versions of patented drugs in case of national public health emergency. In times as these, the Central Government can invoke the provisions of aforesaid Section 92 to declare a national emergency due to Covid-19 pandemic and notify the patents in questions after which any person interested in manufacturing the said patented commodity can make an application to the controller of patents who can then issue a compulsory licence without following the regular procedure which is time-consuming. Once a declaration of national emergency is made, and the relevant patents notified, any person interested in manufacturing the drug can make an application to the Controller General of Patents who can then issue a compulsory licence. The Section 92 of the Patents Act, 1970 approach is sustainable, in the sense that licences could be given in times of necessity with the same being withdrawn as soon as the pandemic is over and it may not alienate big pharmaceutical companies.

Section 92 of the Patents Act, 1970 similar to the TRIPS provision under Article 31, provides for a provision for granting compulsory licences, wherein, a declaration is made by the Central Government vide a notification published in the Official Gazette whereupon, the controller grants the applicant a compulsory licence upon certain terms and conditions keeping into consideration the rights of the patent holder.

Section 92 of the Patents Act, 1970 similar to Article 31 of the TRIPS Agreement can be invoked in cases of national emergency or in circumstances of extreme urgency or in case of public non-commercial use. Now the question arises whether a pandemic like Covid-19 would qualify the conditions for invocation of the provisions for grant of compulsory licences? The answer to this lies in Doha Declaration on the TRIPS Agreement and Public Health issued in November 2001 which clarifies a key flexibility afforded to countries under Article 31 of the TRIPS Agreement — the right to grant compulsory licences. Clause 5(c) provides that: “public health crises, including those relating to HIV/AIDS, tuberculosis, malaria and other epidemics” can constitute “a national emergency or other circumstances of extreme urgency”. Thus, there remains no doubt that the Central Government is well within its power to issue a declaration for grant of compulsory licence for Covid-19 vaccine to other pharmaceutical companies who are willing and have the technological capability to manufacture the Covid-19 vaccine so as to ramp-up the production.

However, one must remember that mere grant of compulsory licence is not going to solve the problem of production. Grant of compulsory licence can only be a first step in the direction to ramp-up the production and it has to be necessarily supplemented with active partnership, training of human resources, sourcing of raw material, etc. with the patent holder as the patent holder has done all the research and development (R&D) which has now resulted in the production of a Covid-19 vaccine and a third party to whom a compulsory licence is granted would not be in a position to immediately start production unless there is an active partnership between the patent holder and the licensee and it is here that the Government authorities would have to play a major role as the patent holder would not be readily inclined to part with its R&D and make it available to the generic company in whose favour the Government has granted compulsory licence.

Other provisions under Patents Act, 1970

Although Section 156[10] of the Patents Act, 1970 clearly lays down that a patent shall have the same effect against the Government as it has against any other person, yet there are various other provisions contained in the Patents Act, 1970 which vest the Government with ample powers to break the monopoly of a foreign patentee as also the affordability and access barriers in times of necessity.

Another enabling provision under the Patents Act, 1970 is the one contained in Section 100[11] which reserves the power to the Central Government to authorise specific companies to use any patents or patent applications for the “purpose of Government”. Once the Central Government gives an authorisation under Section 100 of the Patents Act, 1970 to a local company then such a company can begin with the manufacturing while negotiations regarding royalties to the patentee concerned can continue simultaneously. However, if it so happens that the Central Government or company authorised under aforesaid Section 100 fails to reach an agreement with the patentee, it is up to the High Court to fix the reasonable royalty that is payable to the patentee.

Apart from the aforesaid, reference may also be drawn towards Section 102[12] of the Patents Act, 1970 which provides for “acquisition of inventions and patents by the Central Government” and enables the Government to simply acquire the patent in question and allow the generic companies to manufacture the patented commodity.

In a scenario, where local pharma companies are not well-equipped to step in and apply for compulsory licences and help in scaling up production, Section 47[13] of the Patents Act, 1970 may be invoked by the Central Government. The Section 47 of the Patents Act, 1970 provides that the grant of patents is subject to certain conditions and, inter alia, stipulates that the Government may import any patented commodity or make or have made on its behalf any such patented commodity “for the purpose merely of its own use”. By exercising its powers under aforesaid Section 47, the Central Government can, without any preconditions or procedural requirements import any patented vaccine, medicine or drug for the purpose of distribution through its own hospitals/dispensaries or any hospital/dispensary notified to do so on its behalf. Thus, in situations, where there is a dire need of wide spread medicines or drugs, this is an available option with the Central Government under its own law which can be put to use so as to bridge the gap between the required doses of Covid-19 vaccines and the current rate of supply of such vaccines.

Conclusion 

There can be no doubt about the fact that the ongoing Covid-19 pandemic qualifies as a national public health emergency and owing to present unprecedented demand for vaccines, the production processes have been uncommonly strained. One of the many strategies that serve the need of the hour is to invoke the provisions as discussed above contained in the Patents Act, 1970 in order to accelerate vaccine production and maximise the output responsibilities of locally manufactured overseas vaccines and indigenously developed candidates. Ultimately, it lies in the wisdom of the Government to avail the provisions contained in the Patents Act, 1970 to break the patent impasse in order to proliferate avenues of Covid-19 vaccine production on a large scale.


Author is a practising advocate before the Lucknow Bench of the Hon’ble Allahabad High Court and is a graduate of the University of Cambridge, United Kingdom with specialisation in International Commercial Laws.

†† Co-author is a practising advocate before the Lucknow Bench of the Hon’ble Allahabad High Court and is a gold medalist in law from Unity Post Graduate and Law College, Lucknow (affiliated to Lucknow University, Lucknow).

The authors deeply acknowledge the guidance of Mr Gaurav Mehrotra, Advocate Hon’ble High Court of Judicature at Allahabad, Lucknow Bench, Lucknow.

[1] The vaccination drive announced by the Government of India on 16-1-2021 was to cover 300 million priority groups who are at higher risk of getting infected which figure was estimated to include 10 million health workers, 20 million frontline workers and around 270 million persons above age 50 years and/or with comorbidities.

[2] <http://www.scconline.com/DocumentLink/r4qFF5wg>.

[3] Joint statement issued by Russian Direct Investment Fund (RDIF), which is marketing the Sputnik V vaccine and Dr Reddy’s Laboratories on 28-5-2021.

[4] <https://scroll.in/latest/994052/covaxins-intellectual-property-rights-shared-between-icmr-and-bharat-biotech-says-balram-bhargava>.

[5] <https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/IP/C/W669.pdf&Open=True>.

[6] <https://www.thelancet.com/journals/lancet/article/PIIS0140-6736(20)32581-2/fulltext>.

[7] <http://www.scconline.com/DocumentLink/r4qFF5wg>.

[8] <http://www.scconline.com/DocumentLink/QG2bzuTV>.

[9] <http://www.scconline.com/DocumentLink/3Aqr67YD>.

[10] <http://www.scconline.com/DocumentLink/HfRCqFa0>.

[11] <http://www.scconline.com/DocumentLink/KbXnuDb6>.

[12] <http://www.scconline.com/DocumentLink/0R92159A>.

[13] <http://www.scconline.com/DocumentLink/7abvLPRZ>.

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