How the Vax was won | Part 2: Follow the money

Critics of the monopoly-based ideology underpinning the modern global intellectual property (IP) regime believe it is not geared towards equity, and as a result, poorer countries are being denied access to Covid-19 vaccines and drugs, in a repeat of what happened in the AIDS and Ebola epidemics.

Countries that can afford to place large, at-risk orders with vaccine manufacturers for as-yet unapproved vaccines, through advance purchase agreements (APAs), have sought to reserve limited global vaccine manufacturing capacity for themselves, some with more success than others.

Initiatives that challenge the IP status quo have failed to achieve traction. These include a proposal (currently backed by 57 countries and 115 members of European Parliament)[1] before the World Trade Organisation (WTO) for a limited waiver of the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement, and IP waiver/donation initiatives such as the WHO/MPP patent pool and Open Covid Pledge.

In Part 2, we examine compulsory licensing, realpolitik and how the pandemic has made it tougher for biopharmaceutical companies to walk the public relations tight rope between profit and public perception.

“Come Quietly or There Will Be … Trouble”

Several countries (including Japan, Canada, the United States and the United Kingdom) have opposed the TRIPS waiver proposal at the WTO[2], arguing that existing TRIPS allowances for compulsory licensing are sufficient to address the relevant concerns around access.

But are they? Only three countries have issued compulsory licences (CLs) for Covid-19 drugs since the pandemic begun, and none of them have been for vaccines.

Russia (in January 2021)[3] and Hungary (in late 2020)[4] issued compulsory licences for remdesivir. In March 2020, Israel issued a compulsory licence for a patented antiviral medicine (lopinavir/ritonavir) developed by AbbVie (called “Kaletra”) for the treatment of HIV.

Although Kaletra was protected in Israel by three patents, the patentee, AbbVie, was unable to supply the quantity Israel deemed necessary, and Israel therefore authorised import of this medicine from Hetero, an Indian generic drug manufacturer.[5] AbbVie waived its patent rights to Kaletra,[6] but it ultimately proved ineffective as a Covid therapy.[7]

While other countries, including Chile,[8] Canada,[9] Germany,[10] and France[11], have also enacted (or already have in place) legislation that allows them to issue compulsory licences, none have so far exercised this power.[12]

On 5-3-2021, a Canadian company, Biolyse Pharma, sought a voluntary licence from Johnson & Johnson (J&J) to manufacture its Covid-19 vaccine and sell it in low-income countries, warning that if J&J refused, it might ask the Canadian Government for a compulsory licence under the Canadian access to medicines regime.[13]

“Would That It Were So Simple”

Why have CLs not been used more widely? Unfortunately, several legal, technical and political complications make compulsory licensing a less effective tool than it appears to be.

Vaccine manufacturing is more complicated than the pharmaceutical variant, and can require very specific technical expertise or knowhow. While the inventive process may be protected under a patent, the technical knowhow (for example, the most efficient way of running the process so as to give the highest yield) are often protected as “trade secrets”. In addition, the test data from clinical trials required to be submitted to regulators to prove safety and efficacy may be protected under national data/market exclusivity provisions.

“Trade secrets” are a separate form of IP rights, which unlike patents, do not require public disclosure and offer indefinite protection (patents generally offer 20 years).

Therefore, for compulsory licensing to be effective in the context of vaccines, a Government would not only have to grant a licence to work the relevant patent but also compel the patent- holder to disclose any data or technical knowhow necessary to work the patent effectively (which may not have been disclosed in the patent filings and instead protected as “trade secrets”).[14] That may be a step into expropriation territory (and all the legal challenges that go with it), which, for many Governments, may be a bridge too far.

In addition, data/market exclusivity waivers would be required, and may not be forthcoming.

Then, consider the realpolitik. Countries with strong pharmaceutical industries (and lobbies) are reluctant to start down the “slippery slope” of compulsory licensing, even during a public health crisis, because it would alienate a powerful industry that provides jobs, growth and campaign contributions[15].

For example, consider the United States (US). Once US trade policy is determined, the United States Trade Representative (USTR) has exclusive authority to engage in international negotiations on trade issues.

Since US industries have the power to file petitions with the USTR, and under Section 301, can serve as advisors to the USTR, industry representatives have direct input in US international negotiation strategies.[16]

In submissions to the USTR’s Special 301 Review for 2021, the Biotechnology Innovation Organisation (BIO), the Pharmaceutical Research and Manufacturers of America (PhRMA) and the US Chamber of Commerce all decried Hungary’s compulsory licence as unnecessary and unwarranted.[17]

PhRMA made its views on CLs clear (notwithstanding the pandemic) in its submissions:

“Some countries like Hungary, Colombia and Indonesia, have adopted emergency regulations that allow the … use of CLs for Covid-19 products without due process or basic engagement with the patent-holder … Governments should grant CLs … only in exceptional circumstances and as a last resort.”[18]

Not even the World Health Organisation (WHO) was immune to PhRMA’s ire:

“Organisations such as the WHO … often focus their work inappropriately on limitations … to intellectual property rights … with one regional WHO office asserting that compulsory licensing is ‘important and to be encouraged’. The WHO Director General even publicly supported an extreme and unnecessary proposal at the WTO TRIPS Council to waive … international obligations with respect to Covid-19.”[19]

PhRMA and BIO are powerful, well-funded lobbying groups.[20] Their comments above are significant, as is their recommendation that the Biden administration “use all available tools and leverage to ensure America’s trading partners” toe the line on IP.[21]

Perhaps as a consequence of the influence of its healthcare industry, the US Government is a vocal opponent of compulsory licensing, as the AIDS crisis in 1997 made clear.

The office of the United States Trade Representative has previously threatened trade sanctions against countries that have issued compulsory licences (e.g. India, Malaysia and Colombia).[22]

The US Government has never exercised its rights under 28 USC 1498 (eminent domain) or the Bayh-Dole Act to import or manufacture a drug, not even in the face of a domestic health crisis – the US anthrax scare of 2001, when Bayer would not make Ciprofloxacin freely available (of course, in this case the mere threat of a CL was enough to bring Bayer to the table to resolve the issue).[23]

“I Did Nothing! The Pavement Was His Enemy”

Beyond its lobbying efforts, the biopharma industry’s public responses to criticism of its monopoly-centric business model have ranged from dismissive to collaborative:

Industry representatives have argued that supply chain constraints (including limited manufacturing capacity, insufficient bottles, vials and syringes and scarcity of raw materials and ingredients) not IP, are the real barrier to access, and suspending patent rights would solve nothing.[24]

AbbVie has waived its patent rights to Kaletra, the drug that was the subject of Israel’s compulsory licence.[25] Mylan has also waived its rights to generic Kaletra[26] in the US.

Gilead Sciences has withdrawn its “orphan drug” designation request to the US Food and Drug Administration (USFDA) for its novel antiviral remdesivir.[27] Gilead has also granted nine generic companies licences to manufacture and sell the drug in 127 lower-income countries.[28]

Oxford University has pledged not to make a profit on vaccines, although it is less clear if its commercial partner, AstraZeneca (AZ), has done so. AZ has joined COVAX[29] and struck several licensing and manufacturing deals around the world.

Pfizer/BioNTech has, like AZ and J&J, said it will provide affordable doses to low-income countries through COVAX, but has robustly defended its right to protect its IP and make a profit.[30] CEO Albert Bourla has said suggestions that vaccine developers should forgo profits on their products were “very fanatic and radical”[31].

J&J has declared that it will not seek to profit from “emergency pandemic use”, and has pledged up to 500 million vaccine doses through COVAX, but is maintaining exclusivity and silence on IP issues.[32]

Moderna Therapeutics is the only vaccine maker to have purportedly “donated” its IP, declaring that while the pandemic continues, it would not enforce its Covid-19 related patents against those making vaccines intended to combat the pandemic.[33]

Yet, five months after its “pledge”, production of the Moderna vaccine remains entirely under the company’s direct control within its owned and contracted facilities. Notably, Moderna is also the only manufacturer of a US or British-approved vaccine not participating in COVAX.

Conclusion

While compulsory licensing is no more of a panacea than a limited TRIPS waiver, they are both measures that might have helped to boost vaccine manufacturing capacity globally if implemented in time. Unfortunately, these measures appear unlikely to gain traction now, because they would challenge too many entrenched government and corporate interests in the new vaccine world order.

The biopharma companies that have developed and secured approvals for their vaccines, and the Governments that have given them significant aid (and benefited from their campaign contributions), today hold the keys to the castle, and it would be naïve to believe they would give them away, even with the pandemic baying at the gates.

Still, as vaccine supply failures hamper global vaccination drives and the death toll from successive waves of the pandemic mounts, these companies are increasingly becoming the target of widespread public fury. To their credit, some have tried to win back public opinion by joining COVAX, making IP non-enforcement pledges and promising to manufacture their vaccines for little to no profit. None of these gestures – other than AstraZeneca’s involvement in COVAX – have had a significant impact on vaccine access.

Today, who gets which vaccine and when, is largely a function of a patchwork of APAs between Governments and vaccine manufacturers, and public-private initiatives like COVAX.

In Part 3, we will examine in greater detail the forces that have come to determine vaccine access for billions of people, and the legal and diplomatic disputes raging between them. Also how Bill Gates quietly became the single most powerful force in the vaccine industry.

† Shantanu is the founder of Ronin Legal, a legal boutique with a focus on pharma, biologics and healthcare. He can be reached at shantanu@roninlegal.in and on Twitter [@LegalRonin].

[1] See <https://foreignpolicy.com/2021/03/10/wto-intellectual-propert-waiver-india-south-africa/>.

[2] See Part 1 (Cite as 2021 SCC OnLine Blog Exp 13)

[3]<https://www.cms-lawnow.com/ealerts/2021/01/russian-government-issues-first-compulsory-pharmaceutical-licence>. See also <http://patentblog.kluweriplaw.com/2021/03/04/russia-first-public-security-compulsory-license/>.

[4]See Hungarian Compulsory License for Remdesivir Raises a Stir with BIO, PhRMA and the US Chamber of Commerce available at <https://www.keionline.org/35558>. See also, Pharmaceutical Research and Manufacturers of America (PhRMA) Special 301 Submission 2021 at <https://www.regulations.gov/comment/USTR-2020-0041-0039>.

[5] Israel Issues Compulsory License to Allow the Government to Import Generic Versions of Kaletra, available at <https://www.keionline.org/32503>.

[6] <https://www.natlawreview.com/article/covid-19-update-patent-rights-covid-19-pandemic-how-will-industries-and-governments>.

[7]<https://pharmaceutical-journal.com/article/news/lopinavir-ritonavir-not-effective-for-patients-hospitalised-with-covid-19-third-set-of-recovery-trial-results-show>.

[8]<https://www.statnews.com/pharmalot/2020/03/18/chile-compulsory-licensing-coronavirus-covid19-vaccines/>.

[9]<https://www.iam-media.com/coronavirus/the-key-covid-19-compulsory-licensing-developments-so-far>.

[10]Ibid.

[11]Ibid.

[12] For more information on the legislative or regulatory measures instituted by Governments around the world in response to the Covid-19 pandemic, please see the WIPO Covid-19 IP Policy Tracker available at <https://www.wipo.int/covid19-policy-tracker/#/covid19-policy-tracker/access>.

[13]<https://www.law360.com/articles/1364005/pharma-co-seeks-j-j-virus-vaccine-license-or-else>.

[14]<https://medicineslawandpolicy.org/2020/12/what-is-the-know-how-gap-problem-and-how-might-it-impact-scaling-up-production-of-covid-19-related-diagnostics-therapies-and-vaccines/>.

[15]For detailed statistics on campaign contributions by the pharmaceuticals/healthcare industry, see <https://www.opensecrets.org/industries/indus.php?ind=h04>.

[16]See US Industry’s Influence on Intellectual Property Negotiations and Special 301 Actions available at <https://escholarship.org/content/qt92w038w0/qt92w038w0.pdf?t=n4ow44>.

[17] See Hungarian Compulsory License for Remdesivir Raises a Stir with BIO, PhRMA and the US Chamber of Commerce available at <https://www.keionline.org/35558>.

[18] See Pharmaceutical Research and Manufacturers of America (PhRMA) Special 301 Submission 2021 at <https://www.regulations.gov/comment/USTR-2020-0041-0039>, p. 24.

[19] Id., p. 40.

[20] Close to USD 300 million was spent in lobbying for pharmaceutical/health products in 2019, with the largest contributions coming from PhRMA and BIO. See <https://www.opensecrets.org/federal-lobbying/industries/summary?cycle=2019&filter=p&id=h04>.

[21]<https://theintercept.com/2021/03/03/vaccine-coronavirus-big-pharma-biden/>. See also, Pharmaceutical Research and Manufacturers of America (PhRMA) Special 301 Submission 2021 at <https://www.regulations.gov/comment/USTR-2020-0041-0039>.

[22] See e.g. How Will Everyone Benefit if WTO Members Sign the TRIPS Covid-19 Waiver? available at <https://www.openaccessgovernment.org/trips-covid-19-waiver/103738/>.

[23] Aids, Anthrax, and Compulsory Licensing: Has the United States Learned Anything? available at <https://core.ac.uk/download/pdf/51096569.pdf>.

[24]<https://www.reuters.com/article/us-health-coronavirus-who-vaccines-idUSKBN2B12EO>. See also, No, IP Rights are not the Barrier to Covid-19 Vaccine Supplies, at <https://www.lexology.com/library/detail.aspx?g=d98ea00b-599f-42d6-91b3-78f4ffe2cb7f>.

[25]<https://www.natlawreview.com/article/covid-19-update-patent-rights-covid-19-pandemic-how-will-industries-and-governments>.

[26]<https://investor.mylan.com/news-releases/news-release-details/mylan-announces-additional-efforts-support-response-covid-19>.

[27]<https://www.gilead.com/news-and-press/company-statements/gilead-sciences-statement-on-request-to-rescind-remdesivir-orphan-drug-designation>.

[28]<https://www.gilead.com/news-and-press/company-statements/gilead-sciences-statement-on-remdesivir-global-supply>.

[29] COVAX, the vaccines pillar of the Access to Covid-19 Tools (ACT) Accelerator, is co-led by Coalition for Epidemic Preparedness Innovations (CEPI), Gavi, The Vaccine Alliance and WHO. It is a global initiative that works with Governments, vaccine manufacturers, UNICEF, the World Bank, and others to ensure rapid and equitable access to Covid-19 vaccines.

[30]See No, IP Rights are not the Barrier to Covid-19 Vaccine Supplies, at <https://www.lexology.com/library/detail.aspx?g=d98ea00b-599f-42d6-91b3-78f4ffe2cb7f>.

[31]<https://www.fiercepharma.com/pharma/pfizer-ceo-says-it-s-radical-to-suggest-pharma-should-forgo-profits-covid-19-vaccine-report>.

[32]<https://www.iam-media.com/coronavirus/your-guide-covid-19-vaccine-stakeholders-ip-strategies>.

[33]<https://investors.modernatx.com/news-releases/news-release-details/statement-moderna-intellectual-property-matters-during-covid-19>.