With US On Board, COVID IP Waiver Still Faces Long Road

By Ryan Davis
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Law360 (May 7, 2021, 9:13 PM EDT) -- While the Biden administration has backed a temporary waiver on intellectual property protections for COVID-19 vaccines, experts now foresee heated World Trade Organization negotiations about the scope of any deal, which could keep the proposal in limbo for some time.

The administration's support for the waiver pleased public health groups and angered the drug industry. The U.S. had previously opposed the proposal introduced in October by countries like India and South Africa, which argue that suspending IP will make medicine to fight the pandemic more widely available around the world.

In the wake of the announcement, the European Union signaled openness to at least discuss a waiver, while Germany strongly opposed the U.S. position. Other wealthy nations may yet get on board, but since decisions by the WTO require consensus among all 164 members, even supporters of the waiver say a final agreement is likely far off, if it becomes reality at all.

Tahir Amin, co-executive director of I-MAK, a nonprofit that challenges anti-competitive tactics involving pharmaceuticals and endorsed the proposal, called the announcement "a pleasant surprise," but said he's bracing for a fight.

"Now it remains to be seen what the language is going to be like," he said. "Because obviously the hard part starts now, and the real work starts with the negotiations."

He noted that there will be debates over how long the waiver should last, since it is meant to only remain in place during the pandemic, as well as what it covers. The initial proposal called for waiving intellectual property protections related to the "prevention, containment or treatment of COVID-19," but the statement from the U.S. was notably limited to vaccines.

"I do think it should be broad, and it will be temporary, though how that gets defined in the final text remains to be seen," Amin said. "But I think it's important to make all available tools accessible."

Opening Up Negotiations

The first step will be for India and South Africa to revise their proposal, which they said last month — before the U.S. gave its support — that they would do in an effort to find common ground.

The initial proposal consisted of only a few sentences, so the revision will spur more complicated discussions about specifics, which could advance the ball or just spur gridlock. The debate has to this point consisted of whether countries support or oppose waiving IP protections as a concept, but it will now delve into exactly what would be waived and for how long.

"Now that the U.S. is on board, the question will be first of all, what is the U.S. actually on board for? And that's obviously going to have to be worked out in negotiations," said Grantland Drutchas of McDonnell Boehnen Hulbert & Berghoff LLP.

Justin Hughes, who negotiated international intellectual property treaties as a senior IP adviser during the Obama administration, said reaching a consensus on a waiver agreement will be challenging, and deciding when it ends will be the toughest part.

"That the Biden administration said, 'We agree in principle to a waiver,' lets other developed countries do the same thing and say, 'We're on board that this is the right thing to do.' But everybody recognizes the devil will be in the details," said Hughes, a professor at Loyola Marymount University Loyola Law School.

Because of the nature of WTO negotiations, countries that don't want to be seen as blocking a proposal that has public support can bog it down with objections and technical questions. That is a tactic the U.S. could take if it is not actually as enthusiastic about the waiver as it may seem, said Dmitry Grozoubinski, a former Australian WTO envoy.

"They now have to get into deep technical negotiations over the language of this resolution. Those negotiations will be happening behind closed doors with no visibility of who's saying what, and it'll all be much, much murkier," he said.

Speedier Vaccines?

The proposal would waive parts of the WTO's agreement on Trade-Related Aspects of Intellectual Property Rights, or TRIPS, and has often been framed as a way to speed up production of COVID-19 vaccines and treatments, especially in poorer nations. However, whether suspending IP protections would do that, even if a waiver agreement were reached quickly, is open to debate.

"My concern is that this TRIPS waiver is going to take forever, and it doesn't really solve the immediate problem," Gary Locke, who served as U.S. Secretary of Commerce and U.S. ambassador to China during the Obama administration, said in an interview.

He said the "rich nations of the world need to be joining together to do everything possible to ramp up manufacture, production and distribution of the vaccine," but that the proposed waiver won't assist with that effort. The possibility that governments could force drugmakers to give away their IP could make them reluctant to invest in cures in the future, he added.

The pharmaceutical industry has had a two-pronged approach to opposing the waiver. They argue both that suspending IP protections will undermine the incentive to innovate treatments for future diseases, since drugmakers depend on patents to recoup their investments, and that intellectual property is not standing in the way of increasing production.

Michelle McMurry-Heath, CEO of the industry group the Biotechnology Innovation Organization, said in a statement that she was "extremely disappointed" with the U.S. support for the waiver.

"Handing needy countries a recipe book without the ingredients, safeguards, and sizable workforce needed will not help people waiting for the vaccine," she said.

There has been little patent infringement litigation over COVID-19 vaccines to date, "so I think that this is largely symbolic," said Dorothy Auth of Cadwalader Wickersham & Taft LLP.

"I think the bigger issue is going to be supply chain and quality control, if you're going to allow anybody to do it," she said. "Plus, it'll be questionable as to whether or not there's sufficient know-how out there to allow just any company to pick up the patent and manufacture these vaccines."

Trade Secrets as Flashpoint

Access to those technological trade secrets about how to make vaccines, particularly the ones developed with groundbreaking mRNA technology, may be a key focus of the negotiations going forward, as proponents of the waiver acknowledge that information will be needed to increase vaccine production.

"No one's saying that the TRIPS waiver is a silver bullet. We do also think there still needs to be technology transfer," said Amin of I-MAK. He said his group has spoken with operators of factories around the world who believe they could rapidly develop vaccines if given access to the technology, but are also willing to try to go it alone if they don't have to worry about being accused of IP infringement.

Waiving IP rights alone would not compel vaccine developers to share their information, "it really just creates an open space for any companies to avoid IP landmines so they can operate without looking over their shoulder," he said.

The drug industry is already pushing back against any WTO deal requiring them to share technology. In its statement, BIO urged the U.S. to "protect American companies from the coerced transfer of technology by foreign governments."

The idea of being required to share trade secrets is potentially even more concerning to the pharmaceutical industry than waiving enforcement of other IP like patents, since "trade secrets are like a genie in a bottle: Once you let it out, it's impossible to get those back in," McDonnell Boehnen's Drutchas said.

It's possible the U.S. is supporting the waiver as a way to leverage drugmakers' fears about their intellectual property to encourage them to find ways to ramp up production, including sharing technology, said Grozoubinski, the former WTO envoy who is founder of the Geneva-based consultancy ExplainTrade.

Serious negotiations about a broad IP waiver now — and the possibility that a similar tactic could be used to suspend IP on other types of medicine in the future — might spur the drug industry to make deals with factories around the world and share vaccine-making know-how, he said.

"From the drug companies' perspective, you really want to nip this in the bud before it becomes the new normal and you start losing protection for one thing after another," he said. "You really want these countries back in your corner, and the best way to do that is to cooperate really hard."

There is still a long way to go before any deal is finalized, but whatever happens next, "it's a significant shift for the U.S. to even entertain a waiver of this sort, especially given its position in the past," Amin said.

--Editing by Kelly Duncan and Michael Watanabe.

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