Public health emergencies and drug inaccessibility have always been major problems for developing countries, never developed countries. Indeed, for years, developed countries have been in the privileged position where they could choose to answer low-income countries’ calls for help by issuing nice sounding platitudes (and occasionally even taking real action) or simply by remaining silent. That has all changed. Covid-19 does not discriminate. It has placed the entire world on hold, with everyone waiting for a medicine or vaccine to become available. But the crisis does not end when a treatment is found. That is only one part of the fight. Equally important is what happens after, as this will determine for whom the crisis ends. And this time, maybe to their surprise, rich countries now too find themselves vulnerable, because of intellectual property (‘IP’) laws.
Developing Covid-19 treatments does not guarantee accessibility. Quite the contrary. Actors have already acted in ways undermining access. Trump reportedly offered $1 billion to secure an exclusive license for a vaccine developed in Germany. French company Sanofi announced that the US would receive first access to its vaccine. Gilead even tried prolonging its IP rights for Remdesivir, a US approved Covid-19 drug, by filing for orphan drug status before 200,000 US citizens became infected. Although Sanofi and Gilead backtracked after much negative public scrutiny, it is not right that we are relying on social media pressure to regulate corporate behaviour. Nor should this ever have happened, as nationalism and medicinal exclusivity curtail international access. Moreover, these actions are not only morally questionable, they are counterproductive. Covid-19 knows no borders wherein immunity post infection remains unconfirmed, meaning we are only as safe as our neighbours. There must therefore be a shift from exclusivity to inclusivity and from nationalism to internationalism.
One way to secure this shift is via the newly launched global Covid-19 IP Pool (‘Pool’). This is a centralised information pool under the control of the World Health Organisation (‘WHO’) where organisations may voluntarily share their IP rights, technology transfers, and know-how relevant to drugs, vaccines and diagnostic developments in said Pool. This will then be available for free or licensed ‘on reasonable and affordable terms’, thus improving the advancement, accessibility and affordability of treatments.
The centralised pooling of information has many benefits. First, disclosing clinical trial data, technologies and other essential information accelerates drug/vaccine discoveries because scientists can build on each other’s research. Collaboration between laboratories helped reveal Covid-19’s key protein structures in weeks, something which usually takes months, if not years. Sharing this information also fosters the accessibility of successful outcomes. If one company places its patent in the Pool, with an open licence, all other companies and countries will legally be able to produce generic versions of the same drug/vaccine. As a result, no treatments will be exclusively available to certain countries and more manufactures can produce treatments, increasing supply production and distribution. Both have been issues throughout this crisis.
Developed countries notably acquired protective gear and ventilators quicker than developing countries, but if they do not join the Pool they may secure treatments less successfully, as 37 developed countries opted out of the eligible importer provision under Article 31bis of the TRIPS agreement. Article 31bis removes the previous export barrier stipulating that generic drugs produced under a compulsory license had to predominantly be ‘for the supply of the domestic market’ and allows countries to import/export medicines and vaccines manufactured under licenses. A compulsory license allows governments to circumvent patent rights and authorise other domestic actors to produce, distribute or import generic versions of patented inventions.
By opting out, countries including the UK, Canada and Germany cannot import drugs made under compulsory licenses in other countries. Consequently, if a developing country with robust production capabilities, such as India, issues a compulsory license for Covid-19 drugs, these 37 countries cannot import India’s drugs under this license. They have to rely on their own domestic production, provided they have any, and on their factories remaining open and being able to source active pharmaceutical ingredients, which are again largely imported from countries such as India. Although countries can still notify the World Trade Organisation that they consider themselves eligible, none have so far. Import licenses may nonetheless be impeded as countries are prohibiting exports. This is problematic for countries such as the UK which imports 80-90% of its drugs.
Compulsory licenses for local production are still an option, and some countries have rapidly amended their laws, in extremis, upon realising their precarious position and that drug access is no guarantee. Germany passed legislation reinforcing that patent protection ceases to have effect if used in the interest of public welfare. Canada passed legislation facilitating automatic compulsory licenses for Covid-19 treatments. But if countries have little local manufacturing capabilities (as is the case for many developed countries), such measures are of little value. Partaking in the Pool is therefore pressing for developed countries.
Second, the Pool may lower prices as rights are sub-licensed to generic companies, enabling a larger number of players to enter the market. This is pertinent as shown by the lofty prices for the pre-existing drugs currently tested to treat Covid-19: Sofosbuvir sells for $18,610 in the US—despite costing $5 to make—and Pirfenidone is priced at $2,561 in the UK, while a 28-day course costs $31 to manufacture. Remdesivir’s price remains unknown, but one course costs $9 to produce. Sales prices are higher than manufacturing costs in order to recover R&D expenditures that reportedly reach $1 billion per drug, but, as will be shown below, these drugs are greatly funded by the public.
While these prices are too high under normal circumstances, they are indefensible in a pandemic, which has led not only to loss of life but also to the loss of jobs, salaries and insurance for millions. If a treatment is found, it may be priced so high that it is out of the reach of many. This will cost lives, in particular those of people from lower socio-economic backgrounds, who are already exposed to severe cases of Covid-19 due to their financial status, at-risk jobs and increased chance of having underlying health conditions. If nothing changes, it may be those who are in most need of medicines who ultimately die.
It is for these reasons that the Pool is necessary. But only 30+ countries, including South Africa and the Netherlands, have publicly announced their plans of joining the Pool, weakening its reach and effectiveness, which equally depends on industry player participation.
Currently, Abbvie has waived its patent rights for its potential drug, and Gilead has signed voluntary licenses for Remdesivir, but Latin America is excluded despite suffering some of the highest losses. Other private actors have, alongside trusts and public organisations, launched ‘the Covid-19 Therapeutic Accelerator’ which aims to accelerate treatments and secure equitable access. Pharmaceutical companies will allegedly share their IP, yet the project does not explain how this will be made available worldwide, nor does it mention the Pool or include its own licensing scheme. However, many industry players are determinedly anti: Thomas Cueni, head of the International Federation of Pharmaceutical Manufacturers and Associations—one of the project’s founding members—stated that the Pool’s ‘effects to address the current situation will likely be very limited’. Severin Schwan, chief executive of Roche, said waiving IP ‘would be a disaster’ because ‘who would ever invest if there was no incentive?’
The public purse should not be forgotten. All the drugs above received public funding and are being repurposed for Covid-19 as they were originally developed to treat other illnesses, meaning sales have already recouped R&D costs. Gilead’s Sofosbuvir sales reached $58.6 billion, after having received $880 million in funding from US public agencies. Pirfenidone generated over 1$ billion in sales in 2018 alone, and Gilead received $79 million from the US government for Remdesivir. The Accelerator project likewise funds drugs through money from non-profit associations GAVI and CEPI, funded largely from governmental donations.
Publicly funded companies, therefore, need to give back to the public. Companies need to be ‘actively encouraged’ to voluntarily partake in the Pool. Collaborative efforts are preferable as relations are already strained. But there are other ways to exert pressure to incentivise participation. The threat of compulsory licenses is one tactic: Abbvie waived its patent rights after Israel issued a compulsory license for its drug. Another is withholding investments in companies who place wealth over global health, as the financial sector has already threatened to do. Refusing to participate in the Pool may ultimately prove worse for business.
IP rights themselves are not the barrier, it is how these rights are managed. The Pool ensures that it is done in a way that facilitates access for developed as well as developing countries. Indeed, maybe the very fact that developed countries are also at risk will be the saving grace: they have the power—and now the self-interest—to force companies to do the ‘right thing’. In this way, developing countries will also reap the benefit. For once.
This post is the runner-up of the ‘Oxford Business Law Blog Prize for the Best Essay on the Covid-19 Crisis’. The essay competition ‘The Covid-19 Crisis and Business Law: Legal Problems and Policy Challenges’ was open to current Oxford postgraduate research, BCL, MJur, and MLF students. The members of the jury were Horst Eidenmüller, Luca Enriques, Wolf-Georg Ringe, Umakanth Varrotil, and Kristin van Zwieten.
Katarina Foss-Solbrekk is a DPhil in Law candidate at the University of Oxford.