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Covid Vaccine Waiver Deal Threatens Investment for Future Crises

June 21, 2022, 9:15 AM

A global agreement for waiving Covid-19 vaccine patent protections could endanger future pandemic responses while doing little to address current access to doses, according to critics of the plan.

The World Trade Organization last week approved a deal to loosen intellectual property protections that many policy professionals say will shatter investment and innovation incentives for drugmakers to meet the needs of major health crises. The deal was a blow to vaccine makers such as Pfizer Inc. and Moderna Inc., which fought to keep the current framework that enabled them to produce life-saving vaccines in record time.

“Anyone with a stake in preventing or responding to future crises should be concerned about the negative effect of this agreement,” said James Pooley, a former deputy director general at the United Nation’s World Intellectual Property Organization.

The IP waiver comes after nearly two years of debate and at a time when initial catalysts for a plan to spur vaccine access and production capabilities have largely been addressed—leaving many in the IP and drug spaces skeptical of the goals of the agreement beyond political gain.

“It delivers the worst possible result: coming at a time when there is an oversupply of vaccines, it is irrelevant to the current crisis; and by reducing the reliability and predictability of patent protection it makes it much harder to secure private investment in the research required to deal with the next global health crisis,” Pooley said.

Calls for a halt on IP protections began in 2020 at the WTO with a proposal by India and South Africa, in an effort to facilitate a surge in vaccine production and reduce inequity in access for poorer and developing nations. The US signaled its support for a waiver in May 2021.

The agreement overcame a fight between the US and China over the Biden administration’s demand that China be clearly excluded from the deal out of fear that it would enable China to steal US technologies. The current waiver is limited to vaccines and encourages developing countries with Covid vaccine manufacturing capacity to make a binding commitment to opt out of the deal.

Noticeably absent from the agreed-on plan is an explicit waiver of trade secrets—essentially the recipes for how to make vaccines. That IP protection is considered critical to enabling third-party vaccine production as intended by a waiver.

“I don’t think it will fuel greater vaccine production because the agreement does not waive trade secrets, a big part of vaccine production,” said Tahir Amin, co-founder of the Initiative for Medicines, Access & Knowledge. “So while countries may be able to avoid patents, they could still run afoul of trade secrets.”

‘Modified Victory’

The vaccine waiver deal “will make access to medical supplies and components more predictable in this pandemic—and in the next one,” WTO Director-General Ngozi Okonjo-Iweala said in closing remarks at last week’s ministerial conference.

It “will contribute to ongoing efforts to deconcentrate and diversify vaccine manufacturing capacity, so that a crisis in one region does not leave others cut off,” she said.

Some attorneys say the waiver is a partial win for drugmakers because it’s more narrow than what was initially proposed by South Africa and India and lasts for five years. The initial proposal had also included trade secrets and copyrights on Covid treatments beyond vaccines.

“It’s significantly watered down from that but there are still enough possible pitfalls that it really will depend on how it plays out,” said Kevin Noonan, an attorney at McDonnell Boehnen Hulbert & Berghoff LLP. He called the waiver a “modified victory” for patent owners.

“Under the circumstances, I don’t think there’s a need at all for this,” he said. “But if this is going to be the bargain that we make, it could’ve been a much worse bargain.”

But how countries implement it could be a determining factor.

The waiver indicates that patent rights include ingredients and processes necessary for the manufacture of the vaccine. Were that interpreted to include trade secrets, it could scare off investment capital, Pooley said.

Others worry the move could give companies like Moderna and Pfizer pause in future health crises. Even if trade secrets are protected, the waiver sets a slippery slope, said Bryan Nese of Mayer Brown LLP, noting many pharmaceutical technologies can be trade secrets.

“If we start talking about waiving those rights, we’re talking about allowing folks to go in and dumpster dive and misappropriate trade secrets, you can imagine very easily that it creates a whole host of issues,” Nese said.

‘False Narrative’

Drug companies argue there is no evidence patents have impeded vaccine rollouts. Meanwhile, the demand for Covid-19 vaccines is declining, as the Omicron variant appears to cause less severe disease than other variants.

“There remains broad consensus that the issue is not COVID-19 vaccine availability but rather vaccine deployment and uptake,” Pfizer said in an emailed statement.

“Weakening intellectual property rules will not solve these genuine challenges. Pfizer remains committed to working to help ensure equitable access for all, as it has done throughout this pandemic,” the company said.

Earlier this year, the African Union and Covax, a World Health Organization-backed group aimed at distributing Covid vaccines to low-and middle-income countries, declined options to buy millions of additional doses from Moderna.

WTO officials “have fallen victim to a false narrative” that IP is a barrier to beating the pandemic,” Michelle McMurry-Heath, president and CEO of the Biotechnology Innovation Organization, said in a statement.

“Even some of the countries that demanded an IP Waiver, including South Africa and India, now concede that there is adequate supply of affordable vaccines. In fact, hundreds of millions of doses have been turned away, including from countries across Africa,” she said.

Manufacturing Capacity

Throughout the pandemic, manufacturing capacity concerns served as a major catalyst for those calling for an IP waiver on Covid vaccines.

As early as March 2021, Johnson & Johnson, Moderna, and others inked deals to help ramp up supply. The Biden administration has donated doses directly to countries as well as through Covax, moves that some policy professionals consider more impactful than an IP waiver.

“Vaccine manufacturers have produced more than 13 billion COVID-19 vaccine doses and built capacity to vaccinate everyone in the world,” Stephen J. Ubl, president and CEO of the Pharmaceutical Research and Manufacturers of America, said in a statement.

“Last-mile distribution challenges are causing countries around the world to destroy unused vaccines and turn away donations. Rather than resolving these issues, diplomats spent the past year and a half arguing at the World Trade Organization over ways to undermine the very intellectual property rights that enabled hundreds of collaborations to produce the COVID-19 vaccines on a global scale,” he said.

While the waiver deal fails to meet the aspirations of its most vocal proponents and advocates, the push behind it could signal a changing view on IP rights in times of crisis.

The debate around the waiver “has gotten governments into a mindset that since cost is no object and access is the goal, we should shift to a model that provides generous payments in exchange for liberal access to the technologies in question,” said Daniel Takash, regulatory policy fellow at the Niskanen Center.

“What this means for the future of the present pandemic largely hinges on how the waiver is utilized,” Takash said.

To contact the reporters on this story: Ian Lopez in Washington at ilopez@bloomberglaw.com; Matthew Bultman in New York at mbultman@correspondent.bloomberglaw.com

To contact the editors responsible for this story: Alexis Kramer at akramer@bloomberglaw.com; Jay-Anne B. Casuga at jcasuga@bloomberglaw.com