Coronavirus Vaccine and the Problems of Patent Rights

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The coronavirus pandemic has proven to be a wakeup call for the majority of the institution that has existed for the greater half of the past century. The virus, SARS-CoV2, have shown us the inadequacy of medical infrastructure and highlighted the urgent need to improve the same.

Although, if one were to dig deeper into the possible repercussions of the pandemic, we shall arrive at a seemingly endless list. A list that includes the payment of healthcare workers, restructuring of the global economy and re-establishing international relation to name a few. However, this article shall deal with a niche problem – the problem about intellectual property rights associated with a possible vaccine of Covid-19.

Researchers hope to create a vaccine for Covid-19 in only a few more months. And upon this discovery shall arise the problem of patent rights; leading to a legal clash between businesses as well as governments. This article shall be one that touches upon possible solutions with the current treaties, suggestions to the aforementioned treaties and past instances of similar nature.

Legal Viewpoint

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India has signed and fulfilled all conditions of The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), being a member state of the World Trade Organization (WTO), as of 2005. TRIPS is arguably the most significant and comprehensive international agreement on intellectual property rights; it acts as an umbrella to all IPR related matters on a global scale.

The TRIPS Agreement

Section 5 of TRIPS pertains to patents. As per Article 27 of TRIPS, patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application. A vaccine for the novel coronavirus fulfils there requirements and thus can be patented.

Patent-owners are awarded exclusive rights over their product/process for a stipulated amount of time and can charge royalties (a form of fee) from others who seek to manufacture/use this product/process. In the case of a vaccine, a royalty imposed on the cost price shall raise the final selling price make the same out of reach for a large segment of the human population who live in abject poverty.

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This is where the importance of the Declaration on the Trips Agreement and Public Health, commonly referred to as the Doha Declaration, is reflected. Article 4 of the Doha Declaration states that

“Agreement can and should be interpreted and implemented in a manner supportive of WTO Members’ right to protect public health and, in particular, to promote access to medicines for all.”

Article 5 goes further to state that,

“Each Member has the right to grant compulsory licences and the freedom to determine the grounds upon which such licences are granted.” And “Each Member has the right to determine what constitutes a national emergency or other circumstances of extreme urgency”;

while specifically stating that an epidemic shall qualify as a national emergency.

The novel coronavirus has become a global emergency, save a national one, causing unprecedented fluctuation in international trade and the stock markets. Therefore, each member state of the WTO shall be able to invoke the rights guaranteed to it as per the Doha Declaration., i.e., they shall be able to issue compulsory licensing.

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Compulsory licensing is when a government allows someone else to produce a patented product or process without the consent of the patent owner or plans to use the patent-protected invention itself. Therefore in a pandemic situation, such as the one we face today, the government shall be able to bypass such a patent and start production of vaccines without adding royalties to the price of the vaccine.

A vaccine is not one patent by itself – it’s usually a stack of patents piled upon one another to create a new patent. Picture a new vaccine as tea: now let’s say that the process of plucking tea leaves are patented, the process of converting the tea leaves to tea powder is patented, the process of extracting sugar is patented, even the process of boiling milk to make tea is patented – we undergo all this to make tea, which itself is a new product and has acquired a new patent.

A government of a country has to bypass all the patents that were utilised to make the vaccine to potentially create the same. Patents give incentives for economically effective Research and Development (R&D) by giving a monopoly on the patented invention. This encourages businesses to put millions of pounds into R&D which ultimately benefits society as a whole.

Such is the rationale behind patents and a move to bypass those patents can affect the bottom line of pharmaceutical companies who undertook R&D efforts to make the same possible; affecting post-pandemic relations between Pharma MNCs and governments.

“If people felt we were facing a pandemic situation, we would waive intellectual property rights,”

says Jamie Lacey of Medimmune, but it is not clear whether the other patent holders would do the same. Such was the response recoded during anthrax scares in the US and Canada in 2001. The statement roughly boils down to the inevitable: the governments of the globe will have to start production utilising compulsory licensing.

However, the problems relating to vaccine production does not end here. TRIPS and the Doha Declaration stays silent when it comes to technology transfer. Technology Transfer is the movement of scientific methods of production or distribution from one enterprise, institution or country to another. What this essentially means is that most Least Developed Countries (LDCs) won’t be able to manufacture vaccine even with the help of compulsory licensing as they simply do not possess the requisite technology to do so.

Moreover, governments are unable to pressurise pharmaceutical companies to undertake a technology transfer; and most companies are unwilling to do the same as they risk losing trade secrets and even get extremely low returns on doing the same. Thus one flows to the obvious conclusion of developed nations helping out LDCs and developing countries by supplying vaccines as aid or by selling the same at cost. The former faces no legal scrutiny but is met with an economic one – how much aid can the developed countries provide? In all likelihood, not enough to supply vaccines to the rest of the world.

This directs us to the later suggestion – selling the vaccines at cost. However, if one were to take into consideration the territorial limitation for each member state set in Article 27 of TRIPS while reading the Doha Declarations, we can conclude that a country cannot export the vaccine that has been manufactured without the patent-holders assent. This is because patents enjoy their validity and enforceability country-wise or at time region-wise.

The Bolar Exemption

Enter: the Bolar Exemption. The exemption that enables generic manufacturers to experiment with patented drugs and produce them in limited quantities for research became known as the Bolar exemption. The exemption was carved out by the Drug Price Competition and Patent Term Restoration Act, 1984 (famously known as the Hatch-Waxman Act) as an exception from the breach of the patent holder’s rights, for certain acts relating to manufacturing/use of the patented invention solely for uses reasonably related to the development and submission of information to a regulatory agency. The Hatch-Waxman Act overturned the stance of the US Court of Appeals for the Federal Circuit in Roche Products, Inc. vs. Bolar Pharmaceutical Co., Inc.

Section 107A of the Patents Act, 1970 is India’s Bolar exemption, however the same is much wider in scope when compared to its US counterpart as the US law expressly prescribes a territorial limit for sale and the Indian law does not.

Scope of Bolar Exemption in India

The scope of the Bolar exemption in India has been the subject of a dispute between Natco Pharma Limited (NPL) and Bayer Corporation, which came before the Delhi High Court in a writ filed by Bayer Corporation in the case of Bayer Corporation vs Union of India & Ors. In the aforementioned case, the Hon’ble Court explained that the expression ‘sale’ (in Section 107A) is wide enough to encompass cross-border sales (i.e., exports) and, therefore, exports need not be expressly mentioned in Section 107A of the Patents Act, 1970.

What this judgement means for India is that it not only can produce but also export a potential vaccine for Covid-19 without violating any statutes when empowered by compulsory licensing under TRIPS and Doha Declaration. Technology transfer would also not pose much of an issue for India, a country which has earned the sobriquet of the ‘pharmacy of the world’.

Coronavirus Vaccine and the Problems of Patent RightsAuthor’s Suggestion

The present author believes that the current limitations in TRIPS and Doha Declaration must not be left for judicial interpretations of a nation’s patent statute or the contents of the statute itself.

A new Declaration is to be undertaken by the member states of the WTO that codifies the Indian interpretation of the Bolar Exemption and also facilitates technology transfer. However, these exemptions and transfer rights must only be allowed to be utilised in a situation of national emergency; such as an epidemic.

Moreover, post the pandemic the exemption given to pharmaceutical companies within a nation to circumvent the patent must be gradually revoked with a maximum grace period of one year. Besides, a sort of remuneration is also to be given to the organisation that is to undertake the technology transfer as remuneration for their R&D efforts. This remuneration may be borne by the government for the public good or some portion of the amount for the remuneration may be raised through an open bid to the pharmaceutical companies operating within the nation – as the pharmaceutical company stands to gain from the technology transfer.

A potential vaccine could end the novel coronavirus pandemic; but we would be left in messy aftermath – one that this technological age has never encountered before. As humanity deals with a plethora of problems the suggestions and roadmap given in this article shall help with navigating through the labyrinth of intellectual property rights. And hopefully, humanity shall once again come together and overcome this pandemic – with a faint glimpse of hope that patent-holders shall waive off royalty requirements to ensure that even the poor segments of the society have access to the cure.


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