IP Waivers in a Pandemic: Great in Theory, Wrong in Practice.

• Author: Kingyon, Brenna L.

1. Introduction 165 II. Background 167 A. IP and International Law 168 B. TRIPS and the Pharmaceutical Industry 170 C. Vaccine Waivers in the Global Context 172 III. Analysis 173 A. IP Waivers are Unlikely to Solve the Global Vaccine Shortage 173 B. IP Waivers Are Likely to Impede Innovation in the Pharmaceutical Industry 177 1. IP Waivers' Harm on Pharmaceutical Patents and Trade Secrets 178 IV. Recommendation 179 A. Compulsory Licensing 180 B. Incentivized Voluntary Licensing 181 V. Conclusion 182 I. INTRODUCTION

   The damage caused by the COVID-19 pandemic has been far-reaching and devastating. (1) Not long after the first U.S. cases were reported, it quickly became apparent that this pandemic was deadlier and more contagious than originally thought. (2) On May 15, 2020, a partnership was formed between the Department of Health and Human Services and the Department of Defense to help accelerate COVID-19 vaccine research and development. (3) This partnership, aptly coined "Operation Warp Speed" (OWS), awarded contracts to six pharmaceutical companies to develop and manufacture vaccine doses. (4 ) While researchers were racing to develop a safe and effective vaccine, the virus continued to spread at an alarming rate. There were worries that, even if a vaccine were developed, lower-middle-income countries (LMICs) would not have the same access to doses as wealthier countries. (5)

   In an attempt to provide global access, World Trade Organization (WTO) members India and South Africa proposed a temporary waiver of certain Trade-Related Aspects of Intellectual Property (TRIPS) obligations in October 2020. (6) Specifically, these members sought to waive all IP rights that relate to the "prevention, containment or treatment of COVID-19." (7) Despite garnering considerable attention and support from the United States and 104 other countries, (8) several months went by without a decision as to whether the proposal should take effect. In June 2022, however, the WTO members finally reached a decision to pass a limited TRIPS waiver. (9)

   Unlike the original proposal--which calls for a stay on IP rights pertaining to preventing, containing, and diagnosing COVID-19--this drafted agreement suspends only patent protections for COVID-19 vaccines. (10) Unsurprisingly, biopharmaceutical firms have been its most fervent opponents, as the waiver effectively strips them of the very benefits that led them to patent their treatments in the first place. (11) Many proponents of the IP waiver, on the other hand, feel that the limited June 2022 Ministerial Decision falls flat of making a considerable impact in combatting the global pandemic. (12)

   Although the TRIPS waiver was proposed with the right goal in mind--i.e., to expand global access to COVID-19 treatments, diagnostics, and therapeutics (13)--this Note contends that an IP waiver is not the solution, especially when there are other, less harmful options available. Part II provides background information on intellectual property (IP) law and its significance in the biopharmaceutical industry. (14) Part III argues that the United States should not grant IP waivers by providing two rationales. (15) First, it contends that IP waivers will not actually lead to widespread global vaccination in a pandemic because there are severe barriers to entry in the biologics industry, supply chain shortages, and quality control concerns that IP access cannot resolve. Second, granting sweeping IP waivers can ultimately impede incentivization in a time where such innovation is needed most. Part IV then recommends solutions that are better suited to fight global vaccine inequality while supporting future biopharmaceutical innovation; (16) and, finally, Part V concludes. (17)

2. BACKGROUND

   IP encompasses all original creations of the human intellect, ranging from art and literature to scientific discovery and technological advancement. (18) For centuries, nations have fostered such innovation by allocating exclusive intellectual property rights (IPRs) to inventors and creators for specified periods. (19) This concept is hardly new--for example, the United States has expressly supported the use of IPRs to encourage innovation since its founding. (20) Counterintuitively, these government-granted monopolies, if balanced with antitrust law, can promote competition. (21) This enigma can be understood by considering what would happen in a nation without IP protections. In such an environment, an innovative firm that takes on the economic risks of developing a novel product may never regain its losses because other, less innovative firms could lure consumers away by copying the product and selling it at a lower cost. (22) Even if the innovating firm managed to survive the lost returns, it would likely forego the opportunity to invent in the future. (23) While this example is overly simplified, (24) it illustrates that, without IP protection, markets would favor those firms who "sit and wait." (25) And, as a result, innovation would slow, and consumers would suffer. Thus, it is no wonder why governments can--and often do--effectively promote innovation through IPRs. (26)

   1. IP and International Law

      As advancements in transportation made it possible to export and import goods outside one's own country, the need for a multilateral IP treaty became necessary to protect IPRs across borders. Thus, on March 20, 1883, the Paris Convention for the Protection of Industrial Property was formed. (27) While it has been revised many times since its formation, the treaty's objective has remained unchanged: to harmonize how each nation treated other nations when seeking protection for their industrial property. (28) Only five years after the Paris Convention, the Berne Convention for the Protection of Literary and Artistic Works was formed. (29) Like the Paris Convention, the Berne Convention focuses on international harmonization, but goes a step further by providing minimum standards for copyright law. (30) However, because the Paris and Berne Conventions are both non-self-executing treaties, (31) they only have legal effects within a member state if, and when, countries implemented them through their own laws. (32) As a result, adoption of the two treaties was slow, and their effects less profound. That changed on January 1, 1995, when over 120 nations participated in multilateral trade negotiations in Punta del Este, Uruguay, leading to the creation of the WTO, the largest international economic trade organization in the world. (33) All WTO member countries receive benefits from other members, meaning membership is contingent on "a balance of rights and obligations." (34) Unlike the Berne and Paris treaties, the WTO has mechanisms for dispute resolution and consequences for violations of the agreements it oversees. (35) Disputes are settled by an ad hoc "quasi-judicial" panel and an "Appellate Body," which "issue reports with findings and recommendations." (36)

      One of the most central trade agreements that the WTO governs is TRIPS. (37) "TRIPS establishes minimum standards for the availability, scope, and use of seven forms of intellectual property: copyrights, trademarks, geographical indications, industrial designs, patents, layout designs for integrated circuits, and undisclosed information (trade secrets)." (38) Unlike the prior Berne and Paris treaties, TRIPS is unique because WTO membership is a "package deal," meaning that members cannot just selectively choose which agreements to implement and which to ignore. (39)

   2. TRIPS and the Pharmaceutical Industry

      Tensions have long existed between IPRs in the biopharmaceutical industry and public health concerns in LMICs. (40) Before TRIPS, some countries, such as India and Brazil, did not permit patents on medicine; rather, they only permitted drug companies to patent the processes used to create them. (41) This meant generic alternatives could enter the market right away, keeping prices affordable for consumers. (42) After TRIPS was formed, WTO member states were required to provide IPRs to innovators for product patents (43) with a minimum term length of 20 years. (44) This was necessary because it allowed biopharmaceutical companies to recover many of the R&D costs they would otherwise lose to generic companies. (45) And, as technology has advanced, R&D costs have only skyrocketed. (46) Between 2009 and 2018, the estimated median R&D cost per individual drug was $985 million. (47) However, giving the pharmaceutical industry blanket monopolies for every patented drug would exacerbate the lack of access in LMICs, as name brand drugs--without generic alternatives--can be priced at monopolistic price points. (48) Thus, in an attempt to find the right balance between promoting R&D into new drugs and furthering access to existing drugs, the TRIPS agreement includes two exceptions outlined in Articles 30 and 31.

      Article 30 (Exceptions to the Rights Conferred) provides that certain activities, such as using the patented process or product for research purposes, can be defined under national law as exceptions to an inventor's IPRs. (49) In other words, these excepted activities do not require the patent holder's permission before proceeding with the use of the patented invention. (50) The Article 31 exception, on the other hand, has been understood to permit member governments the right to grant compulsory licenses in limited situations. (51) A compulsory license is essentially a means by which a government can license a patent owner's product or process to a third party without the patent owner's consent. (52) As one might expect, this exceptional measure is not without guidelines for how it may be used. Notably, if a government issues a compulsory license to a third party, the authorization of use "shall be considered on the merits," (53) "the scope and duration shall be limited to the purpose for which it was authorized," (54) it shall be non-exclusive (i.e...