OVERCOMING PATENT BARRIERS TO INCREASE ACCESS TO MEDICINES: A NEW PATH FORWARD FOR COMPULSORY LICENSING.

• Author: Davey, Neil

TABLE OF CONTENTS I. INTRODUCTION 689 II. COMPULSORY LICENSING 691 A. Compulsory Licensing Abroad 692 1. Assessing the Potential of a TRIPS Waiver 695 2. Solving the Know-How Problem 696 B. Compulsory Licensing in the Domestic Context 699 1. The Bayh-Dole Act and March-In Rights 700 2. Government Patent Use 703 III. THE MERITS AND DRAWBACKS OF VOLUNTARY APPROACHES 705 A. Price Discrimination 706 B. Patent Pooling 708 IV. ALTERNATIVE PARADIGMS TO THE PATENT PROBLEM 710 A. Innovation Prizes 711 B. A Commons-Based Approach 712 V. CONCLUSION 713 I. INTRODUCTION

The COVID-19 pandemic has made one thing clear: "Nobody on this planet is safe until everyone is safe." (1) Many nations recognize the need for solidarity in this crisis, and it is clear that the Global North simply cannot afford to ignore the Global South. (2) Of course, turning a blind eye to vaccine and drug access issues in the Global South would unquestionably be a "catastrophic moral failure." (3) But as noted by World Health Organization ("WHO") Director-General Tedros Adhanom Ghebreyesus, since continued outbreaks in the Global South due to low vaccination rates would "keep 'the pandemic burning' and would result in a 'very slow' global economic recovery," developed countries should also act in their own self-interest by helping vaccinate the Global South. (4) The recent Omicron variant acutely demonstrates this dilemma. It was first identified in South Africa, where less than thirty percent of the population was fully vaccinated, (5) and its high infectivity caused fear and a surge in new cases worldwide. (6)

Unfortunately, patents on biopharmaceutical products are a serious barrier to access in the Global South, often precluding people in developing countries from accessing much-needed medicines. (7) Specifically, patents give their holders monopoly rights for a certain period of time, (8) during which the holders have nearly unrestricted power to set prices. (9) Importantly, these patent barriers present a problem for lower-income populations in the United States as well. (10) Though the pharmaceutical industry often cites a need to recoup high research and development ("R&D") costs, (11) critics have properly noted that the industry still enjoys substantial profit margins and often spends more on advertising and marketing than R&D. (12) Beyond concerns about price, another prevalent issue with pharmaceutical patents is the creation of copy-cat "me-too" drugs, which reward large pharmaceutical companies with new patents for "trivial and minor inventions" over their competitors' existing products for lifestyle-related conditions. (13) This phenomenon ultimately crowds out the development of more "socially-useful radical" therapies. (14) A similar patent abuse is "evergreening," which involves minor tweaks to small molecules by branded manufacturers to increase patent life. (15) Further, the industry has frequently employed "pay-for-delay" tactics to keep cheaper, generic products off the market. (16) While patents have been shown to be critical in spurring biomedical innovation, (17) ongoing abuse of the patent system has had a substantial adverse impact on access to medicines, both in the United States and abroad. (18) One tool that could be promising in overcoming such patent abuse is compulsory licensing.

2. COMPULSORY LICENSING

   Compulsory licensing describes "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." (19) Such circumventing of patents by governments to produce essential technologies during national emergencies has been touted as a tool that could overcome many patent-related access concerns. (20) For example, permitting local manufacturers to produce patented technologies and distribute them at a lower price could greatly increase access to care in developing markets. Further, compulsory licensing would allow a country to build up both local production capacity and its own industry, from which it could then export drugs to other nations. (21) Common concerns about reduced foreign investment and innovation from the reliance on compulsory licensing in these countries seem to be overstated based on the evidence, as nations like China still present irresistible market opportunities for the pharmaceutical industry. (22) Regarding innovation incentives in the branded pharmaceutical sector, since drugs for most noncommunicable diseases are geared for developed-country markets (with negligible revenues in poorer countries), compulsory licenses on these products would have little impact on innovation. (23) Namely, the economic losses to the pharmaceutical industry from compulsory licensing of these products by lower-income countries would be minimal relative to the profits achieved in higher-income countries, having little deterrence effect on innovation. And R&D to develop medicines for tropical diseases that are prevalent in low-income countries is limited anyway. (24) Thus, compulsory licensing presents a favorable path forward to increase global access to medicines.

   1. Compulsory Licensing Abroad

      Unfortunately, most of the patenting in the pharmaceutical sector occurs in the Global North, which has often left countries in the Global South helpless during crises. (25) For example, during the HIV/AIDS epidemic, pharmaceutical players with patents on lifesaving antiretroviral drugs did not budge to decrease prices for low-and-middle-income countries ("LMICs"). (26) Some countries, however, have successfully employed compulsory licenses to overcome these hurdles. Larger LMICs like Brazil and Thailand--which had greater leverage and lesser fear of backlash--enacted such licenses on antiretrovirals between 2006 and 2007. (27) Importantly, political economy plays a huge role in dictating whether countries can successfully employ compulsory licensing. A developing country's ability to legally prevail against the United States "would likely depend heavily on the political context and on the way in which its initiative were [sic] depicted in the media." (28) This puts nations like Brazil, Thailand, India, and South Africa at an advantage over many African countries, which lack both political leverage and manufacturing capacity. However, even these larger countries cannot act without consequence. After Thailand invoked a series of compulsory licenses in 2006-2007, the United States Trade Representative "exerted extraordinary pressure on Thailand by placing it on the Priority Watch List (PWL) under Section 301 of the Omnibus Trade and Competitiveness Act of 1988" and "threatened to revoke [Thailand's] trade privileges." (29)

      In the international context, Article 31 of the Agreement on Trade-Related Aspects of Intellectual Property Rights ("TRIPS") permits nations to employ compulsory licenses in times of crisis. (30) However, while Article 31(b) permits compulsory licensing "[i]n situations of national emergency or other circumstances of extreme urgency," the text of Article 31(f) is stringent in that it limits compulsory licensing "predominantly for the supply of the domestic market of the Member authorizing such use." (31) Many experts have aptly noted how "notoriously vague" this language is--for example, there are no definitions for "national emergency" or "extreme urgency." (32) This vagueness has led to serious disputes between countries in the Global South and pharmaceutical companies. (33)

      Beyond the lack of textual clarity, Article 31(f) has presented a significant barrier for the Least Developed Countries ("LDCs"), which lack the manufacturing capacity to produce drugs protected by patents and therefore cannot benefit from domestic compulsory licenses. (34) Consequently, in November 2001, the Doha Declaration to TRIPS reaffirmed the ability of member states to utilize compulsory licenses, (35) and in Paragraph 6 noted: "We recognize that [World Trade Organization ("WTO")] Members with insufficient or no manufacturing capacities in the pharmaceutical sector could face difficulties in making effective use of compulsory licensing under the TRIPS Agreement. We instruct the Council for TRIPS to find an expeditious solution to this problem and to report to the General Council before the end of 2002." (36) This provision effectively initiated a process through which countries without manufacturing capacity could finally benefit from these licenses. Eventually, legal machinery was set in place for a country "to issue a compulsory license for a medicine it could not produce and then to seek help from any other country having that capacity that was willing to assist it." (37) This back-to-back licensing scheme was laid out in a waiver and is now embodied in Article 31bis. It took more than twelve years before the Amendment that enacted Article 31bis was finally ratified in January 2017. (38)

      Unfortunately, the procedures set out in 31bis are very cumbersome, and "any license issued under the TRIPS Agreement requires a determination on a country-by-country, product-by-product and caseby-case basis." (39) More specifically, only one Article 31bis-like proceeding has taken place, to import HIV/AIDS drugs from Canada to Rwanda in 2007, and it took more than two years for Rwanda to finally receive the necessary drugs. (40) Critics have noted that "[t]he time lost in waiting for the deliveries of drugs could almost certainly wipe out the possibility of using this in particular circumstances of national emergencies." (41) Thus, there is not yet a clear way for low-income countries without manufacturing capacity to compulsorily license pharmaceutical products. Importantly, Thailand and Brazil issued licenses between 2006 and 2007 under the standard Article 31(f) pathway, not 31bis, which was only possible because they had sufficient capacity to manufacture the drugs themselves. (42)

      Thus, despite the recent push to employ...