More Said Than Done: Holdup Concerns for Developing Nations during the Coronavirus Outbreak

By Matthew Pham 

I. INTRODUCTION

In the midst of a virus outbreak, all the world scrambles to remedy the situation. The speed and effort at which the world mobilizes itself is heavily driven in part by the promise that the costs related to helping out are going to be paid back.[1] This certainty is solidified in part through the complex network of IP rights that keep track of who contributed what in the international process of crisis control.[2] Arguably, without these intellectual property rights, the speed at which the world could mobilize technological innovations would be slower.[3]

However, IP rights can also prove to hinder the public interest by adding bureaucracy and red tape.[4] On top of stalling from regulations and approvals, pharmaceutical technologies are also stalled at the negotiating table.[5] Certain laws allow the latter problem to be solved through the mechanisms of compulsory licensing and parallel imports.[6] The World Trade Organization provision that provides this avenue essentially permits a drug to be provided and licensed without the patent owner’s permission.[7] Although meant to be an expediting process, the strong interests of IP owners, primarily in the United States, create pressure for other countries to forgo using the provision.[8] As a result, developing countries put more time and effort navigating the IP landscape, slowing down their main objective of providing essential drugs to their domestic markets.[9]

Such may be the case for the latest outbreak of the Corona Virus (or COVID-19). Since last year the virus has propagated from its source in Wuhan outwards into many countries.[10] The virus is causing rising concern in nations, markets and the public at large.[11] Since developing and implementing remedies to a crisis is a complex, multi-step and technological challenge, intellectual property (particularly patent law) finds itself in every aspect of the coronavirus issue.[12] Patents have been and are being filed in every aspect surrounding the coronavirus, including diagnostic tests, vaccines and even strains of the virus itself.[13]

II. WHAT’S HAPPENING NOW

One promising cure for the virus appears to be a drug called Remdesivir.[14] Pharmaceutical Company Gilead Sciences is currently prosecuting its own patent for Remdesivir before the United States Patent Office.[15] If Remdesivir proves to be a viable cure, then absent any special measures, the current intellectual property measures in place exalt Gilead into a dangerously powerful position.[16] With a patent for the only viable Coronavirus cure, Gilead may have a strong ability to halt the distribution of the cure due to opportunities to maximally exploit IP.[17] This resembles the many criticisms of pharmaceutical IP in the past, such as those concerning the AIDS epidemic, when AIDS cures were notably slow in reaching less affluent countries such as South Africa.[18]

The leverage Gilead actually has is uncertain, since all vaccines are still undergoing preliminary testing.[19] Gilead is currently working with China to set up clinical trials.[20] Other possible vaccines include Kaletra, a combination of two drugs originally developed to cure HIV/AIDS.[21] Meanwhile, other companies such as Novavax, Inovio Pharmaceuticals and Moderna Therapeutics are beginning to develop their own vaccines.[22] There are also possible vaccines that are not patented, such as chloroquine, a drug originally meant to treat malaria.[23] With no clear results available, there is little certainty on what the eventual patent landscape will look like.

However, it is already clear that the way IP rights are set up will cause implementation methods that will discriminate beyond who needs the cure the most. Chloroquine, the unpatented solution, is already projected to be useful to low-income countries due to its cheapness and availability.[24] Depending on the effectiveness and viability of other vaccines, these countries may receive sub-optimal care, especially if more effective patented care proves inaccessible.

Current news would suggest that companies are acting cooperatively to ensure any cures would be distributed fairly. Gilead is currently providing Remdesivir to China for free during clinical studies and is working with Wuhan to develop an implementation system that respects IP rights.[25] However, any developments on how possible medicines will be implemented in poorer countries remains up in the air. Such countries are different in that they may not have the political clout to cooperatively work with developed countries for their own interests. Since attention on the coronavirus is high, it is clearly advantageous to work generously and cooperatively. However, what may happen as tensions settle at home, but persist in developing countries?

III.  PAST VIRUSES AND THE TRIPS AGREEMENT

The coronavirus is not the first outbreak where IP rights have been under fire on the international stage. Dating back over 20 years ago, the AIDS epidemic was one of the first times the world saw how intellectual property rights stifled accessibility to essential drugs in countries that needed it the most.[26] Under the IP landscape at the time, cures and vaccines did not travel quite as fast as the virus did.[27] The poorest countries did not have any leverage to help their communities get the help they needed and voluntary licensing agreements could not be reached.[28]

As a result, many of these shortcomings began to be addressed in the form of international treaties such as the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS agreement). Most notably, the scope of the TRIPS Agreement has been modified through the Doha Declaration to “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.”[29] Through the Doha Declaration, the TRIPS Agreement solidified the motivation for the world to work together to distribute medicines throughout the world in a fair and equitable manner.

As a result, the TRIPS Agreement has evolved to provide developing countries generous leeway to bring essential medicines to their domestic markets. For example, the TRIPS Agreement clearly delineates the way in which countries may grant compulsory licenses (to allow third parties to develop patented technologies without the patent-holder’s consent) as well as parallel imports (to allow third parties to import legally obtained patented technologies into the domestic market without the patent-holder’s consent).[30] These alternatives, available to all countries under the treaty, allow the circumvention of burdensome licensing negotiations in order to promote the access to medicines for all.

The benefits of these TRIPS Agreement provisions are illustrated through the Agreement’s introduction into the AIDS situation. Absent the ability to provide compulsory licenses or parallel imports, patented first-line antiretroviral (ARV) drugs for HIV/AIDS remained expensive and inaccessible to many countries “where therapies involving combinations of expensive antiviral drugs are out of the question.”[31] The expiration of the patents and the consequential introduction of generics eventually made the first-line drugs more accessible and affordable.[32] From this, it is arguable that the transition of patented drugs to generics is an essential mechanism of IP rights that ultimately provide medicines to all.

Unfortunately, as with most viruses, HIV/AIDS continued to persist and began to become resistant to the first-line ARVs.[33] As a result, the development of second-line ARVs saw the same hold-up problems as the first-line ARVs, thereby continuing the accessibility issues seen in the past.[34] Fortunately, the now-available TRIPS provisions allowed a few countries to circumvent the accessibility issues to quickly grant compulsory licenses and allow parallel imports into their domestic markets.[35] A few examples of such countries were Zimbabwe, which declared an emergency period in 2002 to allow its government to override patents and permit the local production of ARV drugs;[36] as well as Malaysia, which allowed the import of generic didanosine, zidovudine and the lamivudine/zidovudine combination from India to supply its public hospitals.[37] Without the leeway provided by the TRIPS Agreement, voluntary licensing agreements have only been reached with enormous effort from government, civil society organizations and local manufacturers.[38]

IV. BARRIERS TO COOPERATION

Although these examples show the TRIPS Agreement’s ability to promote access to essential medicines, there are still many barriers that hinder its optimal exploitation, which may affect the ability to promote access to eventual vaccines and cures for the Coronavirus. Even though the above has explained how countries have properly utilized the TRIPS Agreement, many other countries have failed to follow suit due economic restraints, misinformation and political pressures.

In the simplest situations of economic restraints, developing countries face drug accessibility issues when there is no domestic capacity to manufacturer the patented drug. Although countries can and have also granted compulsory licenses outside of their country, the system by which to do so remains cumbersome.[39] Developing countries looking to grant parallel imports are also beholden to external markets which have to be willing to export their drugs at a price that is fair for the domestic markets.

The more pervasive barriers lie in the misinformation concerning the TRIPS Agreement. A common misconception is that countries need to declare a state of emergency before granting a compulsory license.[40] This misinformation has been propagated in news reports concerning the coronavirus.[41] In reality, the TRIPS Agreement provides that countries have more flexibility in granting their compulsory licenses. Clearly, this misconception prevents countries from proactively promoting their own public health interests and preventing the spread of viruses, since it will be seen as an option of last resort.[42] This misconception will surely affect how medicines will move throughout the coronavirus issue. In general, a lack of understanding the TRIPS Agreement puts countries at a disadvantage in leveraging the Agreement’s flexibilities to protect the health of their citizens.

The most challenging barrier lies in the political pressures of countries and players that are most negatively affected by the TRIPS Agreement provisions, most notably IP owners. Compulsory licenses and parallel imports ultimately undercut the interests of IP owners who presumptively invest heavily into the development of essential drugs and technologies.[43] The TRIPS Agreement, as read through the Doha Declaration, undermines the ability for pharmaceutical companies to enforce their patents and may be seen as a way for the pendulum to swing the other way and make countries the uncooperative parties in licensing agreements.[44] Such an effect on interested parties bring about aggressive efforts to prevent countries from exercising their powers under the TRIPS Agreement.[45] Of course, these political pressures are most effective when enforced on the smallest of countries who have no political leverage of their own to defend themselves.

Ultimately, the TRIPS Agreement combined with the three barriers identified above are representative of the continuing uncooperativeness between IP owners and developing countries. The tensions shown through the international response to AIDS indicate that the TRIPS agreement will be ineffective in promoting the access of medicines during the Coronavirus outbreak. The misconceptions mentioned above represent the general misinformation of how the international world may work together to control virus outbreaks. This tension is already being seen in the development of possible coronavirus cures. As Gilead Sciences continues the prosecution of its remdesivir patent, Wuhan is not solely relying on its TRIPS Agreement powers to ensure its access to possible cures. Wuhan is applying for its own remdesivir-related patents, presumably to side-step away from the pressures of granting compulsory licenses. Unfortunately, as seen in the AIDS situation, such cooperation may only persist for as long as the coronavirus remains an issue in the developed world. With cooperation and generosity closely tracking headlines instead of the actual need of the developing world, the quick development of essential drugs may slip into an ongoing struggle of helping our world’s most needy.

V. RECOMMENDATION

It is undeniable that the unprecedentedly quick response to the Coronavirus is driven by the IP laws in place today. It is equally undeniable that the laws that have expedited solution-building will eventually burden solution-implementation in the coming months. As the international response to the coronavirus continues on and the most viable cures and drugs are identified, tensions will rise among nations in how to best distribute these drugs in a fair and equitable manner, particularly to poorer countries.

Although these tensions are inevitable, barriers to productive and open discourse should be addressed. The reality is that essential drugs are inaccessible to many countries to varying degrees. Current popular understanding of compulsory licensing powers are too restrictive—countries should not have to wait for an emergency and hinder their public health interests. The ability for a domestic market to even manufacture essential drugs absent any patent hindrances should also be considered. Ultimately, these realities must be reinforced while attention on the coronavirus is at its highest. As crisis control continues, discussion on how developing countries can equitably receive medicines must persist. With these concerns in mind, international response to the coronavirus can continue to be cooperative well into the implementation phase of viable cures and solutions.


[1] Roy Bodem, Pharmaceutical Patent Profits Facilitate Innovation, 11 McKendree U. Online J. of Undergraduate Research (2008).

[2] Id.

[3] David Kline, Do Patents Truly Promote Innovation?, IP Watchdog (Apr. 15, 2014), https://www.ipwatchdog.com/2014/04/15/do-patents-truly-promote-innovation/id=48768/ (“We know from the historical record that in 19th century America, at least, most observers had no doubt that that the patent system was absolutely vital to U.S. economic success.”).

[4] See Thomas F. Cotter et. al., Demystifying Patent Holdup, 76 Wash. & Lee L. Rev. 1501 (2019) (“Patent holdup can arise when circumstances enable a patent owner to extract a larger royalty ex post than it could have obtained in an arms length transaction ex ante [the circumstances].”).

[5] Id.

[6] Compulsory licensing of pharmaceuticals and TRIPS, World Trade Organization (March 2018), https://www.wto.org/english/tratop_e/trips_e/public_health_faq_e.htm; Parallel Imports, World Trade Organization, https://www.wto.org/english/thewto_e/glossary_e/parallel_imports_e.htm.

[7] Agreement on Trade Related Aspects of Intellectual Property (TRIPs), supra note 3, Part II, sec. 5, art. 31.

[8] Sara M. Ford, Compulsory Licensing Provisions Under the Trips Agreement: Balancing Pills and Patents, 15 Am. U. Int’l L. Rev. 941, 953 (2000).

[9] See Consumer Project on Technology, U.S. Department of State Report: U.S. Government Efforts to Negotiate the Repeal, Termination, or withdrawal of Article 15(c) of the South African Medicines and Related Substances Act of 1965 (showing how the U.S. “joined with other USG agencies with trade responsibility” sought to repeal South Africa’s laws  that would allow compulsory licensing and parallel import of AIDS drugs).

[10] Coronavirus Disease 2019 (COVID-19) Situation Summary, Centers for Disease Control and Prevention (Mar. 9, 2020) https://www.cdc.gov/coronavirus/2019-nCoV/summary.html#anchor_1580079137454.

[11] Berkeley Lovelace Jr., Coronavirus cases could reach 64,000 in Washington state by May, governor says, CNBC (Mar. 10, 2020) https://www.cnbc.com/2020/03/10/coronavirus-cases-could-reach-64000-in-washington-state-by-may-governor-says.html; Hannah Ziady and Julia Horowitz, Could coronavirus shut Wall Street? Banks begin moving staff out, CNN Business (Mar. 10, 2020) https://www.cnn.com/2020/03/10/business/wall-street-coronavirus-shutdown/index.html; Stephen Daw, RuPaul’s DragCon LA Canceled Amid Growing Coronavirus Concern, Billboard (Mar. 10, 2020) https://www.billboard.com/articles/news/pride/9331932/rupauls-dragcon-canceled-coronavirus.

[12] Irene Vázquez, Coronavirus and Patents, ABGExperts (Feb. 20, 2020) https://abg-ip.com/coronavirus-patents/.

[13] Id.

[14] Gilead Sciences Update On The Company’s Ongoing Response To COVID-19, Gilead (Feb. 26, 2020) https://www.gilead.com/purpose/advancing-global-health/covid-19.

[15] International Patent Application No. PCT/US2016/052092, Published (filing date Sep. 16, 2016) (Gilead Sciences, Inc., applicant).

[16] As I write this, it appears that Gilead’s momentum is growing. See Mark Prvulovic, Will Gilead Sciences Make a Fortune Off Its Coronavirus Drug?, The Motley Fool (Mar. 9, 2020).

[17] See Chris Berdik, Urging Global Access for Medical Breakthroughs, BU Today (April 30, 2009) http://www.bu.edu/articles/2009/urging-global-access-for-medical-breakthroughs/ (“Fear of lost profit is part of the holdup. ‘Any time you start talking about something that could be perceived as taking money away, you’re going to run into some resistance[.]’”).

[18] Consumer Project on Technology supra note 9.

[19] Gilead supra note 14.

[20] Id.

[21] Hannah Devlin and Ian Sample, Hopes rise over experimental drug’s effectiveness against coronavirus, The Guardian (Mar. 10, 2020) https://www.theguardian.com/world/2020/mar/10/hopes-rise-over-experimental-drugs-effectiveness-against-coronavirus.

[22] Vázquez supra note 12.

[23] China applies for patent on Gilead’s remdesivir to treat coronavirus, Pharmaceutical Technology (Feb. 5, 2020) https://www.pharmaceutical-technology.com/news/coronavirus-patent-gilead-remdesivir/.

[24] Hannah Devlin and Sarah Boseley, Coronavirus facts: what’s the mortality rate and is there a cure?, The Guardian (Mar. 10, 2020) https://www.theguardian.com/world/2020/mar/10/coronavirus-facts-mortality-rate-is-there-cure.

[25] Angus Liu, Chinese firm copies Gilead’s remdesivir, the most promising drug against the new coronavirus, FiercePharma (Feb. 12, 2020) https://www.fiercepharma.com/pharma-asia/chinese-firm-copies-gilead-s-remdesivir-most-promising-drug-against-new-coronavirus.

[26] Jacqui Wise, Access to AIDS medicines stumbles on trade rules, 84 Bulletin of the World Health Organization 5 (May 2006) https://www.who.int/bulletin/volumes/84/5/news10506/en/.

[27] Id.

[28] Id.

[29] See WTO Ministerial Conference, Declaration on the TRIPs Agreement and Public Health, WT/MIN(01)/DEC/2 (Nov. 20, 2001) available at http://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_ trips_e.htm (last visited July 11, 2002).

[30] Wise supra note 26.

[31] With Fanfare, Global AIDS Conference Gets Underway in Vancouver, Washington Post (July 8, 1996) https://www.washingtonpost.com/archive/politics/1996/07/08/with-fanfare-global-aids-conference-gets-underway-in-vancouver/897b52bb-265d-4973-afc6-ca48f8465974/.

[32] Wise supra note 26.

[33] Id.

[34] Id.

[35] Id.

[36] Zimbabwe Declares HIV/AIDS Emergency; Move Will Facilitate Importation of Generic Drugs, Kaiser Health News Morning Briefing (May 29, 2002) https://khn.org/morning-breakout/dr00011399/.

[37] A brief update on compulsory licensing and infectious diseases in ASEAN, MirandaH (June 16, 2007) https://www.mirandah.com/pressroom/item/146-a-brief-update-on-compulsory-licensing-and-infectious-diseases-in-southeast-asia/.

[38] Wise supra note 26.

[39] Holger P. Hestermeyer, Canadian-made Drugs for Rwanda: The First Application of the WTO Waiver on Patents and Medicines, 11 American Society of International Law Insights 28 (Dec. 10, 2007) https://www.asil.org/insights/volume/11/issue/28/canadian-made-drugs-rwanda-first-application-wto-waiver-patents-and.

[40] Ellen t’Hoen, The Most Common Misunderstanding about Compulsory Licensing, Medicines Law & Policy (May 25, 2017) https://medicineslawandpolicy.org/2017/05/the-most-common-misunderstanding-about-compulsory-licensing/.

[41] China Wants to Patent Gilead’s Experimental Coronavirus Drug, Bloomberg News (Feb. 5, 2020) https://www.bloomberg.com/news/articles/2020-02-05/china-is-trying-to-patent-gilead-s-experimental-coronavirus-drug (describing the compulsory licensing system as an “option that lets nations override drug patents in national emergencies”).

[42] t’Hoen supra note 40.

[43] Joseph Allen, Compulsory Licensing for Medicare Drugs– Another Bad Idea from Capitol Hill, IP Watchdog (Aug. 23, 2018) https://www.ipwatchdog.com/2018/08/23/compulsory-licensing-medicare-drugs-bad-idea/id=100608/.

[44] Zeba Siddiqui, India defends right to issue drug ‘compulsory licenses’, Reuters Health News (Mar. 23, 2016) https://www.reuters.com/article/us-india-patents-usa-idUSKCN0WP0T4.

[45] Wise supra note 26.