Henning is a University Reader in International and European Intellectual Property Law at the Faculty of Law of the University of Cambridge, and a Fellow of King’s College. He is Co-Director of the Centre for Intellectual Property and Information Law, a Fellow at the Lauterpacht Centre for International Law, and external researcher at the Max Planck Institute for Innovation and Competition in Munich (Germany).
Henning’s research, teaching and legal advice focuses on international intellectual property protection and development issues, world trade and investment law, as well as on interfaces amongst legal orders in international law, including transnational law set by private actors.
Part I: Patent protection, voluntary access and compulsory licensing
In our new Covid19 world, advice by leading public health experts suggests that we will continue to live under quarantine or some form of social distancing regimes (which may have to be switched on and off) until populations have developed sufficient herd immunity – or an effective treatment (such as a vaccine) has been found. Given the dire economic outlook and the social costs of these measures (which however can also have positive effects), as well as the specifically devastating consequences for the poor on our planet, one can appreciate the importance of developing effective medical treatments as fast as possible. It is then not surprising that significant efforts are undertaken by publicly funded research institutions, public-private partnerships and the pharmaceutical industry in search for an effective treatment. As sufficient incentives for R&D hence are not an issue, the key question will be one of global, fast and affordable access once treatments have been developed, hopefully by Summer or Fall 2021. Under international law, this is primarily a matter of intellectual property (IP) protection for such treatments – although current export restrictions for essential pharmaceuticals and/or medical equipment in the EU, UK and India also implicate trade law (see Articles XI and XX GATT).
This Two-Part post explores options for countries to facilitate access to Covid19 treatment under the WTO TRIPS Agreement, taking account of generally more stringent commitments for IP protection under Free Trade Agreements (FTAs). In Part One, it considers what type of existing and future Covid19 treatment (including medical devices) countries will have to protect under their national patent laws, and how patent protection is likely to affect widespread access to affordable treatment around the world. My main argument is that while we can expect the use of existing drugs for treating Covid19 to be patentable in most high-income and some lower-income countries, and any newly developed vaccine to be patentable in most countries, patent rights will not serve a major barrier to access. That is mainly because most patent owners will have a strong interest to license their treatment widely, and hopefully on affordable terms, especially in middle and low income countries. Should that not be the case, international patent law generally allows countries to force a patent holder to license (compulsory licensing). A specific WTO system designed to overcome legal hurdles for access to medicines in countries with insufficient manufacturing capacity to produce drugs domestically can also be used. However, the key hurdle in all these scenarios is to find countries that have enough approved facilities to produce medicines for us all: not only for its own population, but especially for poor countries with no or little manufacturing capacity.
In most countries, treatment (in the form of a new vaccine, the possible application of existing drugs to treat Covid19, or necessary medical equipment such as diagnostic kits for testing) may to be subject to patent protection, and – to the extent such treatment requires marketing approval by health authorities – protection of test data submitted to obtain such approval. Under the TRIPS Agreement, WTO Members must protect a pharmaceutical product or process that is new, inventive and industrially applicable under their domestic patent laws, granting patent owners exclusive exploitation rights for 20 years. Under Article 27:3 a) TRIPS, WTO Members can exclude from patent protection ‘diagnostic, therapeutic and surgical methods for the treatment of humans or animals’ – which arguably includes the option not to grant patents for new uses of existing drugs, but may not necessarily extend to exclusions for the medical equipment used for therapy, surgery or diagnostics.
While some FTAs (including Article 14.8:2 US-Bahrain FTA and Article 18.37:2 TPP, although currently suspended after the USA left the TPP) oblige contracting parties to award new use patents, most WTO Members still have the flexibility not to afford patent exclusivity for the use of existing drugs for treating Covid19. And even in countries where a new use for an existing drug is in principle patentable, it will not always meet the conditions for patent protection, in particular the inventive step requirement. All WTO Members however would be obligated to grant patents to a drug developed to treat Covid19, a process for making that drug, or medical equipment used for that purpose – as long as the conditions of novelty, inventive step, and industrial application (assessed by the domestic patent office based on a patent application) are met.
Assuming that patents therefore are likely to be available for these key new Covid19 treatments and will be sought and (normally after 1-3 years) granted in most major markets, that alone however does not mean access will be solely on monopoly terms. Usually, exclusive rights to make and sell the patented invention are only available once the patent has been granted. And while often just compensation is due from publication of the patent application (which generally occurs 18 month after its filing), any use prior to publication is not infringing. In the case of break-through Covid19 treatment, relevant information enabling its large-scale production will likely become widely available very fast, and may therefore initially not infringe. And even once a patent is granted, one can assume that the patent owner will be under significant pressure to license it widely. Although there are reports about investors asking pharma companies to ensure huge profits, some companies have already shown their willingness to license their existing patented drugs for Covid19 treatment on terms that support accessibility, or to donate significant quantities; and others are allowing key equipment to be made by other producers. Companies can also use the Medicines Patent Pool to license (existing and new) drugs for Covid19 to ensure affordable access in low and middle income countries. Taking this idea a step further, Costa Rica has proposed for the WHO to set up a voluntary emergency Technology Intellectual Property Pool to ensure global and affordable access to all data, research publications, technology and other informational aspects of Covid19 treatment – a proposal now apparently being considered by the WHO. Overall, we should expect that corporate social responsibility (and in case of publicly funded research, the state’s responsibility to protect public health) will be taken serious and some form of voluntary licensing will be the norm.
However, in case a country finds that a patent owner does not or cannot produce or import relevant patented Covid19 treatments in sufficient amounts or at an affordable price, TRIPS allows it to grant compulsory licenses under the conditions of Article 31. In a nutshell, this enables local authorities to allow another entity to produce and sell the patented invention without a voluntary license, subject to adequate remuneration and usually only after unsuccessful negotiations with the patent owner. However, in cases of ‘national emergency or other circumstances of extreme urgency or in cases of public non-commercial use’, there is no need for prior negotiations.
While no-one would seriously doubt that addressing the Covid19 pandemic would satisfy the above, all WTO Members agreed in the Doha Declaration on TRIPS and Public Health that countries have ‘the right to determine what constitutes a national emergency or other circumstances of extreme urgency, it being understood that public health crises, including those relating to HIV/AIDS, tuberculosis, malaria and other epidemics, can represent a national emergency or other circumstances of extreme urgency’. As discussed by Ellen t’ Hoen in more detail here, several countries, including Germany, Israel, the United States and Canada have already indicated their willingness to issue compulsory licenses to facilitate access to Covid19 treatment. In the case of Israel, this led AbbVie, the producer of Kaletra (an HIV drug thought to potentially help treating Covid19) to license the import of its patented drug from suppliers abroad to ensure sufficient availability.
Although the TRIPS Agreement therefore will not stand in the way in case countries want to rely on compulsory licenses, things become more complicated whenever a country has insufficient or no manufacturing capacity to produce the relevant treatment domestically. As the case of Israel shows, a country can also issue a compulsory license for importing patented treatments, such as a medical drug, from elsewhere. But if that treatment is also patented in the country of exportation, Article 31 f) TRIPS in principle requires that production must be ‘predominantly for the supply of the domestic market’ – hence barring the grant of compulsory licenses purely for export purposes to countries in need. In the context of the HIV/Aids epidemic, WTO Members eventually agreed in 2003 on a special mechanism (now incorporated in a new Article 31bis TRIPS), designed to enable countries with insufficient manufacturing capacity to nevertheless benefit from compulsory licensing to facilitate access to medicines.
In a nutshell, a fairly complex system allows the exporting country to issue a compulsory license solely for the purpose of exports to an eligible importing country that has made a notification to the WTO about its (self-assessed) insufficient manufacturing capacity. Given the exorbitant global need for treatment (in particular a vaccine, once developed) for Covid19, it is not difficult to imagine that many countries will find their own manufacturing capacities to be insufficient, and hence might ask others to help produce sufficient supplies for them. As the system covers not only medical drugs (and their active ingredients), but also ‘diagnostic kits needed for its use’ (TRIPS Annex, para.1a), it should apply to a wide range of relevant medicines and supporting devices used in the treatment of Covid19. However, leaving problems about complexity and insufficient experiences in using the system aside, in our current situation, it may well be rather difficult to find any country able to produce sufficient amounts of a future Covid19 treatment for its own population, let alone to export for other countries in need. Reports about the Trump Administration trying to lure a German manufacturer to develop and produce a vaccine for the USA are quite telling, and show that countries are initially going to prioritise their own people.
But even if there are, for example based on India’s huge generic manufacturing capacity and experience, enough manufacturing sites that are approved by health authorities for producing medicines according to relevant standards, there are legal complications. First, several OECD countries (namely: Australia, Canada, the EU and its member States, Iceland, Japan, New Zealand, Norway, Switzerland, and the United States) have explicitly declared that they will not use the mechanism as importing countries. When the system was negotiated in 2003, that was an essential element for the US pharmaceutical industry (and by extension, the US government) to come on board – as they feared the system could be ‘abused’ by rich countries to obtain cheap access to medicines. So can countries that have opted out of the system now opt back in, for example in order to ask India to produce a future Covid19 vaccine in bulk quantities if their own domestic manufacturing capacities are insufficient?
Although paragraph 1(b) of the relevant Annex to TRIPS suggests that ‘a Member may notify at any time that it will use the system in whole or in a limited way’, this arguably was only meant as an option for other WTO Members that had not yet opted out. The WTO website confirms this, as it categorically states that ‘[s]ome members are excluded from using the system as importers’, referring to those listed above. For the United Kingdom, matters become even more tricky: while the relevant text of fn.3 to para.1(b) only refers to the EU (then EC) and ‘its member States’, a chairman’s statement accompanying the 2003 WTO decision explicitly states that ‘the following Members have agreed to opt out of using the system as importers’, listing, inter alia, the ‘United Kingdom’. That statement is seen by some WTO Members as a crucial part of the overall agreement, while others consider it a unilateral statement of the chair of the negotiations with no legal status. It hence remains to be seen whether a post-Brexit UK faces legal obstacles if it attempted to use the system as eligible importing country, for example arguing that the chairman’s statement is not legally binding, and that the EU’s declaration not to use the system does not constitute an ‘act’ of the Union under Articles 2(a) & 4(1) of the Withdrawal Agreement (which would bind the UK).
Part II: National security exceptions and test data protection
In Part One, this post considered obligations under international law to offer patent protection for existing and future Covid19 treatment, and how that is likely to affect widespread access to affordable treatment around the world. Its showed how voluntary licensing and compulsory licensing should ensure that international patent law does generally not serve as major barrier for access to affordable treatment. It however pointed to specific legal issues for those WTO Members which had declared they would not use the ‘Article 31bis’ TRIPS system for enabling drug exports to countries with insufficient manufacturing capacity. This second part looks at alternative options to overcome those issues, in particular by relying on national security exceptions. It also discusses how another form of legal protection mandated under the WTO TRIPS agreement, namely in relation to the test data necessary to show the safety of a drug, can affect access to medicines. It concludes that test data protection, especially under FTAs, can raise complex legal questions about its interface with express allowances to override patent rights, and hence may well serve as legal hurdle to affordable access to medicines. Countries that currently pour resources into drug testing and development might therefore wish to try to ensure that IP rights later available for these drugs and their test data cannot be exercised to limit access.
Returning to the discussion in Part One, a further question revolves around the interplay between the Article 31b is system for export compulsory licenses and Article 73 TRIPS, setting out the (Article XXI GATT-equivalent) national security exception to commitments under TRIPS. Under Article 73, ‘[n]othing in [TRIPS] shall be construed (…) to prevent a Member from taking any action which it considers necessary for the protection of its essential security interests (…) (iii) taken in time of war or other emergency in international relations.’ In principle, Article 31bis:5 TRIPS confirms that the Article 31bis system is ‘without prejudice to the rights, obligations and flexibilities’ that WTO Members have under TRIPS. Whether this also allows to ‘mix and match’ that system (invoked by an exporting country) and Article 73 (invoked by an ineligible importing country) – or whether both countries would have to rely on the national security exception – is not immediately clear. These complexities aside, the primary question concerns the applicability of Article 73 to our Covid19 scenario. Can a WTO Member that (for whatever reason) cannot use the Article 31bis system alternatively rely on Article 73, arguing that importing Covid19 treatment to address its own insufficient manufacturing capacity is ‘necessary’ for protecting its ‘essential security interests’? And does the current pandemic constitute an ‘emergency in international relations’ under Article 73?
The limited guidance from the so far only Panel Report addressing this issue (Russia – Traffic in Transit, discussed here and here) suggests that (1) the security exception ‘is not totally “self-judging”’ (para.7.102) – but rather requires an objective determination whether the requirements in the subparagraphs of Article XXI GATT (in our case: Article 73 TRIPS) are satisfied (para.7.101); and that (2) an ‘emergency in international relations’ requires a ‘situation of armed conflict, or of latent armed conflict, or of heightened tension or crisis, or of general instability engulfing or surrounding a state’ (paras.7.76, 7.111). Even though this definition is linked to situations akin to an armed conflict, the severity of the Covid19 pandemic and its far-reaching consequences across the globe, plus the clarifications under para.5c) of the Doha Declaration that ‘public health crises, including (…) epidemics’ can represent a ‘national emergency’, arguably support an application of Article 73(b)(iii) TRIPS. If WTO Members in the Doha Declaration (which the WTO Panel in Australia – Plain Packaging considered a subsequent agreement on the interpretation of TRIPS under Article 31(3)a) VCLT) refer to an epidemic as a ‘national emergency’, then a WHO declared pandemic should constitute an international emergency, especially if accompanied with general economic, social and political instabilities, as further discussed here.
In addition, the good-faith limit imposed by the Russia – Transit Panel when a WTO member exercises its (limited) discretion to decide what ‘it considers necessary’ to protect its ‘essential security interests’ (see para.7.132-38) should not pose a problem in the Covid19 context: given the number of mortalities and the severity of quarantine measures currently imposed as only real alternative, no-one can reasonably question a country’s decision that considers sufficient availability of effective treatment as a ‘matter of national security’.
A final legal hurdle in effective reliance on both compulsory licenses in general and on the specific system for compulsory licensing for export to countries with insufficient manufacturing capacity lies in the additional and separate protection for test data under TRIPS, FTAs, and national laws. Distinct from patent protection for a new invention, test data protection under Article 39:3 TRIPS obliges WTO Members to protect ‘undisclosed test or other data the origination of which involves a considerable effort’ when national authorities require such data ‘as a condition of approving the marketing of pharmaceutical or of agricultural chemical products which utilize new chemical entities’. While TRIPS only demands WTO Members to protect such data ‘against unfair commercial use’, and ‘against disclosure, except where necessary to protect the public’, a significant number of FTAs negotiated by the US, the EU and other IP demandeurs tend to oblige contracting parties to introduce specific periods of test data- as well as marketing exclusivity: that is, not to allow any entity (other than the one which had submitted the test data) to rely on that data to show to health authorities that its own (bio-equivalent) generic drug is safe to use; and not to allow any such entity to market its generic drug. In both cases of test- and marketing exclusivity, the periods mandated by FTAs tend to run for at least 5 years.
As most treatment for Covid19 (in particular a vaccine) would require marketing approval, any entity which submits test data to national authorities for this purpose would be eligible for test data protection described above. That in turn raises questions about overriding such protection for public health purposes – for example to allow other producers to obtain marketing approval so that a vaccine can be imported or produced in sufficient quantities for domestic supply. Under TRIPS, this should not be a problem: Article 39:3 TRIPS does not prohibit to disclose test data when that is ‘necessary to protect the public’. In addition, the (above discussed) national security exception under Article 73 would apply.
However, countries that have committed to test data exclusivity periods under a FTA might be prevented from allowing any other producer to request that data, rely on it for purpose of obtaining marketing approval for its generic versions of the vaccine, and to market that generic version – until the exclusivity period has expired. Unless the FTA includes any equivalent limitation on test data exclusivity or an equivalent national security exception, difficult questions about the potential application of the respective WTO/TRIPS limitations in the FTA context would arise. While answers will depend on the individual FTA provisions, a general argument might point to the FTA as a limited lex specialis addition to existing WTO/TRIPS rules – an inter-se Agreement which allows its contracting parties to fall back on general rules of TRIPS (such as national security exceptions) unless there is clear evidence that the parties intended to divert from these general rules.
In sum then, a rather complex picture emerges when assessing opportunities for countries to support another in ensuring fair and affordable access for an effective treatment against Covid19. Once a vaccine or another form of effective treatment is found, the main practical hurdle in the foreseeable future will be to produce and distribute that treatment on a global scale for all populations in need. One hopes that once patents are granted to public research institutions and/or private companies, they will be voluntarily licensed across the world, and on reasonable terms. Where that is not the case, the principal legal issues under global IP protection regimes will be to navigate the complex web of obligations under TRIPS, but even more so under IP chapters in FTAs that tend to go beyond the standards of TRIPS. For most countries that will find that they have insufficient domestic manufacturing capacities to produce for example a the Covid19 vaccine, the specific mechanism under Article 31bis TRIPS in principle serves as a (hopefully viable) legal solution. But more complex problems emerge for WTO Members that had declared not to use that system, as well as for any country bound by test data exclusivity periods. If those (legal) problems would effectively bar countries from accessing medicines, this would not only directly contradict the unanimous agreement of all WTO Members that ‘the TRIPS Agreement does not and should not prevent members from taking measures to protect public health’; it would also be a testament that international economic law does not serve the global community. In order mitigate such a scenario, countries that are currently pouring resources into drug testing and development should ensure – in particular by insisting on relevant terms in funding and cooperation agreements – that IP rights later available for these drugs and their test data cannot be exercised to limit access.
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