The TRIPS waiver - the most important thing in the world right now?
There’s a debate going on right now in the World Trade Organisation about an obscure bit of trade legislation that has the ability to impact the lives of millions.
This legislation, the TRIPS waiver, would suspend intellectual property rights for medical products related to Covid-19. Most controversially this would apply to vaccines, meaning that any manufacturer in the world would be able to access the secret sauce behind vaccines like Pfizer and Johnson & Johnson. Depending on who you ask, this will either greatly increase vaccine supply worldwide to help end the pandemic sooner, or might actually worsen the current supply shortage.
The waiver itself was first proposed in October 2020 by India and South Africa. Little progress had been made towards approval until early May, when the US shocked the world by changing its position to support the waiver, reigniting the debate.
The Facts About the Waiver
It’s about more than just vaccines. It also applies to any medical products used to fight Covid-19 including diagnostic kits, medicines, personal protective equipment and ventilators. This is worth mentioning because the US has thrown its support only behind a waiver for vaccines, not for all medical products.
Intellectual property rights are about more than just patents. Patents detail the list of materials needed to create a vaccine or therapeutic. Complete intellectual property rights include trade secrets like clinical research data and manufacturing processes, crucial for successful production of these products by other manufacturers.
The waiver would last for three years, with the opportunity to review on a yearly basis until its agreed upon expiration date.
Will This Actually Make a Difference?
Opponents of the waiver say that it won’t expand vaccine access, and possibly could decrease vaccine supply. They argue:
Supply chain issues are the real problem. Vaccines are made from hundreds of raw materials from dozens of countries, including obscure ingredients like Chilean tree bark. These resources are scarce and the supply chains for them are fragile. Opponents argue this scarcity wouldn’t magically disappear if intellectual property rights were waived, and could actually worsen the supply problem if current suppliers like Pfizer are unable to access these materials due to higher demand from other producers.
Licencing agreements are filling supply gaps. The major vaccine manufacturers have been signing commercial agreements with their competitors, something previously unthinkable, in order to produce vaccines faster. According to these manufacturers, this will help increase supply, making the need for a waiver unnecessary.
A waiver will lead to unsafe vaccines and discourage innovation in future pandemics. Because of the complexity of vaccine manufacturing, they argue that few facilities in the world have the ability and expertise to safely produce them. Any deaths from poorly produced vaccines could lead to increased vaccine skepticism. Negative economic consequences for pharmaceutical companies from any waiver may also mean they choose not to invest in vaccine research in the case of a future pandemic.
‘Horse Pucky’
Supporters of the waiver dismiss these arguments, pointing out that:
Pharma is moving too slowly with licencing. Despite what vaccine manufacturers claim, current commercial agreements for vaccine supply will not produce enough to meet global demand. Hundreds of millions of people in lower-income countries aren’t expected to be vaccinated until 2023. This greatly increases the risk for further variants to develop in unvaccinated people. All it takes is for one vaccine-resistant strain to emerge for everything to be plunged back into chaos.
The consequences of variants outweigh any waiver risks. The pandemic has already cost 3.75M lives and an estimated $4 trillion. A vaccine-resistant variant would make both these measures much worse. The majority of vaccine makers benefited from government grants and other financial support to help them create their vaccines. This would be replicated in a future pandemic, voiding the argument that a waiver would de-incentivise pharma to invest in producing new vaccines in the future.
The safety argument is disingenuous. Manufacturers and governments from around the world have reached out to vaccine makers, offering to help with production. To help safely produce mRNA vaccines (the cutting-edge technology behind Pfizer and Moderna’s vaccine), the World Health Organisation established a hub for mRNA technology transfer for vaccine producers to share knowledge with other manufacturers. The initiative has received strong interest from manufacturers but to date none of the major mRNA vaccine producers have chosen to participate.
Would a waiver cause pharma to lose money?
The current global shortage of vaccines has led to producers having massive leverage when negotiating agreements with countries. Rich countries have mostly been the first ones to receive vaccines simply because they’ve been able to pay a higher price for them. Pfizer is expecting $26 billion in vaccine sales in 2021 alone, more than the GDP of Iceland.
What you might not know: most countries around the world already have access to vaccine intellectual property rights for the major vaccines. Their health agencies received this information from pharma in order to assess the safety of their vaccines for regulatory approval.
However these agencies are strictly forbidden from sharing this information, risking sanctions for patent infringement from other WTO countries if they do.
A waiver would give governments much more freedom to issue compulsory licenses. These licenses would allow manufacturers to produce products against the will of the patent holder. This would enable Incepta in Bangladesh or Bavarian Nordic in Norway to produce Pfizer’s vaccines against its wishes, assuming their respective governments could provide them with enough information to produce a vaccine.
Even with more compulsory licences vaccine vaccine makers would still get paid. That’s because under the WTO’s rules on compulsory licensing, patent holders must receive ‘adequate remuneration’. There has however never been an agreed definition of what qualifies as adequate, meaning that vaccine producers could be paid $20 or 20 cents a dose, depending on what WTO members ultimately agree.
While billions of revenue for pharma is already guaranteed from government contracts, an increase in compulsory licences due to a waiver could have a significant negative impact on future pharma profits. The main reason: booster shots.
Booster shots are where pharma is expected to really profit, potentially being able to charge 10x the price for boosters (〜$200 a shot) than they charge now. Compulsory licencing could threaten these profits by a) leading to an increase in market participants competing on price and b) creating uncertain revenue for pharma (good luck defining ‘adequate remuneration’).
What will it take for the waiver to get passed?
The WTO requires unanimous consent to approve the TRIPS waiver.
The US came out in favour of it after big business and the military announced their support. Turns out big business doesn’t really like lockdowns, and Russian/Chinese vaccine diplomacy was becoming a threat to US interests worldwide.
China has been vaguely supportive of the waiver from the outset, although it didn't come out in full support until recently.
Those holding up implementation of the waiver are the UK and European Union, along with other rich countries like Australia. The reasons for this opposition seem to boil down to simple economic self-interest (e.g. protecting the biotech sector - BioNTech, the vaccine producer behind Pfizer, is German. Astrazeneca is British) in addition to securing vaccine supplies in the case of Australia.
*Japan and Brazil have recently come out in favour of the waiver.
The TRIPS Council’s next meeting will be on June 8-9th. Even if the waiver was to be approved during this session, it would likely kick off months of further legal negotiating over the specifics of the agreement and what falls within the waiver and what doesn’t. The WTO chief herself predicted that it could take until December for them to reach a final agreement.
My take:
This waiver isn’t a silver bullet, but it’s a step in the right direction. Other aspects to increase supply will also be important to help end the pandemic, like rich countries exporting excess vaccines to COVAX and building out greater manufacturing capacity worldwide.
Even if the waiver isn’t passed, the mere threat of it can create progress by incentivising pharma to sign more profitable voluntary licencing deals instead of having compulsory licences forced onto them.
I don’t buy the arguments against the waiver due to concerns about vaccine safety or de-incentivising future investment. There are plenty of pharmaceutical companies worldwide with the production capacity and expertise to safely produce these vaccines, and initiatives like the WHO’s hub for mRNA vaccine technology transfer can help derisk this process.
Vaccine makers like Pfizer and Moderna already have enormous brand benefits, with their vaccines and names to be echoed throughout human history. Waivers don’t mean they won’t still profit, and any medical product that they produce going forward will be seen as the gold standard, allowing them to charge premiums. The risk of less vaccine investment in the future due to a waiver is minimal.
The most compelling arguments against the waiver focus on its potential effectiveness due to supply chain limitations. However, even if a waiver only leads to a 5% increase in vaccine production, that’s still a 5% less risk of variants developing.
Imagine the outrage and despair if we didn’t exhaust all our options to eliminate this virus, and then were blindsided by a vaccine-resistant variant coming from a part of the world that couldn’t access vaccines. The enormous human and economic costs of this happening are too high. The waiver must pass.
Thanks to everyone who reviewed early drafts of this: Elizabeth Mendes, Lily Eagan, Ashoka Rajendra and Kavir Kaycee.