Potential WTO TRIPS Waiver and COVID-19

Potential WTO TRIPS Waiver and COVID-19

Updated September 13, 2021
Potential WTO TRIPS Waiver and COVID-19
The Coronavirus Disease 2019 (COVID-19) pandemic has
The WTO has sought to address obstacles to CL use by
spurred biopharmaceutical companies to conduct costly and
poorer members (see text box).
risky research and development (R&D) to develop vaccines
Additional Compulsory Licensing Flexibility
and other products to respond to COVID-19. Firms have
relied on intellectual property rights (IPR) to commercialize
In 2003, WTO members adopted a decision to waive the TRIPS
these products. Governments and nonprofits have funded
obligation general y limiting members’ CL use to supply
and coordinated some of the underlying R&D. Some groups
pharmaceutical products to their domestic markets. The waiver
have voiced concerns over the impact of IPR on affordable
al owed members to export pharmaceutical products made under
access to these products for low- and middle-income
CLs to least-developed and other eligible countries that cannot
countries (LMICs). On May 5, 2021, the Biden
make these products themselves, subject to certain requirements.
Administration announced its support for the concept of a
In 2005, members formal y amended TRIPS to make the waiver
waiver of parts of the World Trade Organization (WTO)
permanent. The amendment entered into force in 2017, fol owing
Agreement on Trade-Related Aspects of Intellectual
its ratification by two-thirds of WTO members (the United
Property Rights (TRIPS) for COVID-19 vaccines, and
States accepted in 2005). The WTO has periodical y extended
pledged to “actively participate in text-based negotiations at
the deadline to ratify the waiver, most recently to December 31,
the [WTO] to make that happen.” Many consider this
2021. For members who have not accepted the amendment, the
notable, given the United States’ history of advancing IPR
waiver continues to apply. The first and only use of this additional
standards globally. Members of Congress are divided on the
CL flexibility was in 2007-2009 (until potential recent
issue. An active debate is underway in the WTO on the role
developments), for a Canadian company to make and export an
of IPR and trade policy in the pandemic response.
AIDS therapy drug to Rwanda. In 2021, Bolivia notified the WTO
Background on WTO TRIPS Agreement of its need to use the flexibility to import COVID-19 vaccines.
Debate over the effectiveness of this mechanism persists.
TRIPS, which entered into force in 1995, incorporated IPR
obligations into the multilateral rules -based trading system.
Essential Security Interests. A WTO member can take
It requires most WTO members to adhere to minimum rules
measures in derogation of TRIPS if it is “necessary for the
and disciplines on patents, copyrights, trademarks, and
protection of its essential security interests… taken in time
other rights, and to enforce these commitments
of… other emergency in international relations.”
domestically. It also has certain limitations to and
TRIPS Waiver Developments
flexibilities for these obligations. Longstanding debates
In October 2020, India and South Africa proposed a waiver
over the balance in TRIPS to promote innovation and other
of certain TRIPS obligations (copyrights, patents, industrial
societal aims has intensified over access to COVID-19
designs, and undisclosed information) “in relation to
vaccines and other treatments. Select relevant TRIPS
prevention, containment or treatment of COVID-19.” The
flexibilities are summarized below.
specific time period for the waiver would be determined
Transition. Least-developed countries (LDCs) are exempt
during negotiations among WTO members; India and South
from meeting most substantive TRIPS obligations generaly
Africa proposed to extend the period “until widespread
until July 1, 2034, and meeting pharmaceutical patent and
vaccination exists.” The proposal drew support from many
clinical trial data protection obligations until January 1,
LMICs seeking greater access to COVID-19 vaccines and
2033. The time limits on these exemptions have been
other health products, but it prompted skepticism, largely
extended several times using WTO waiver authority.
from a number of high-income countries, due to concerns
about its scope, duration, and possible adverse effects on
Patentability Exclusion. A government can exclude
innovation incentives and drug quality and safety.
certain inventions from patentability, including if necessary
to protect human health or life, or if they are diagnostic,
In May 2021, India, South Africa, and 60 other mainly
therapeutic, or surgical methods of treatment.
lower-income countries submitted a revised proposal in
hopes of garnering more support. As revised, the proposal
Compulsory Licenses (CLs). A government may issue a
would waive the same IPR obligations as originally
CL to authorize a third party to use a patented product or
proposed, but by contrast, it would limit the waiver to cover
process without the patent owner’s consent under certain
initially a period of three years, and apply “in relation to
conditions. These conditions include requiring the proposed
health products and technologies, including diagnostics,
user to first seek a license on commercial terms; giving
therapeutics, vaccines, medical devices, personal protective
adequate remuneration to the patent owner; and using the
equipment, their materials or components, and their
CL mainly to supply the domestic market. These
methods and means of manufacture for the prevention,
requirements may be waived in “situations of national
treatment, or containment of COVID-19.”
emergency or other circumstances of extreme urgency….”
https://crsreports.congress.gov

Potential WTO TRIPS Waiver and COVID-19
Momentum for support for the concept of a TRIPS waiver
evidence exists to show that IPR is delaying vaccine
and/or ongoing WTO discussions on it has broadened to
production and distribution, and point to other barriers, such
include some higher-income countries and economic
as supply chain disruptions; lack of manufacturing capacity,
groupings (the BRICS nations of Brazil, Russia, India,
know-how, and financing; and inadequate distribution
China, and South Africa, and the 19-member Asia-Pacific
networks and health care systems in many LMICs.
Economic Cooperation). The scope of a potential waiver,
Some stakeholders debate whether a waiver would help
however, remains a key issue. The Biden Administration,
accelerate the production and deployment of vaccines and
for instance, voiced support for a narrower concept of a
therapeutics in low-income countries. The pharmaceutical
TRIPS waiver than contemplated in the revised proposal by
industry points to ongoing voluntary licensing agreements
India, South Africa, and other countries. Members of
and technology transfer of COVID-19 treatments as a
Congress remain divided in their support for or opposition
means to support global vaccine distribution. Companies
to the concept of a waiver. Some other high-income
doubt third-party manufacturers’ ability to produce the
countries have remained skeptical. The European Union
vaccines. For instance, if the waiver applies only to patents,
(EU) has submitted in the WTO an alternative proposal for
a patent holder would not necessarily be under any
equitable access to COVID-19 vaccines and treatments,
obligation to transfer technological or manufacturing know-
with elements on reducing export restrictions and keeping
how, which is especially critical for the mRNA vaccines.
supply chains open, expanding production, and facilitating
Waiver advocates counter that voluntary licenses are too
CL use under TRIPS, as needed.
costly and inefficient and, in some cases, rights-holders
WTO members’ positions remain divergent on “the
have been unwilling to license their IPR to vaccine-
appropriate and most effective way” to address shortage
producing companies. Some foreign firms say they are
and access issues for COVID-19 vaccines and other
willing and able to make the vaccine save for the lack of
products. It remains to be seen whether WTO members will
access to the IPR. Evaluating these claims is difficult, as
reach an agreement on these issues before or at the 12th
most licensing agreements and their terms are not public.
WTO Ministerial Conference (MC12), planned for
Issues for Congress
November 30-December 3, 2021.
Supporters may urge the Administration to negotiate a
The WTO generally reaches decisions by consensus, a
waiver as quickly as possible and/or to advocate for a
procedure used, for example, to adopt the TRIPS CL
waiver covering specific types of IPR or to cover other
amendment. Voting, however, is possible in certain cases
COVID-19-related products beyond vaccines. Critics may
where members cannot reach consensus. If the WTO were
press the Administration to consider alternative responses,
to adopt a potential TRIPS waiver, it would not change
including those related to voluntary licensing, transfer of
members’ domestic IP protections automatically. Each
know-how, use of existing TRIPS flexibilities, or scaling up
WTO member would need to undertake relevant domestic
production. Various bills have been introduced to allow for
procedures to decide whether and how to change its laws to
more congressional input or approval before the
implement the waiver.
Administration can agree to a waiver. Issues that Members
Debate
of Congress may examine include
Countries and stakeholders supporting the waiver argue that
 What should be the role of Congress in any potential
the large-scale morbidity (illness) and mortality (deaths)
U.S. agreement to modify TRIPS?
caused by the pandemic and its disproportionate impact on
 Would a waiver, if adopted, promote greater global
LMICs require a fuller response than allowed under
production and access to COVID-19 treatments? If so,
existing TRIPS flexibilities. They assert that the process for
would it do so in a sufficient period of time to respond
issuing a CL is too lengthy, costly, and cumbersome to be a
to the urgency of the crisis, including with respect to the
viable strategy for addressing shortfalls in domestic
new challenges associated with the delta variant? Would
manufacturing. By contrast, suspending IPR obligations
further steps be necessary to ensure product safety?
may allow countries to authorize producers to manufacture
 How might a waiver affect U.S. industry, economic
COVID-19 products likely without facing the threat of a
interests, and competitiveness in future innovation,
WTO dispute or other negative trade consequences. U.S.
including with respect to China?
advocates also argue that since the U.S. government, with
 Does support for a waiver represent a unique position in
taxpayer-funded R&D, supported the development of some
U.S. trade policy specific to the pandemic, or a general
COVID-19 vaccines, the IP should be shared publicly.
shift in such policy as it relates to historical U.S.
Other countries, industry, and stakeholders argue that IPRs
positions in advancing IPR in trade agreements?
facilitate innovation and access to COVID-19 treatments.
See CRS In Focus IF10033, Intellectual Property Rights
They point to the unprecedented speed of the development
(IPR) and International Trade, CRS In Focus IF11796,
of COVID-19 vaccines and claim that the waiver would
Global COVID-19 Vaccine Distribution, and CRS Legal
constrain the current production ability and discourage
Sidebar LSB10599, The Legal Framework for Waiving
future advances. Some U.S.-based stakeholders also argue
World Trade Organization (WTO) Obligations.
the waiver would cause the United States to lose a
competitive advantage to countries such as China and
Shayerah I. Akhtar, Specialist in International Trade and
Russia, which may reap the economic rewards of U.S.-
Finance
developed technology if patent protection is removed for
more developed economies . They further claim little
https://crsreports.congress.gov

Potential WTO TRIPS Waiver and COVID-19

IF11858
Ian F. Fergusson, Specialist in International Trade and
Finance

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https://crsreports.congress.gov | IF11858 · VERSION 3 · UPDATED