Countries that are members of the World Trade Organization are currently considering a watered-down version of a comprehensive proposal by South Africa and India — made 20 months and more than 6 million deaths ago — to suspend international obligations regarding intellectual property (IP) rights for making Covid-19 vaccines, treatments, diagnostics, and personal protective equipment for at least three years. Notably, even if adopted, this proposal notably would not have immediate effects in any country. It would simply remove international liability against countries amending domestic laws to create exceptions to Covid-related patent laws.
Some countries, including Germany, Switzerland, and the European Union, continue to resist recognizing that IP rights on treatments, vaccines, and diagnostics unduly hinder needed access to essential tools for fighting Covid-19, and so oppose consideration of proposed changes to IP rules for WTO members. This reflects what I have coined IP nationalism, which parallels well-known vaccine nationalism, yet is present even beyond pandemic situations.
IP nationalism: a new term for old concepts
Although vaccine nationalism is well-recognized and condemned by the WHO, IP nationalism is a new concept that needs to be equally recognized before it can be addressed. Essentially, IP nationalism refers to a country engaging in actions to protect domestic self-interest with respect to IP rights. A country may do that by promoting strong global IP rights that correlate with exports of IP-intensive products, or even promote such rights to curry favor with trading partners.
IP nationalism is responsible for resistance to modifying international IP norms that public health advocates have urged. But, more fundamentally, it is responsible for the very existence of such norms.
Until the mid-1980s when the United States and the E.U. championed the need for minimal global standards for IP, each country made its own decision on whether to provide protection for intellectual property, and for what. For decades, India, did not patent drugs to ensure they were affordable, which benefited many people worldwide. Even some wealthy countries, including Spain and Italy, at one point declined to provide patents on drugs to ensure that they were affordable. Countries promoting IP nationalism, however, mandated a major change by requiring all WTO countries to provide patents on drugs, not just methods of making them — and with very limited exceptions.
One of the major exceptions to patent rights is a compulsory license to an issued patent. This permits a third party or a government to make a patented invention, subject to payment of a government-determined royalty rate. Any country is permitted to use a compulsory license and set its own criteria for use. No emergency is necessary. But the U.S. and E.U. have pressured other countries not to use these licenses. In a tone-deaf move, the U.S. even criticized countries for compulsory licenses during the Covid-19 pandemic.
Although compulsory licenses are one of the few policy levers to help promote affordable access of treatments in a world where drugs must be patented, they are of minimal help during a pandemic. Why? The same international agreement mandating that drugs be patented imposes a number of procedural requirements to using compulsory licenses. Countries must allow patent owners the ability to challenge compulsory licenses. The licenses must generally be predominantly for domestic use. And there is a complicated and cumbersome procedure to permit a compulsory license to export to low-income countries that lack domestic ability to make generic drugs.
Recognizing these challenges, South Africa and India proposed suspending the usual requirement to grant patents on Covid-19 treatments and diagnostics along with other IP rights. That way, any country could make any Covid therapy, once domestic laws were amended to permit that. Although more than 100 countries support this, the E.U. has objected. Even though the Biden administration endorsed the proposal, it was only for vaccines, not treatments. These objections have barred approval of the South Africa-India proposal, since the WTO operates by consensus.
Its contribution to the WTO proposal
The proposal under consideration since May 2022 emerged from a so-called quad discussion of four WTO members: South Africa and India along with the U.S. and E.U. Unsurprisingly, it reflects prior positions of the U.S. and E.U. and their IP nationalism approaches, even amid a pandemic.
The proposal now under consideration focuses on compulsory licensing of patents only for vaccines, even though countless countries also still need treatments and diagnostics. In addition, the methods of making vaccines are often protected by non-patent intellectual property, such as trade secrets, that are not part of this proposal.
The limited number of countries that can use the mechanism laid out in the May decision text to modify IP rights without international liability reflects IP nationalism. While the prior proposal by South Africa and India applied to all countries, the May decision text applies only to some low- and middle-income countries. Moreover, although the May decision text replaces the cumbersome procedure for low-income countries that cannot manufacture their own treatments, it imposes new limits.
Although the proposal now under consideration has many limitations, such that it is firmly rejected by many policy groups, with some suggesting that countries should abandon this “sham compromise,” an overlooked yet important issue is that the limitations are likely a function of IP nationalism.
Does IP nationalism benefit countries that embrace it?
IP nationalism can lead to negative outcomes even for countries that embrace it. While the U.S. and E.U. may seemingly benefit from IP nationalism in terms of strong profits to their pharmaceutical industries, during a pandemic like Covid-19 it leads to further infections and global disruption in supply chains.
Countries that embrace IP nationalism tend to have domestic policies that endorse strong IP rights, even to the detriment of their own citizens. For example, the U.S. refused to use an existing exception in its laws to permit the government (or its licensee) to manufacture needed supplies of remdesivir, a Covid-fighting antiviral drug, ignoring a request by more than 30 state and territory attorneys general.
Strong IP rights can harm citizens in countries embracing IP nationalism even in nonemergency situations, since strong IP rights promote high prices in the U.S. and elsewhere that are just as problematic as inadequate supplies. While there are technically adequate supplies of insulin for people with diabetes, for example, some often skip doses due to cost.
The problems of IP nationalism go beyond cost. As some have recognized, strong IP rights might simply result in more IP rights — and more limits on those who need items protected by intellectual property rules. “New” drugs are not necessarily better. But drugs aren’t the only entities covered by intellectual property rights: Companies claim clinical study data, gene therapy and even the cost of medical products and services as trade secrets, ignoring the public health consequences of these restrictions. This broad range of IP protection imposes serious social costs on access, including access by researchers, ultimately undermining innovation rather than promoting it.
Addressing IP nationalism
Combating IP nationalism is admittedly a tall order. A first step to solving it, or any problem, is recognizing that it exists.
The next step involves examining why countries embrace IP nationalism and whether it is, in fact, economically valuable. This seems questionable during a pandemic when no one is safe until everyone is safe due to new variants from inadequate vaccinations, along with disrupted supply chain. Beyond pandemic situations, the assumption that strong IP rights should prevail is questionable given the litany of problems just mentioned.
But it is not clear that new drugs cost as much as companies claim — to justify strong IP rights — which is why the Pharmaceutical Research Transparency Act (and its Senate counterpart) need to be passed.
Although pharmaceutical companies have provided a seemingly compelling narrative of how strong IP rights — and concomitant high prices — promote innovation, it is time to question whether that story holds water. What innovations are we getting, by whom, and at what cost? If the IP system in wealthy countries is not promoting optimal innovation, these countries should stop insisting that countries with fewer resources accept this approach.
Of course, IP nationalism has already resulted in a web of web of international agreements that promote and protect IP rights that would be hard to disentangle. But recognizing the over-protection of IP rights would at least cease what has, in recent decades, been an incessant yet problematic increase in global IP norms. And as we have seen during Covid-19, trying to untangle these norms in a crisis is deadly.
Cynthia M. Ho is a research professor and director of the intellectual property program at the Loyola University of Chicago School of Law.
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