Why IP Waivers Are Not the Best Option for the COVID-19 Vaccine

In the midst of the COVID-19 pandemic, South Africa and India have asked the World Trade Organization (“WTO”) to waive enforcement of certain provisions of the Trade-Related Aspects of Intellectual Property Rights (“TRIPS”) agreement  “until widespread vaccination is in place globally, and the majority of the world’s population has developed immunity.”1Council for Trade-​Related Aspects of Intell. Prop. Rts., WTO, Waiver from Certain Provisions of the TRIPS Agreement for the Prevention, Containment and Treatment of COVID-19: Communication from India and South Africa 2 (Oct. 2, 2020), https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/IP/C/W669R1.pdf&Open=True. The TRIPS agreement sets minimum standards for IP law that member states are obligated to enforce.2WTO, The TRIPS Agreement and COVID-19 2 (Oct. 15, 2020), https://perma.cc/B52Y-Z7TK. This waiver would allow WTO member states to refuse to grant and enforce IP rights and protection for COVID-19 related drugs and technologies, including vaccines.3James Bacchus, An Unnecessary Proposal: A WTO Waiver of Intellectual Property Rights for the COVID-19 Vaccines, Cato Inst. (Dec. 16, 2020), https://perma.cc/6NGW-ZGNU. However the request was defeated in October 2020 by members of the WTO, and notably, the United States.4See id.

Although the waiver request still failed to pass resolution at the WTO in March 2021, its adoption remains a possibility.5Joanna T. Brougher & Andrew Kingsbury, Calls for Compulsory Licensing and IP Waivers of COVID-19 Vaccines Ignores Technical Complexities, IPWatchdog (Mar. 30, 2021), https://perma.cc/KKE5-58PN. But waiving IP protection would not likely result in an increased vaccine supply and would instead weaken incentives for future innovation.

First, even if vaccine supply were to increase, member states would not have the adequate technology to produce enough to meet the demand. Despite Moderna voluntarily waiving its patent rights in October 2020, “other manufacturers still aren’t able to use Moderna’s technology without active cooperation from Moderna.”6Lisa Larrimore Oullette, Stanford’s Lisa Ouellette on Waiving COVID-19 Vaccine Patents, SLS Blogs (May 4, 2021), https://law.stanford.edu/2021/05/04/stanfords-lisa-ouellette-on-waiving-covid-19-vaccine-patents/. This cooperation does not just encompass Moderna’s patents—“it’s the trade secrets, know-how, and scarce physical supplies needed to get a new manufacturing plant up and running.”7Id.

In response, proponents of the waiver claim that IP rights already serve as barriers to scaling up vaccine supply. In particular, they claim that “IP constraints have not only led to vaccine shortages but have also led to shortages of key raw materials [to manufacture vaccines] like bioreactor bags and filters.”8Seven Reasons the EU Is Wrong to Oppose the TRIPS Waiver, Hum. Rts. Watch (June 3, 2021), https://perma.cc/RLD5-7H59. Materials to make vaccines have already been in short supply, and it may take years to meet the current demand.9Editorial, A Patent Waiver on COVID Vaccines Is Right and Fair, Nature (May 25, 2021), https://perma.cc/874J-LATQ. Therefore, without first addressing existing input shortages, vaccine supply is unlikely to increase even with waiver.

Second, waiving IP protection would weaken the incentives for further innovation. In 2019, the pharmaceutical industry spent $83 billion on research and development.10David Austin & Tamara Hayford, CBO, Research and Development in the Pharmaceutical Industry (Apr. 2021), https://perma.cc/VB5D-U5WF. Businesses will be far more reluctant to invest in these efforts if they cannot generate a profit, or even just recover expenses.11David McCombs et al., Considering Short-And Long-Term Effect of COVID IP Waiver, Law360 (Aug. 11, 2021), https://perma.cc/TBM6-3YNN. 

Some have instead argued for compulsory licensing as an alternative to a waiver. Article 31 of TRIPS permits compulsory licensing and government use of a patent without the authorization of its owner, so long as certain patent-holder friendly conditions are met.12WTO, supra note 2, at 9. Most importantly, this includes a patent-holder’s right to receive remuneration.13Id. In addition, compulsory licensing is available for all patents, not just pharmaceuticals.14Id. But private drug manufacturers tend to dislike compulsory licensing because it is in “derogation from the customary workings of market‐​based capitalism.”15Bacchus, supra note 3.

Compulsory licensing is an attractive alternative because it covers all technology—including PPE, ventilators, and manufacturing technologies—and is especially useful in situations where member states cannot receive affordable health technologies in sufficient quantities.16WTO, supra note 2, at 9. Furthermore, it would not weaken incentives for further innovation so long as patent-owners receive adequate compensation. But this would depend on how the amount of compensation the government would provide compares to the patent-owner’s potential earnings. Instead of focusing on IP protection waivers, the WTO should look towards compulsory licensing, which would increase vaccine availability while preserving incentives for lifesaving innovation.

Laryssa Bedley

The University of Chicago Law School

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