Patent Rights and Wrongs in the COVID-19 Pandemic: EU and U.S. Approaches to Compulsory Licensing

As governments around the globe fight the COVID-19 outbreak, pharmaceutical companies race to develop a vaccine and potentially secure a patent for it. To speed the process, much of that effort builds on known drugs for other diseases. The World Economic Forum reports that 70 potential vaccines are currently in development around the world. According to a BBC report, research is in progress on more than 150 additional drugs globally, with many pre-existing drugs being trialed for potential usefulness in combating COVID-19. Those which can are giving it their best shot—for people as well as profit.

In the wake of this COVID-19 vaccine and patent sprint, questions arise concerning affordable and universal access: will governments, especially poorer ones, be able to secure affordable access to a vaccine if and when one becomes available? Can a patent owner actually be forced to license a COVID-19 vaccine for the benefit of the greater good? The answers are likely yes to both, depending where you are.

Governments can secure access for their populations to a vaccine, at least in theory, because the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) provides a mechanism for governments to authorize themselves, or third parties, to make use of a patent without the permission of the patent owner through compulsory licensing. All the Member States of the World Trade Organization, which are most countries in the world, including the United States, are parties to TRIPS. This article focuses on compulsory licensing, the circumstances under which it can be invoked, and the important diverging views between the European Union and the United States that could chart critically different paths for those infected with the disease.

How to Secure Public Access to a Patented Vaccine

The rights associated with a patent vary somewhat from country to country, but most often, a patent provides the patent owner with the exclusive right to make, use, sell, license and distribute an invention for a specified period of time. Accordingly, pharmaceutical companies racing to develop a COVID-19 vaccine will patent it in order to protect and enhance their ability to profit from their invention and offset the steep costs associated with developing it.

The TRIPS Agreement, which came into effect on January 1, 1995 is to date the most comprehensive, multilateral agreement on intellectual property, including patents. TRIPS is an international minimum standards agreement, meaning that Member countries (including the United States) may provide more (but not less) protection of intellectual property if they so choose. Member countries are left free to determine the appropriate method of implementing the provisions of TRIPS within their own respective legal systems and practices.

Thus, it is a balancing act. TRIPS allows for exceptions to the exclusive rights conferred by a patent, such as the right to license, sell and distribute a patented vaccine; however, the exceptions must not unreasonably affect the exploitation of the patent or prejudice the patent owner. TRIPS also explicitly permits the use of compulsory licensing.

The patent law objectives of TRIPS are to promote technology, invention and innovation, and the dissemination of such, to the advantage of patent owners as well as users by means conducive to social and economic welfare. Thus, in the pharmaceutical context, TRIPS aspires to protect the interests of patent owners without leaving marginalized countries, with limited resources to develop or acquire medicines themselves, out to dry (or die).

Significantly, the compulsory licensing provision of TRIPS is optional. Some countries have opted separately to allow for compulsory licensing, while others have not. Most European countries provide for compulsory licensing of some sort, as do India and Canada to name a few. These countries permit compulsory licensing to encourage public access to inventions and vaccines, and naturally this is promising in the fight against COVID-19.

However, Member countries are not obligated to implement the compulsory licensing provision of TRIPS. As for the many Member countries that have opted to allow for compulsory licensing, a patented vaccine may be produced without the consent of the patent owner in a national emergency or other extreme urgency, such as the COVID-19 pandemic. As detailed above, most European countries allow for compulsory licensing, and EU Member States, provided certain conditions are fulfilled, must allow for compulsory licensing of medicines to least-developed and developing countries pursuant to EU Regulation (EC) No 816/2006.

Compulsory Licensing in a Pandemic

As hopeful as this sounds, compulsory licensing has its limitations. Use of the patent must be limited to the purpose for which it is granted. A government must try to obtain consent of the patent owner unless there is a national emergency or other circumstance of extreme urgency, such as an epidemic, in which case seeking consent is not required. Further, if the purpose of the license is to stem a national emergency, the compulsory license must cease when the emergency is under control. The patent owner retains the right to be paid, and the amount to be paid is decided according to the circumstances of each case. Determining the fair and reasonable patent royalty the patent owner is to be paid is likely to be the subject of litigation and delay.

The right of least-developed and developing countries to gain access to lifesaving medicines and vaccines through the application of compulsory licensing was reinforced by the Doha Declaration (2001), which may be applied by all World Trade Organization (WTO) Members. The United States has been a Member of the WTO since January 1, 1995. The Doha Declaration, inter alia, states: “Each Member has the right to grant compulsory licenses and the freedom to determine the grounds upon which such licenses are granted.”  It further states that Members maintain “the right to determine what constitutes a national emergency or other circumstances of extreme urgency” (emphasis added), and that a public health crisis (such as COVID-19) can be an emergency under this provision.

The European Union, in stark contrast to the United States, has implemented legislation to address public health problems of least-developed and developing countries through compulsory licensing of pharmaceutical products. EU law provides that every EU Member State shall grant a compulsory license for the manufacturing and distribution of medicine to least-developed and developing countries, so long as the conditions in TRIPS (Article 31) on compulsory licensing are fulfilled. This may drive greater international investment in EU vaccine development, and speed the process of getting a COVID-19 vaccine to where it is needed most in the European Union and internationally. While across the pond, U.S. regulatory hurdles as well as litigation may further obstruct EU-developed vaccines from timely reaching the United States.

Compulsory Licensing Under U.S. Law

The closest the United States comes to compulsory licensing of medicines and vaccines is a government agency’s right to compel licensing of a federally-funded patent. These are called “march-in rights,” which give the U.S. government the right to override the patent owner and grant licenses to applicants, provided the development of the patent was funded by federal funds, and the patent owner has:

• not taken effective steps to achieve practical application of the invention;
• not reasonably satisfied health and safety needs;
• not reasonably met requirements for public use specified by federal regulation; or
• granted an exclusive right to use the patented invention to somebody without obtaining a required promise, or where the licensee in that case breaches a required promise, that the invention will be manufactured substantially in the United States.

Although limited to federally-funded inventions, the U.S. march-in rights are powerful, at least in theory. However, in practice, they have never been invoked, despite efforts by applicants. Strong protections are afforded to patents under U.S. law. This rewards innovation and incentivizes innovators, such as the institutional researchers, Big Pharma, and other patent owners intensely seeking to be first to market with an effective vaccine against COVID-19.

The Race to Save Lives

There are ways to ensure access to life-saving medicines, including a future COVID-19 vaccine. However, the European Union and the United States, which constitute the largest economies in the world, have diverging views on compulsory licensing. In the United States, there is no general right to force licensing and distribution of a vaccine, whereas in the European Union, a compulsory license can—and likely will—be granted to secure access to medicines at times of national emergency and for use in least-developed and developing countries. There is no over-arching legislative body to quickly bridge the divide. Markets will be limited—and black markets may thrive. The future of a speedy COVID-19 vaccine accessible to the American public may in fact lie abroad.

Accordingly, the circumscribed right to compulsory licensing under U.S. law, in combination with the lack of universal health care in the United States, could result in limited access to a COVID-19 vaccine, and further, the consumer price for the eventual vaccine could be very high. In poorer countries, litigation is likely where governments seek to provide access to the vaccine by compulsory licensing. Pharmaceutical companies in turn will seek compensation, which will drive litigation and further delays. As an example, several pharmaceutical companies filed suit against African governments where their national legislation capped the price of life-saving medicines during the AIDS epidemic in order to help save lives. A similar situation could arise with COVID-19.

As the world continues to cope with the COVID-19 pandemic and its death toll rises, governments around the globe work to protect their citizens in developing life-saving vaccines and treatments. It is a race to save lives, as well as to secure the bottom line. But how countries gain access to newly-developed COVID-19 treatments, which are sure to come, is a complex matter with no simple answer and could, in fact, put profit before the very people who can least afford the wait.

Pandemic Flu Coronavirus Covid Outbreak Concept Hand Holding Blood Tube — Stock Vector

Image Source: Deposit Photos
Author: Rewat
Image: 358544690