ITC Report on TRIPS COVID IP Waiver Extension Plays it Safe

The U.S. International Trade Commission (ITC) released a sprawling report on Tuesday analyzing market dynamics surrounding the question of whether to extend the waiver of IP rights for COVID-19 technologies under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) to diagnostics and therapeutics. The report stopped short of making any recommendations, but ultimately did not find any definitive evidence that IP rights present a barrier to access in the context of COVID diagnostics and therapeutics. However, it largely amounts to a reiteration of talking points on both sides and seemingly does little to further the debate.

The United States Trade Representative (USTR) on December 6, 2022, sent a letter to the ITC asking it “to launch an investigation into COVID-19 diagnostics and therapeutics and provide information on market dynamics to help inform the discussion around supply and demand, price points, the relationship between testing and treating, and production and access.” The initial agreement on waiver came in June of last year and left most of those at the table unhappy. The decision presently applies only to “ingredients and processes necessary for the manufacture of the COVID-19 vaccine” and contemplates extending that to therapeutics and diagnostics no later than six months after the date of the decision, which would have been December 17, 2022. However, that was delayed in December amid concerns there wasn’t enough information to make an informed decision on extension.

As part of its investigation, the ITC in March 2023 held an  all-day hearing featuring stakeholder comments. While industry participants said extending the waiver would be a blow to innovation and would not solve the core problems or result in greater supply or access today, advocacy organizations said the point is to expand access for future products.

The final product ultimately does not answer the question of extension, instead providing background on the role of IP in COVID-19 treatment and access. The report did not take sides, but merely provided a recap and some additional data on the various perspectives presented by those who were interviewed or provided comment.

According to the report, the “Commission staff interviewed representatives from more than 120 entities through virtual meetings and fieldwork to gain insight and understanding of the issues and the global value chains for COVID-19 diagnostics and therapeutics.” This included domestic travel to Maryland, Michigan, and New York and international travel to Bangladesh, Brazil, Malaysia, Mexico, South Africa, Switzerland, and Zambia.

Here are some key statements/ findings from the report:

Pros and Cons of Voluntary Licensing Agreements (VLs)

“Another key advantage of VLs is that they provided a mechanism for technology transfer and knowledge sharing. Originator companies provided access not only to patented information but also to technical know-how about manufacturing processes and, in some cases, assistance with regulatory processes. This advantage was not available to countries relying on [compulsory licenses] CLs or the LDC exception to the TRIPS Agreement.”

“In UMICs, at least one of the four therapeutics could be offered for sale to 14.7 percent of the UMIC population, leaving 85.3 percent of the UMIC population without access to these COVID-19 therapeutics under the terms of the VLs. COVID-19 infection rates were particularly high for countries excluded from some VLs, as compared to those countries within the coverage territory.”

Source: ITC report

Demand

“While there are estimates of need for COVID-19 therapeutics, no studies or reports have been found that provide estimates of need for diagnostics.” (p. 27)

“Easing the use of CLs pertaining to COVID-19 vaccines was the primary focus of the 2022 Ministerial Decision; however, as of September 2023, CLs have not been used to access patents pertaining to COVID-19 vaccines.” (p. 26)

“Although no data are available on global consumption of COVID-19 diagnostics, trends can be inferred by observing testing rates over specific time periods. For example, testing rates fell significantly between the first quarter of 2022 and the second quarter of 2023. By mid-2023, several sources noted that testing appeared to have stopped in most MICs, and testing data were no longer reported for LICs. The fall in diagnostics demand will likely continue with the announced end of the WHO’s public health emergency of international concern.” (p. 28)

“Demand has also been impacted by the waning of the pandemic. For certain drugs, only a small number of licensed manufacturers are producing, and demand for their products has been low with the timing of licensed product availability coinciding with the waning of the pandemic. This also may be the case for supplies available to LICs and LMICs for free through donor funds from international organizations, such as the Global Fund and UNICEF, and private entities. By the time contracts were negotiated between originator companies and procurement organizations, demand for the products was declining.” (p. 30)

Delivery

“The extent to which last mile delivery can reportedly be a barrier to patient access to COVID-19 diagnostics and therapeutics in developing countries varies among countries by income level. Little evidence shows that last mile delivery challenges have constrained access in HICs and UMICs. Last mile delivery, however, can be a barrier in LMICs and LICs, especially in rural areas, because of factors such as poor roads and distance between health centers.” (p. 30)

“The diffusion of pharmaceuticals tends to be limited in LICs; however, researchers have noted that factors other than patent protection are important determinants for the diffusion of medicine in these markets.” (p. 33)

Initial Reactions 

Several organizations have issued statements on the report. United States Trade Representative Katherine Tai, who commissioned the report, said her office will review the findings with the Biden-Harris Administration and that the USTR also looks forward to Congress and stakeholders reviewing it.

The Biotechnology Innovation Organization (BIO) took the view that the report supports BIO’s perspective that “there is no credible evidence supporting the need for an expanded TRIPs waiver — or other expansions that would hinder critical intellectual property protections within the biomedical field — to increase global access to COVID-19 diagnostics and therapeutics,” said BIO Chief Policy Officer, John Murphy.

Patrick Kilbride, Senior Vice President of the Global Innovation Policy Center at the U.S. Chamber of Commerce, similarly concluded that the report “validates the role of intellectual property to advance COVID innovations during [the] pandemic.” Kilbride said: “The USITC’s report underscores the success of IP-enabled licensing collaborations and fails to substantiate claims that IP posed a barrier to access to those products.”

Not for profit NGO Knowledge Ecology International’s James Love took a more critical view of the report, saying that “the 497 page report covers a lot of well known ground, and does not do anything to resolve the central question.” Love accused the ITC of not wantng to make enemies on either side and said the process of commissioning the report was a delay tactic. “Here we are, October 2023, years into what was once considered an emergency, with a sort of literature review, and no end in sight on these talks,” Love charged.

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