The Big Secret Behind the Proposed TRIPS Waiver

May 25, 2021

IP Watchdog

“Be careful what you ask for because you just might get it.” 

— Anonymous

All the fuss surrounding the proposal by India and South Africa to suspend the TRIPS Agreement to help them produce vaccines to fight COVID-19 has obscured some critical truths. In spite of the rallying cry “Patents versus People,” it’s not really about patents. And merely lifting TRIPS obligations will do nothing to address the current suffering of the world’s poorer populations. In fact, it would hamper efforts to secure global distribution of vaccines, as well as cause real harm in the long term.

The Biden Administration has embraced the proposal in principle and has received plaudits for what many see as a humanitarian and diplomatic breakthrough: choosing people over patents. So how could something that looks so right be so wrong?

First, we have to understand what the TRIPS Agreement is and isn’t. Stay with me here. I know that treaties can be boring, but this one is more important than you may realize.

Since their introduction in 15th century Venice, patents have been strictly territorial, a grant of rights that stops at the country’s border. Indeed, if you found some invention being used in another country, you could bring it back home and get a patent even though you weren’t an inventor at all. We didn’t care much about what was going on next door, just what would benefit the local economy.

Beginning in the late 19th century, as global commerce got seriously underway, a spate of treaties made it easier to claim inventions – and other intellectual property – in multiple countries. For patents, the high-water mark of this business-driven improvement came in 1978 with the Patent Cooperation Treaty (PCT), which bound all signatory countries to accept the priority date of an invention filed in another member country, so long as it was presented within 30 months. This is one of those international treaties that actually works in a practical way to speed the spread of innovation around the world.

But still, patents and other IP protections are decided under national laws, and variations from one country to the next in the scope of rights – especially in enforcement – continued to cause a lot of inefficiency for companies trying to build global markets. So back in the early 1990s, when we all thought tariffs were bad and globalization was good, when everyone seemed to believe that a rising tide of cross-border commerce would lift all national economies, the United States led an effort to establish the agreement that would come to be known as TRIPS, for Trade-Related Aspects of Intellectual Property Rights.

Protection and Ownership

Here’s the thing to remember about TRIPS: it only creates obligations of governments to pass laws supporting intellectual property rights of various kinds: patents, copyrights, designs, trademarks, and trade secrets. It doesn’t affect the private ownership of those rights. That’s an important distinction, especially for trade secrets (or “undisclosed information” as it’s called in TRIPS), because unlike the other “registered” rights, it doesn’t depend on a government grant. It just requires a legal system that enforces confidentiality.

The provisions of TRIPS were not new for industrialized countries. But for the developing world the agreement represented a tradeoff: adopt our framework for protecting IP (including our own, like drug patents), and you’ll get the benefit of increased wealth and productivity that comes with joining the club we’re going to call the World Trade Organization.

What seemed to sell this deal was the expectation that “technology transfer” from industrial north to agricultural, extractive south would happen as a result. Remember that phrase “technology transfer,” because it’s at the hidden heart of the current waiver proposal. You see, published patents are available for anyone to read and learn from, and developing countries still have the option to compel licenses from patent owners if needed to address serious domestic needs, including pandemics. But patents are only a part of most stories of technology transfer, because in order to actually build the factory and produce the goods, you need to know more than what’s in the patents.

When I managed the PCT in Geneva, I heard a lot about this from developing country delegates to WIPO. They expressed great disappointment in how TRIPS seemed to be a “bait and switch” scam, in which the promised benefit never materialized. Patents are fine, but that doesn’t tell you how to adjust the dials on the machines to get the best outcomes. They thought they would be getting all that “know-how,” too.

For some traditional pharmaceuticals, this lack of know-how may not be a showstopper. The patent claims may describe a particular small molecule that provides a certain therapeutic effect. If you already know how to make pills, then manufacturing it can sometimes be relatively straightforward. Sometimes, but not always.

Moreover, biopharma generally, and mRNA vaccine technology in particular, are quite different from traditional drugs. Developing a process to reliably produce these medications at scale is astonishingly difficult and depends on years of experimentation involving cell growth times, temperatures, and other variables. That body of knowledge represents the trade secrets of the developers. It is enormously valuable, and not just for making COVID-19 vaccines. Creating other therapeutics based on the mRNA platform would be much easier and quicker with the benefit of knowing what tends to work and what doesn’t.

The Importance of the Entire Pharmaceutical Cookbook

So, this is why a temporary waiver of TRIPS—which would suspend national obligations to enforce IP rights—can’t possibly help countries like India get more vaccines to its citizens. The know-how required to manufacture at scale is owned by the companies like Pfizer and Moderna that are producing doses in record volumes. To effect the demanded “technology transfer,” governments would have to secure the agreement of those companies not just to hand over their entire “cookbook” but also to send qualified scientists and technicians to spend time at the foreign facilities, basically consulting on how to implement the secret processes to produce a safe vaccine. And even if that transfer happened tomorrow, getting to the point of actually manufacturing in volume would take more than a year.

Not only would the TRIPS waiver not produce the results the proponents want, it would likely reduce the current level of international distribution of vaccines, by interfering with access to the limited supplies of required ingredients. In fact, this supply chain disruption was recently cited by none other than the government of India in pushing back against popular demands for a compulsory license on Gilead’s Remdesivir and other COVID-19 treatments, noting that the “main constraint” was not intellectual property rights but preventing competition for scarce “raw materials and other essential inputs.”

TRIPS Ironies Abound

But there’s more. A waiver would result in even greater harm over the long haul. Drugs typically are not discovered by governments. Instead, we rely on the private sector to respond to new diseases. It seems deeply ironic that while our IP system succeeded in incentivizing the development of a new vaccine only months after the SARS CoV-2 virus appeared, we would now be considering suspending that system. Congratulations and thank you! Now, hand over your trade secrets!

Another irony relates to the fact that these companies have not been producing all the vaccine on their own. Instead, they planned ahead and established collaborative relationships with other manufacturers, leading to quick and effective voluntary technology transfers through licensing. Those who clamor for a waiver seem to ignore that robust, reliable trade secret laws enable such transactions. It may seem counterintuitive, but it’s well established that enforceable secrecy leads to more dissemination of technology, not less. Indeed, without it there would be hoarding of know-how, slowing production of vital medications and other innovations.

It takes more than $1 billion to engage in the risky business of producing a new drug. The willingness of shareholders to invest that kind of money requires a predictable IP system, one in which rights are not imperiled just because some people mistakenly believe those rights are in the way of achieving some laudable goal. Broadly removing IP protections is something governments can do, but they can only do it once, because the next time there may be no innovations available to claw back. Without reliable incentives, private industry simply won’t be able to prepare us for the next pandemic.

Trying to suspend IP rights clearly will not solve the problem and, indeed, risks making it worse. Instead, the international community – including the United States – should focus on diplomatic solutions to the immediate problem by lifting export controls by rich countries and forcing more equitable distribution of the available supplies of vaccines.

For decades, the United States has been vigorously promoting the value to society of a strong, globally harmonized IP system. The success of Operation Warp Speed has demonstrated the value of that system. This is no time to see what it might be like without one.

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