Vaccine patent waiver: What are IP rights, and which nations stand for and against India and South Africa's proposal

The Union External Affairs Ministry on Sunday said that a proposal by India and South Africa to temporarily waive patents on COVID-19 vaccines to ensure their equitable access received widespread support at the G7 summit in the UK.

In a virtual address at an inaugural outreach session of the summit, Prime Minister Narendra Modi sought the support of the grouping to lift patent protections for COVID-19 vaccines.

The MEA said Modi's call was supported by South African President Cyril Ramaphosa, Australian Prime Minister Scott Morrison, WTO Director-General Okonjo Iweala and UN Secretary-General Antonio Guterres, as reported by PTI.

Guterres on Saturday extended support to the initiative, though he cautioned that "technology transfer" must be backed up by "technical support".

As the topic gains traction, and more voices join in, the stand the world takes on the issue will be crucial in the fight against the coronavirus. But let's first understand how drug patents work, and why they are important for drugmakers.

What are vaccine patents?

According to The Associated Press, patents reward innovation by preventing competitors from simply copying a company’s discovery and launching a rival product. In the US, patents on medicines typically last 20 years from when they are filed, which usually happens once a drugmaker thinks it has an important or lucrative drug.

Because it often takes a decade to get a drug approved, companies typically enjoy about a dozen years of competition-free sales. But drugmakers usually find ways to improve their product or widen its use, and they secure additional patents that can extend their monopoly for many more years.

Why is patent protection important to drugmakers?

Medicines are incredibly expensive to develop. Most experimental drugs fail at some point during the years of laboratory, animal, and finally human testing.

Averaging in the cost of those flops, it typically costs over $1 billion to bring a drug from discovery to regulatory approval. Without the prospect of years of sales without competition, there's far less incentive to take that risk.

Why is the US backing efforts to lift protections on COVID-19 vaccines?

The Biden administration has been under intense pressure, including from many Democrats in Congress, to get more COVID-19 vaccines to the rest of the world. Support for the waiver idea floated by India and South Africa in October has been growing in other countries while the outbreak worsens in some places, especially India.

What is the process to relax vaccine patents?

Even though the US has agreed, and France and many other countries support it, the decision is up to the 164-member World Trade Organisation, which administers complex trade rules among nations.

And all of them would have to agree for it to happen. Because a single 'No' would lead to a rejection of the proposal. So, the decision to waive the vaccine-related patents has to be unanimous.

If waivers are approved, vaccine developers would then have to share their know-how for the very complex manufacturing.

This type of waiver has never passed before. A decision that comes closest to is from two decades ago when WTO members had passed a temporary waiver allowing poor countries to import cheap generic drugs for HIV, tuberculosis, and malaria amid health crises.

That temporary waiver eventually was made permanent.

Why is Big Pharma, others against it?

In a word, money, says AP.

In the US, pharmaceutical companies can charge whatever they want for their medicines. They typically raise prices twice a year, often doubling or tripling them during a drug’s patent-protected years.

That makes the big, long-established drugmakers among the world’s most profitable companies. But a huge amount of innovation also comes from startup companies, which rely heavily on investors to fund early research. Without the prospect of a big payday, it would be much harder to attract investment.

Les Funtleyder, health care portfolio manager at E Squared Asset Management, thinks the industry is less worried about protecting its patents for the COVID-19 vaccines than about the “slippery slope” such a precedent could create.

The US and some other wealthy countries lead the world in many areas of research and innovation, particularly medicines. Aside from the prestige that confers, pharmaceutical companies provide millions of well-paying jobs, generate tax revenue and provide new medicines that can save or improve lives.

Drugmakers and their trade groups spend millions every year lobbying governments to maintain the status quo on patents.

But that may not be all. While the Biden administration and likewise minds have supported the call to lift the vaccine protections, they are not entirely clear as to what would lifting the protections on the COVID-19 vaccine accomplish in the first place.

Drugmakers and analysts say waiving patent rights won't do much to get COVID-19 vaccines to developing countries faster. That's because making them is far more complex than following a recipe, requiring factories with specialised equipment, highly trained workers, and stringent quality control.

There is also little available factory capacity. In addition, many raw materials to make the vaccines, along with vials, stoppers, and other components, are in very short supply, which won't change soon.

Who has said what so far?

In closed-door talks at the WTO in recent months, Australia, Britain, Canada, the European Union, Japan, Norway, Singapore, and the US opposed the waiver idea, according to a Geneva-based trade official who was not authorised the discuss the matter and spoke on condition of anonymity.

Whereas some 80 countries, mostly developing ones, supported the proposal, the official said.

Back then, China and Russia — two other major COVID-19 vaccine makers — hadn't expressed a position but were open to further discussion, the official said.

Many of these countries who opposed the decision, including the US, have now changed their position. Joining the Biden Administration, Australia's prime minister Scott Morrison and Russian president Vladimir Putin too have welcomed the call to relax vaccine patents.

UN Secretary-General Antonio Guterres has welcomed the US decision too. India and South Africa are already onboard.

Though some like the EU remain on the fence, they are open for dialogue.

According to AP, EU Commission president Ursula von der Leyen said the 27-nation bloc is ready to talk about the idea, but she remained noncommittal and emphasized that the EU has been exporting vaccines widely — while the US has not.

Besides, while France was among the first to support the US call to relax vaccine patents, president Macron like many pharmaceutical companies, insisted that a waiver would not solve the problem of access to vaccines.

According to AP, Macron said manufacturers in places like Africa are not now equipped to make COVID-19 vaccines, so donations of shots from wealthier countries should be given priority instead.

In Brazil, one of the deadliest COVID-19 hot spots in the world, Health Minister Marcelo Queiroga said that he fears that the country does not have the means to produce vaccines and that the lifting of patent protections could interfere with Brazil's efforts to buy doses from pharmaceutical companies.

China too has said that it's open to discussions.

Italy, meanwhile, remains divided. While Italian foreign minister Luigi Di Maio wrote on Facebook that the US announcement was “a very important signal” and that the world needs “free access” to vaccine patents, Italian Premier Mario Draghi was more circumspect on the issue.

Whereas, Germany has outrightly spoken against lifting the restrictions. “The protection of intellectual property is a source of innovation and must remain so in the future,” said German Chancellor Angela Merkel’s office.

A Merkel spokeswoman, speaking on customary condition of anonymity, said Germany is focused instead on how to increase vaccine manufacturers' production capacity.

Among the companies which have licensed COVID-19 vaccines, Pfizer, Moderna, Johnson & Johnson, and AstraZeneca, only Moderna has for long been saying that it will not pursue rivals for patent infringement during the pandemic.

"A waiver is the simple but the wrong answer to what is a complex problem,” said the International Federation of Pharmaceutical Manufacturers and Associations. “Waiving patents of COVID-19 vaccines will not increase production nor provide practical solutions needed to battle this global health crisis.”

With inputs from agencies