A Wait In Vain? The USITC Report on the WTO TRIPS Extension Decision For COVID-19 Tests & Treatments
A Wait In Vain? The USITC Report on the WTO TRIPS Extension Decision For COVID-19 Tests & Treatments
Newsletter Edition #203 [The Files In-Depth]
Hi,
A year ago, the United States bought more time at the WTO, seeking to gather evidence on whether a clarification on compulsory licensing [TRIPS decision] on COVID-19 vaccines merited an extension to tests and treatments as well. Multilateral discussions on this matter at the WTO were pretty much suspended pending the conclusion of this evidence-gathering exercise in the U.S.
That evidence is now here, but it does not seem to have made much of a difference at the WTO where countries continue to discuss the need for an extension.
In today’s edition, we bring you a few key features of the nearly 500-page USITC report on the terrain around COVID-19 tests and treatments. We also discuss the lack of efforts on concluding this WTO mandate, even as we head to the next Ministerial in less than three months. (Also read a small update on TRIPS Council discussions today).
What is fascinating is how this report by American authorities can be used by health negotiators across countries in Geneva at WHO: read what the report says on compulsory licensing, limitations on voluntary licenses, on patents as barriers to name just few examples of “evidence”. To be sure, the USITC report also reflects positions of the industry and other stakeholders arguing against an extension.
And while you are at it, do not miss this significant discussion in the European Parliament yesterday on compulsory licensing.
Geneva: where all strands of policies converge, and here is where we untangle it for you.
If you find our work valuable, become a paying subscriber. Tracking global health policy-making in Geneva is tough and expensive. Help us in raising important questions, and in keeping an ear to the ground. Readers paying for our work helps us meet our costs.
Our gratitude to our subscribers who help us keep the lights on!
Until next week - a big one coming up in Geneva, with back to back meetings at the WHO on the INB and IHR negotiations. Count on us to bring you the story.
Best,
Priti
Feel free to write to us: patnaik.reporting@gmail.com or genevahealthfiles@protonmail.com; Follow us on Twitter: @filesgeneva
I. ANALYSIS
A Wait In Vain? The USITC Report on the WTO TRIPS Extension Decision For COVID-19 Tests & Treatments
By Nishant Sirohi & Priti Patnaik
On October 17, 2023, the United States International Trade Commission (USITC) released its highly anticipated report, “COVID-19 Diagnostics and Therapeutics, Supply, Demand and TRIPS Agreement Flexibilities”. The anticipation may have been in vain, considering the lack of a clear message in the report from US authorities on the extension decision and its failure to revive the moribund discussions on this agenda.
While the report was meant to help the USTR “gather evidence”, the onus of the failure of decisive action on the decision lies squarely with WTO members. The extension decision might not even be “delivered” at the next WTO Ministerial going by signs in Geneva, diplomatic sources say. (See latest update on TRIPS Council discussions below)
THE CONTEXT OF THE REPORT
The USITC report’s genesis can be traced back to the WTO Ministerial decision on the COVID-19 vaccine patent waiver in June 2022. Following this decision, on December 16, 2022, Ambassador Katherine Tai requested a comprehensive investigation into the issues and factors related to the market dynamics of COVID-19 diagnostics and therapeutics. In one stroke, the decision on the extension was then put off for a year, pending internal consultations in the U.S. and other jurisdictions.
Consequently, the USITC prepared the report that integrated insights from consultations with the U.S. Congress and a broader spectrum of stakeholders to ostensibly inform the position of the USTR.
It is imperative to note that during the WTO General Council meeting held on December 19 – 20, 2022, developing countries pushed for a conclusive deadline to extend the TRIPS decision for COVID-19 tests and treatments. However, at the subsequent WTO TRIPS Council meeting, the proposal from the developing countries faced resistance from the United States. On December 22, 2022, the TRIPS Council recommended an extension of the deadline for deciding on the expansion of the June 2022 TRIPS waiver to include COVID-19 diagnostics and therapeutics.
The USITC report was expected to reignite and influence the discussions on extending the TRIPS decisions to tests and treatments. The report shies away from drawing specific conclusions or making any recommendations, but presents evidence on “both” sides.
1. USITC REPORT – KEY TAKEAWAYS
The USITC report offers a comprehensive overview of the complexities affecting access to COVID-19 diagnostics and therapeutics. It emphasises the disparities in access across different regions and the challenges arising from patent protection. The report also discusses how patent protection influences innovation and access, the role of compulsory licenses in fostering affordable medicines, the constraints associated with voluntary licenses, the complexities in managing medicines patent pool licenses, and the various advantages and hurdles associated with the use of compulsory licenses.
On inequality in access and affordability, the report brings into sharp focus the “disparity among countries of different income groups is wide in terms of access and availability to COVID-19 diagnostics and therapeutics (p. 16)”.
On compulsory licenses, the report acknowledges that compulsory licenses are linked to “increased generics and lower prices, and increased access to pharmaceuticals (p. 17)”. The report emphasised that this is particularly notable, “when prices of the patented product are unaffordable, and VLs [voluntary licenses] are not granted, CLs [compulsory licenses] can provide an avenue of developing a local solution and then increasing access (p. 189)”.
On patent protections and innovation, the report acknowledges that patents have continued relevance, even though foundational patents for PCR and antigen tests have expired. It emphasises that “this does not mean that patents are irrelevant; for example, they may be used to protect testing platforms and associated inputs used in automated testing processes for COVID-19 and other diseases (p. 59)”.
On the impact of patent protection on innovation and access, the report, while identifying extensive patenting on COVID-19 therapeutics, emphasises that cross-country studies “have provided evidence that patent protection supports innovation in the health sector in more developed countries but has little to no positive effect for innovation in developing countries and negative effects for access and affordability (p. 64-65)”.
On voluntary licenses, the report sheds light on the advantages and disadvantages of voluntary licenses, emphasising how “the substantial control maintained by the licensor can give rise to disadvantages in terms of access to medicines (p. 178)” in developing countries.
On Medicines Patent Pool (MPP) licenses, the report noted that issues such as “the geographical scope of MPP [Medicines Patent Pool] licenses is a challenging aspect (p. 183)” and regulatory approval, including WHO prequalification, which is required for some MPP sub-licensing agreements, “requires significant effort by manufacturers in order to complete the application requirements and address data standards (p. 255)”.
On tier-pricing and access, the report emphasised that “the affordability of COVID-19 therapeutics has been noted as a significant barrier to access for many LICs and MICs (p. 251)”. The reports note that even the "best access" prices for COVID-19 therapeutics may be unfeasibly high for many low-income and middle-income countries (LICs, LMICs, and UMICs), comparing these costs to the average annual healthcare expenditure in these countries (p. 251-252).
Despite its comprehensive coverage, the 497-page USITC report falls short in terms of progression, resolution and decisiveness. The report primarily reiterates known information and does not offer new insights, solutions, or recommendations to ongoing discussions on urgent global health and trade issues. The report’s approach limits its ability to effectively contribute to advancing the dialogue on urgent matters related to the negotiations at the WTO on the extension of the TRIPS Decision.
2. CHALLENGES AND DIVERGENT VIEWS ON THE WTO’S MINISTERIAL DECISION
2.1. What’s the problem?
The USITC faced a challenging task in determining how to define and measure the demand for COVID-19 diagnostics and therapeutics. This assessment is critical for determining whether to extend the 2022 Ministerial decision. Acknowledging the complexity of this assessment, the USITC concludes that “measuring need is challenging, particularly in the face of multiple epidemiological and policy uncertainties (p. 27)”.
The report further elaborates on this complex issue and clarifies that estimating the need for COVID-19 treatments is a multifaceted process that involves numerous assumptions and variables. The report notes that “estimating need is challenging, requiring assumptions about eligibility for the drug (i.e., authorized eligibility for certain treatments is only for patients infected with COVID-19 with high risk of hospitalization and death), as well as multiple epidemiological and policy uncertainties around the world. Estimates depend on many specific factors, including timely testing and tracking of COVID-19 caseloads; assumptions about the number of confirmed COVID-19 infections in high-risk patients; the health-seeking behavior of individuals; and other considerations such as regulatory guidance, country priorities, and test availability and turnaround. Estimating future need also depends on the trajectory of the virus in terms of infection rates and emergence of new variants (p. 228)”.
Regarding access to COVID-19 diagnostics and therapeutics, the report posed a critical question: “… whether, under existing IP rules, supplies are currently sufficient at affordable prices and available to anyone who could benefit from them (p. 232)”. The report acknowledged the difficulty in providing a definitive answer and noted, “Answering this question is challenging owing to a lack of data (p. 232)”.
2.2. The Need for the Extension: Views from “Both” Sides
In discussing the potential extension of the WTO’s June 2022 Ministerial decision to COVID-19 diagnostics and therapeutics, the report details contrasting viewpoints highlighting the varied perspectives on demand, supply, pricing, and the influence of intellectual property rights in global health policy.
According to the report, opponents of the extension, including pharmaceutical manufacturers and some academicians, attributed low global consumption and low procurement levels to factors beyond supply issues. They argued that there is sufficient supply “given current capacity of countries to receive, store, distribute, and administer tests and therapeutics (p. 227)”. Furthermore, the report added, “low procurement levels exist in part because currently available COVID-19 therapeutics are only authorized for use in certain countries … (p. 227)”.
On the other hand, proponents of the extension, including public health and other civil society organisations and academicians, argued that inadequate supplies at affordable prices are the primary reasons for the lack of purchases. They asserted that “the lack of purchases of COVID-19 diagnostics and therapeutics is due to inadequate supplies at affordable prices (p. 227)”. They stated that the “governments in several LICs, LMICs, and UMICs have been deterred from launching COVID-19 test-to-treat programs because of unaffordable prices and, therefore, orders have not been filled to supply them (p. 227 - 228)”. Proponents also viewed “IP protections as limiting availability and affordability … (p. 228)” and emphasised for issuing compulsory licenses, suggesting that this could “play a role in increasing production, lowering prices, and thus facilitating greater access going forward (p. 228)”.
The report remains neutral and does not favour any particular viewpoint. However, as pointed out in an analysis by Sangeeta Shashikant for Third World Network, the report fails to adequately emphasise the continuing pandemic potential of COVID-19, particularly in the context of the emergence of new variants and the potential rise in infection-related morbidity and mortality. Additionally, the report overlooked “the continuing need for therapeutics that prevent, shorten, or ameliorate ‘long COVID’”, she said.
2.3. What evidence does the report find?
2.3.1. Definition
In defining COVID-19 diagnostics and therapeutics, the USITC states, “COVID-19 diagnostic is a good used to diagnose COVID-19 or identify how patients respond to a treatment for COVID-19, and a COVID-19 therapeutic is a good used to treat COVID-19 (p. 92)”. However, the USITC also notes the broad and varied range of products encompassed by these definitions. It mentioned that “the universe of products that fall within these expansive definitions is broad and varied (p. 93)” and that “as the virus mutates, the efficacy of a given diagnostic or therapeutic for COVID-19 can also change (p. 93)”.
2.3.2. Pricing
The report highlights significant variations in the pricing of COVID-19 diagnostics across regions and countries. The report noted that “The pricing of COVID-19 diagnostics diverges significantly across regions and countries because of different healthcare systems, economic conditions, and domestic regulations. Pricing also differs depending on the technology used, such as polymerase chain reaction (PCR) tests or rapid antigen tests (also known as rapid tests). The pricing and affordability of COVID-19 diagnostics vary dramatically by country, and even within country where prices differ by manufacturer, or if a test was acquired through a healthcare provider or purchased in the marketplace (p. 233)”.
In contrast, the report underscores the lack of transparency in the pricing of COVID-19 therapeutics, as the pricing of therapeutics is largely negotiated in confidentiality by pharmaceutical companies. The report noted that “Price transparency for COVID-19 therapeutics is lacking (p. 238)” given the fact that “Pharmaceutical companies often negotiate prices with governments, health systems, insurance providers, and multilateral organizations. These negotiations are typically conducted in private, resulting in confidential supply agreements that prevent public disclosure of pricing details (p. 238)”.
2.3.3. Affordability
The report identifies the high cost of COVID-19 therapeutics as a major obstacle to their accessibility in many low-income countries. The report noted that the “affordability of COVID-19 therapeutics has been noted as a significant barrier to access for many LICs and MICs, especially where generic manufacturers for a given product are not authorized under VLs, CLs, or the LDC exception to the TRIPS Agreement (p. 251)”.
The report notes that “Even though the middle and lowest “best access” prices are well below the highest price points paid by HICs, they may still be untenably high for LICs, LMICs, and UMICs. Indeed, for many countries, the “best access price” exceeds the average annual health care expenditure for LICs ($39 per capita) and is more than half the price of the average annual per capita health care expenditure of LMICs ($137) (p. 251-252)”.
2.3.4. Procurement
On the procurement of COVID-19 therapeutics, the report asserted that the challenges in the procurement of affordable therapeutics would continue until “more manufacturers coming on board with generic versions … and further lowering the price, the pricing for LICs and LMICs may be untenable (p. 253)”.
The report addresses tiered pricing as another hurdle for the procurement of affordable therapeutics. The report noted that “tiered prices for many MICs and UMICs that are offered high per treatment prices and are generally excluded from the MPP and CHAI [Clinton Health Access Initiative] agreements (p. 253)”. Tiered pricing constitutes a large portion of healthcare budgets in the middle, for example, “tiered price for these UMICs is about $250 per treatment course for nirmatrelvir (+ ritonavir), which is about half of the average per capita annual health care expenditure ($524) (p. 253)”.
3. LIMITATIONS ACKNOWLEDGED BY THE USITC
In terms of the limitations to access to the intellectual property associated with COVID-19 Diagnostics and Therapeutics, the report highlights challenges associated with the bilateral license agreements, medicines patent pool and compulsory licenses.
3.1. Bilateral License Agreements
The bilateral license agreements “have been an important mechanism used to offer COVID-19 therapeutics in LICs, LMICs, and some UMICs (p. 177)”, and the report laid down three challenges associated with them.
Primarily, the report notes a significant challenge related to control over available treatment and states that “the licensor determines what IP rights and products are made available to licensees. There is no assurance that the most successful or most needed treatments will be made available for licensing (p. 178)”.
Secondly, the report then pointed to the challenge related to export and import restrictions and asserted that “licensors control the countries to which licensees may export their products and the countries that may obtain access through imports from licensees. With respect to COVID-19, this option may exclude countries for which access to licensed products would be valuable from a public health perspective, as discussed in further detail below (p. 178)”.
Lastly, the report the mentioned the challenge related to lack of transparency and contended that “BLAs generally are not published; this means complete information about the terms and conditions of the agreements is not available. This lack of transparency makes it difficult for the public to assess competing claims about the advantages and limitations of the agreement’s terms and conditions (p. 178)”.
3.2. Medicines Patent Pool
Medicines Patent Pool is another voluntary licensing mechanism through which “licensors authorize the MPP to sublicense their technologies to third parties (p. 178)”. The report recognises the issue related to the geographical scope of the medicines patent pool as a major challenge. Particularly, the upper-middle-income countries have limited to no reach and effectiveness of this licensing approach. To support this, the report referred to “one analysis in fall 2022, only 10 percent of global diagnoses of COVID-19 occurred in LICs, LMICs, and UMICs included in the Pfizer-MPP deal but 29 percent of diagnoses came from LMICs and UMICs not included in the agreement (p. 183)”.
3.3. Compulsory Licensing
Compulsory licensing is the “practice of a government allowing an entity aside from the patent owner, including the government itself, to produce a patented product or process without the consent of the owner (p. 187)”. The report says that that “No compulsory licenses (CLs) have been used with respect to COVID-19 vaccines or diagnostics … COVID-19 therapeutics have been the subject of CLs in several instances (p. 187)”. The report outlines several challenges associated with using compulsory licensing.
Point out the political and economic pressure, the report pointed out that “countries that use CLs often encounter political and economic pressure when granting a CL or attempting to issue a CL (p. 189)” and additionally noted that developing countries have “a chilling effect on the use of CLs (p. 189)”.
On retaliation from the pharmaceutical corporations, the report observed that “the pharmaceutical sector reportedly has publicly retaliated against countries for utilizing CLs by withdrawing investment or withholding pharmaceutical products from the relevant market”.
On the limitation of compulsory licensing, the report also highlighted that “a key challenge to effectively utilizing a CL is that the flexibility only covers patents and does not include know-how (p. 190)”.
The report also stressed the legal and procedural challenges in utilising compulsory licensing, which are related to Article 31 (f) and Article 31bis. The report noted that Another challenge faced by countries attempting to successfully issue a CL is the potential lack of a qualified generic drug manufacturer interested in serving the available market. This issue could be either domestic (if attempting to use a CL under TRIPS Agreement Article 31) or foreign (if seeking exports under a CL issued through Article 31bis) (p. 191)”.
TRIPS EXTENSION BEFORE WTO MINISTERIAL IN DOUBT?
The report from the USITC does not take a position on whether the US government must support the decision to extend the TRIPS decision to tests and treatments.
And it is not clear if and to what extent, the USITC report has been workshopped at the WTO.
So come the next Ministerial (February 2024), the extension decision may not even feature in the discussions, some trade delegates in Geneva told us. Already the matter that has come to be referred as “Para 8” of the TRIPS decision, is no longer a standing item on the agenda of the TRIPS Council.
TRIPS COUNCIL INFORMAL MEETING [November 29, 2023]
In an informal TRIPS Council meeting today, the last scheduled one for this year, WTO members continued to remain divided on the question of extension, according to Geneva-based trade sources.
The meeting was convened by Chair of the TRIPS Council, Ambassador Pimchanok Pitfield of Thailand, who discussed bilateral consultations on the subject of extension that took place earlier in November 2023. She noted the divergent views between members and reportedly said that there was not a clear path ahead. While some members are keen on pushing for the resolution of the issue at the General Council meeting next month during December 14-15 December, it is not clear at all whether there is any pressure to do so. (Some trade diplomats do not expect this to be resolved even before the Ministerial next year.)
In today’s meeting, members including the UK, EU, the US, Switzerland and Japan, reportedly pointed to a lack of evidence on IP-related barriers and the fact that COVID-19 is no longer a pandemic.
Instead, in what appears to be a new change of tack, some of these countries are understood to have suggested a potential work programme on pandemic preparedness in order to continue discussing intellectual property (IP) in the WTO context, given the lack of consensus on the extension decision, Geneva based sources said. This could be seen as an effort to safeguard and solidify the turf of WTO on IP and health related matters. (These countries are also the ones who have suggested that the WHO is not the forum to discuss IP in the context of negotiations for a Pandemic Agreement. See below).
It is also understood that Colombia and Peru suggested that model terms for voluntary licences during a pandemic should be explored. They also reportedly suggested amending Article 31(f) of the TRIPS agreement in a way that helps countries with manufacturing capacity to attract commitments from markets.
Members including South Africa, India, Indonesia and Brazil, called for the extension in light of evidence already furnished. They also emphasised the persistence of COVID-19 and the risk of new variants of SARS-CoV-2. These countries reportedly also indicated that that waivers as a measure could contribute to recovery from crisis.
RIPPLES AT WHO
The perceived silence around the USITC report, that after all, kept the discussions near-frozen for many months in Geneva, has to be seen in light of sensitive negotiations now unfolding at the World Health Organization on a new Pandemic Agreement and in the amendments to the IHR.
Developing countries at WHO are seeking waiver-triggers in the event of pandemics, health emergencies, new rules on technology transfer, pathways to local manufacturing – ambitious rules that cover swathes of trade policy to govern public health challenges effectively. Countries are also seeking to restate the importance of using TRIPS flexibilities in a Pandemic Agreement. While there is deep resistance to change status quo on the part of developed counties with respect to the question of intellectual property, the sheer breath of proposals suggests the appetite for reforms in this debate.
And yet, at the WTO, members have struggled to agree on a narrow legal mechanism to improve access to COVID-19 tests and treatments, that experts say, while important, is too little, too late.
At WHO, the refrain among several developed countries has been that any discussion on IP issues should take place at the WTO and other forums. But many experts believe that forum-splitting is counter-productive when the same issues are being discussed by the same actors.
(See this rebuttal in an editorial by Ellen t’Hoen of Medicines Law and Policy in Health Policy Watch: WHO is an Essential Forum for Debates on Intellectual Property and Public Health)
But the significance of any change in rules in the world foremost trade body, creates the fear of precedence and how this can be used in other forums including the use of waiver for climate technology. So the lack of action on the extension of the TRIPS decision, goes well beyond COVID-19, industry experts fear. It is about how this decision will be referred in the future, not only in other trade disciplines at the WTO, but also at WHO.
(Also see, AP: South Africa, Colombia and others are fighting drugmakers over access to TB and HIV drugs)
Evidence has seldom mattered in the 3+ years of TRIPS waiver discussions at the WTO. The politics of how this evidence can be wielded is what this story is about. And yet, evidence counts for posterity.
To be sure, the value of the extension is embedded in what WTO members have already endorsed last year. As Shashikant points out in her analysis: “A key feature of the TRIPS Decision is the waiver of the limitation on exports in Article 31(f) attached to the use of compulsory license, to overcome patent barriers. Lifting the export restrictions would enable manufacturers to achieve economies of scale and to supply other developing countries with insufficient manufacturing capacity. The TRIPS Decision also reaffirms countries’ right to use existing flexibilities.”
Hence, this is precisely why the extension is seen as being stone-walled.
TAILPIECE
At WIPO:
See a recent statement by Brazil at WIPO this week, published by Knowledge Ecology International [KEI].
At the Thirty-First Session of the Committee on Development and Intellectual Property, the statement was delivered by Ambassador Guilherme Patriota, one of the architects of WIPO’s Development Agenda:
Excerpt:
“We now have the COVID-19 pandemic in hindsight to remind us of the importance of a public interest approach to intellectual property, and that we must focus on people’s health and lives as the overriding priority. It took a tragedy of global proportions for the IP system to move an inch towards a better public-interest private-profits balance in vaccines, as the TRIPS Waiver under the MC12 mandate of the WTO demonstrated. We now lack the subsequent step of extending the waiver to therapeutics and diagnostics. It was meant to be ready by the end of this year. But we are nowhere near such an outcome.”
In a statement from NGOs, activists have said that the US Government must support the extension of the TRIPS decision.
Activists from Public Citizen, Health GAP, AVAC, NETWORK Lobby for Catholic Social Justice, Partners in Health, and AIDS Healthcare Foundation, argue that “People worldwide still need COVID tests and treatments. Price is a problem. That the extension decision will have essentially no adverse impact on U.S. jobs or the economy. Finally, voluntary measures should be complemented with tools that return power to health agencies.”
As KEI has shown: “The U.S. also authorized use of inventions without permission of patent holders for COVID-19 vaccines, drugs, tests and other technologies in dozens of cases. The Department of Justice acknowledged this in its intervention in the Arbutus Biopharma, Genevant Sciences, and Moderna patent infringement case.”
We leave you with a message from Brussels:
Our previous reports on this:
Suspended in Time: WTO TRIPS Extension Decision to COVID-19 Tests & Treatments March 2023
High Drama, But No Outcome at the WTO: TRIPS Extension Decision for COVID-19 Tests & Treatments December 2022
Hours to Deadline, Countries Remain Divided at WTO on Extending Temporary Easing of IP rules for COVID-19 Tests & Treatments December 2022
“Evidence” & “Time” As Obstacles In The Waiver Route For Drugs And Tests For COVID-19 At The WTO October 2022
Global health is everybody’s business. Help us probe the dynamics where science and politics interface with interests. Support investigative global health journalism.