India: The Quagmire for COVAX; Q&A: Hyo Yoon Kang on the financialization of intellectual property & COVID-19

Newsletter Edition #49 [The Weekly Primer]

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Hi,

Allow me an indulgence this week. It is with a fair amount of concern and anxiety that I have been following the current surge of COVID-19 cases in India - my home country - one of the 194 member states of WHO, or one of the 223 countries, areas, or territories affected by the pandemic.

The sheer strains facing the health system in India and the resultant calamity facing its population is an unfolding tragedy of epic proportions. Unfortunately, the consequences multiply manifold in a pandemic.

This is worsened by the fact that like many other developing countries, India does not have enough vaccines for its people. Less than 1% of its population has so far been vaccinated. And more than 90 other countries in the developing world continue to wait for vaccine doses from India through the COVAX facility. (Instead of 240 million doses by the end of May, COVAX will likely deliver 145 million WSJ reports. So far only 41 million doses have been delivered.)

WHO said yesterday, that only 1% of the 100 million doses administered last week went to low-income countries. More than 5.2 million new cases were reported just last week. The challenge to make vaccines available grows more acute with every passing hour. Yet there are no clear answers from global health agencies and the industry on how this will be met, even as the dead continue to pile up in the gravest fight of our times. (“The monopoly is going to cost us”, as one activist pointed out.) The challenge of the scope for mutations in such a large infected population is another question altogether.

We need greater transparency on Indian manufacturers’ ability to service contracts to supply vaccines for COVAX, and we also need more clarity on the implications of India’s export restrictions that are affecting supplies globally. More than half the world is waiting for answers. It is very likely that Gavi and WHO have limited latitude in this situation where the primary vaccine supplier is also becoming a vaccine importer.

We believe, that to an extent this artificial scarcity can be busted by the powerful TRIPS waiver proposal. This devastating state of affairs is enough to blow the lid of the opposition to the waiver - in a world where lives matter. This week we bring you a lucid, comprehensive interview with Hyo Yoon Kang on what intellectual property protection means during a pandemic and why this waiver proposal is crucial. We hope you find this enlightening. (Disclosure: Kang is one of our paid subscribers and is a regular reader.)

Finally, thank you for reading us. We are heading into crucial weeks. Consider switching to a paid subscription to make this one-person newsroom viable. Your support will push for greater accountability in global health at a critical time.

You cannot afford to miss the nuance and the politics that is captured in The Friday Deep Dives. Sample this: We reported a month ago on “WHO donors seek a new tech transfer hub under ACT-A, C-TAP sidelined.” Last week WHO announced the mRNA tech transfer hub - a development we are still trying to fully understand.

Write to us with your thoughts and suggestions.

Best,

Priti

Feel free to write to us: patnaik.reporting@gmail.com or genevahealthfiles@protonmail.com; Follow us on Twitter: @filesgeneva


I. THE GENEVA HEALTH FILES INTERVIEW

Q&A: Hyo Yoon Kang on the financialization of intellectual property & its implications in a pandemic

At Geneva Health Files, we make a concerted effort to use inter-disciplinary reporting approaches given the very nature of global health which straddles so many disciplines.

It is, therefore, with great pleasure that we bring you this pertinent interview with intellectual property law expert,  Hyo Yoon Kang, a reader in law at Kent Law School, University of Kent. Kang, who has cross-disciplinary training, has worked at the intersection of law, history of sciences, and science and technology studies. In this enlightening interview she examines the embedded politics in the very foundations of intellectual property law and picks apart the arguments against the TRIPS waiver.

Hyo Yoon Kang (Image credit: Shariq Siddiqui)

Geneva Health Files [GHF]: You have argued that IP law must serve a global public, not a national one. "There is no logical reason why patent law’s grant of monopoly power cannot be curtailed, if its public purpose is not fulfilled." Can you elaborate?

Hyo Yoon Kang [HYK]: With my statement, I was transferring the commonly held justification for patent law at the level of national jurisdictions to the global level. Much of modern patent law’s legitimacy rests on the belief that the public will be better served by granting a limited monopoly right in an invention than allowing market competition. This is commonly known as the ‘patent bargain’: private risk is rewarded and incentivised in return for a limited private monopoly right, which in turn is supposed to benefit the public at large in a trickle-down or trickle-across effect. Yet the scale of such a bargain has arguably not been in an equilibrium for some time, as pharmaceutical companies’ ever-greening practices and price hikes have shown. Also, not all inventions have the same importance for the public. It is not sensible that medicines are treated in the same way as hair dryers in patent law.

In the current Covid-19 pandemic, the scale of the ‘patent bargain’ has become even more skewed against the public interest because monopoly rights are being claimed for inventions that have been effectively de-risked and funded with public taxpayers’ money, not to mention the decade long public support for basic research that has led to these products, such as the NIH funding of the mRNA technology. These arguments have been made and  published many times. (See “Who funded the research behind the Oxford-AstraZeneca COVID-19 vaccine? or Challenges in ensuring global access to COVID-19 vaccines: production, affordability, allocation, and deployment) While there is no need to repeat what has already been said, it bears pointing out that - a year into the pandemic - governments have created a de-facto oligopolistic market dominated by a handful companies that have been subsidised by governments and intellectual property protection, such as patents and trade secrets.

How does such a skewed patent bargain play out on the global scale? At least since the 1995 TRIPS agreement, what counts as ‘public’ and ‘private’ in the context of IP can no longer be national categories. Yet the understandings of what is ‘public’ and ‘private’ in much of IP law discourse have remained rooted at the national level. The result is a dissonance of legitimacy between a transnationally enforceable IP legal structure and its justification based on 19th century concepts of sovereignty, colonisation and industrialisation.

The history of TRIPS, including the de-facto  impracticability of Art. 31 bis, has shown that its institutional design has not exactly been a level playing field from the start, favouring certain multinational corporations over others. We can currently observe the unequal effects of such a legal institutional design in the pharmaceutical industry’s resistance to any compulsory licensing, to the C-TAP and the TRIPS IP waiver  proposal. They clearly illustrate that particular, private interests hosted by a minority of nation-states are pitted against the global majority public health interest.

This is why we ought to go back to the initial motivation that legitimised patent monopolies in the first place and conceive the notion of a public clearly as a global public, and not a national one. If TRIPS is the legal architecture that underpins the ability to extract monopoly rent on a global scale, then by the same token, transnational patent law needs to serve a global public’s interest.

Lastly, the public interest in rewarding ‘inventions’ is often erroneously conflated with ‘innovation’ as a desirable good in itself. For example, the term “technological innovation” has been included as TRIPS’ objective in Article 7 of the TRIPS Agreement, albeit with a caveat that it should be of mutual benefit to producers and users of “technological knowledge”. Although much of intellectual property offices’, media and pharmaceutical industry’s PR communications assume that they are interchangeable notions, inventions, patents and innovations are not the same. The belief in ‘patents equal inventions equal innovation’ is rather a myth, as economic historical research has been inconclusive as to the benefits of patents until to date.


[GHF] You have also spoken about how “the entanglement of governments with university science-entrepreneurs, venture capitalists and preferred industrial champions, further complicates the notion of what is 'public'.” Can you elaborate on this?

[HYK] The notion of ‘public’ is used by a variety of actors with different interests without asking: who does the ‘public’ include, who does it exclude? Are governments acting in the best interest of their citizens?

Sciences are implicated in the erosion of the notion of ‘public’ since at least the Bayh-Dole Act 1980, but the relationship between sciences and various industries stretches back to the 19th century [Historians of science, such as Ilana Löwy and Jean-Paul Gaudillière, have written about this, as have historians of chemistry, such as Ernst Homburg and Carsten Reinhardt]. Publicly funded universities and public research organisations are avid users of the intellectual property system, as recent European Patent Office analysis of pharmaceutical patent applications has shown. As much of their interests are monetary in nature now, university sciences, both fundamental and applied, cannot be necessarily understood as pure or public without qualifications: the high profile CRISPR patent dispute involved scientists, universities or public research institutions, and their spin-offs.

In my Critical Legal Thinking piece, I also explained the patent interests of Oxford University and their scientists. These existed prior to Gates’ push for an exclusive contract with AstraZeneca, and it is not entirely accurate to portray the university scientists as the innocent victims of commercial influence. There are, of course, some exceptions to this by now unfortunately normalised figure of the ‘scientist-entrepreneur,’ as Steven Shapin has called this persona in his 2008 book, “The Scientific Life”. I am thinking about Katalin Karikó who has been instrumental in inventing the mRNA technology. The pressure exerted on scientists by the university administration to apply for patents is also not negligible, and the problem of private profit motives pervading underfunded public universities is a complex one.

In relation to a government’s public duties, the pandemic has laid bare how particular, private and corporate interests have permeated what ought to be essentially public processes and decision-making power beyond an advisory capacity. For example, in the UK, the Johnson government has favoured certain private actors under the guise of having no time for public procurement processes during a pandemic. Some journalists have argued that it was such ‘VC thinking’ that has led to the UK’s vaccine success. The UK ‘vaccine tsar’, Kate Bingham, is a venture capitalist who has expressed that her vaccine procurement responsibility was ‘outside’ of politics (“Politics is separate”). In a recent FT interview, she claimed such VC thinking entailed that government could not afford to be “penny pinching,” even if it was public money that she was spending. What is interesting is that the government, or the civil service, is regarded to have no capacity to direct and shape the process of vaccine manufacturing and distribution, whilst being expected to give a carte blanche . In other words, it is asked to pay and shush.

Some US patent academics had, moreover, argued on social media that more financial incentives should be given to pharmaceuticals by the government in order to scale-up vaccine production. Yet the COO of BioNTech stated on German TV that it was not the lack of financial incentive that made the scaling up of vaccine production difficult at the moment.

What this pandemic has demonstrated very clearly, is that we need to strengthen public sector capacity after years of austerity rather than diminishing it. This will reduce the present dependency on corporate actors. Also governments and their officials need to negotiate harder on the public’s behalf instead of accepting without question financial sector mentality in which maximising profit margin is the rational thing to do. Such a mentality forgets that it is the taxpayers' money, not their own, that they play with. The public underwrites all risk whilst the financial gain is all private and distributed among a small number of shareholders or corporate owners.

Without wishing to diminish the exceptional advances in vaccine development that we have seen in the past year, it is equally important to remember the extraordinary mobilisation of public funding into medical research and supplies which has been unprecedented in our lifetime.

It seems therefore odd and disproportionate to me that there doesn’t seem to be a single contract in the UK or US, in which a government has taken co-ownership of a vaccine patent or receives future royalty, precisely because the vaccine development efforts were headed by a venture capitalist or a former pharmaceutical executive who would normally demand such returns on their investments. Beyond this incongruence, there is the fundamental political question if the government should act like a venture capitalist, at all (for example, the UK government runs the biggest venture capital fund in Europe which has received little scrutiny and is also reported to have taken a stake in Vaccitech, the Oxford University spin-off behind the Oxford/AstraZeneca vaccine.) Alternative ways to balance public and private interests could be through IP restrictions on certain subject matters, national compulsory license legislation, and the enforcement of price ceilings on publicly funded inventions, but it will also be interesting to think about higher taxation on IP rent income.

[GHF] Some believe that IP is not a barrier for medicines during the pandemic. Particularly with respect to vaccines. It has been suggested that the TRIPS waiver will not sufficiently address access barriers to vaccines or wider medical products. (Since the waiver itself will not force technology transfer.)

[HYK] The TRIPS waiver proposal does not only comprise patents, but also copyright, industrial design and importantly, undisclosed information, such as trade secrets, in relation to the fight against Covid-19. Trade secrets are also part of IP. They are especially relevant in relation to Pfizer because it has decided to keep its vaccine manufacturing know-how secret.

Some argue that waiving patents is not sufficient because the knowledge-transfer and sharing of know-how are needed. This is certainly true, and also because of the low standard of the disclosure requirements in different national patent laws: the disclosed inventive information in patent documents is often woefully insufficient to be used as a “recipe” or for reverse engineering. That is also why analogising patents with recipes and copies is not accurate.

Yet I find the arguments  advanced against the waiver proposal claiming that as “patents are not the problem” disingenuous because, even if know-how was shared, tech was transferred, and a vaccine was developed, it would be illegal to produce it without a license, if the substance, its parts, or its process of manufacture, remains under patent protection. The patent holder would continue to hold the power to block vaccine production, regardless of existing or shared expertise and capacity. This is not a good way of clearing all barriers for scaling-up vaccine production in a global pandemic. The IP waiver is therefore necessary as an integral part of a concerted effort to share know-how and scale up production. We need the waiver in order to end the pandemic instead of prolonging it through artificial scarcity. Both IP waiver and tech transfer need to go hand in hand.

For example, the pharmaceutical lobby and the Gates Foundation have argued that it is not IP that stands in the way of scaling-up vaccine production. Turning their argument on its head, we may ask why they are defending IP so much if it does not matter so much. If they are not the problem right now, then why not waive the IP rights temporarily? It seems to me that they are fighting so vehemently against the IP waiver because patents enable monopoly power and accompany a future profit pipeline of a huge global market desperate for the vaccine.

From a purely financial perspective, it is not in the vaccine makers’ and their shareholders’ interest to end the pandemic as soon as possible. Even though policy makers and governments are reluctant to push the pharmaceutical players too hard, the pharmaceutical industry, universities and their technology transfer offices will not self-regulate and voluntarily open license their patents through C-TAP or share their know-how in the latest announced WHO Technology Transfer pool, precisely because it is contrary to their rational commercial self-interest to do so. In my view, there must be both a carrot and stick approach towards the vaccine makers to change their present course. This could include the introduction and implementation of national compulsory license measures.

[GHF] You have said: “An analysis of vaccine nationalism also ought to take into account the history of international capitalisation of knowledge via intellectual property." How do you see this "capitalisation of knowledge" play out in the future with respect to say biological resources and digital health?

[HYK] I don’t think I can answer the question about biological resources and digital health accurately without looking more into detail into the main issues and players in these fields, but in relation to the latter we will see an increasing overlap of copyright and patent law issues because the key value driving digital health will be access to datasets for pattern recognition and correlation tracing. The current debates about privacy, social media and regulation of AI are instructive for digital health. Similar to internet companies, the valuation of digital health companies will be data and computing-capacity driven.

The role of IP law in the capitalisation of knowledge is that it creates a link between knowledge and speculative value through a legal monopoly right.

In a way, this is nothing new. Intellectual property rights have always acted as currencies of international trade (chemical patents in the 19th century, for example), and have been hence nationalistic instruments of trade policy. For example, it is interesting to read patent statistics against the background of different trade dynamics at a given point of time. When you examine patent office rhetoric and self-presentation, you will notice how often they invoke nationalist rhetoric of economic greatness or competitiveness.

It is also nothing new that academic or university sciences have been implicated in industrial policy since the 19th century, which in turn shaped the foundations of modern patent law, in particular. Historians of science, science studies scholars, and myself from the patent law side, have studied the different phases and modalities of co-option of science into industry.

What has been novel since roughly the mid-1990s is the pursuit of IP as not only monopoly for extracting monopoly rent in a commodity market, so via monetisation, (this is the case presently in the Covid-19 vaccine oligopoly), but using IP as a financial tool: either to raise more equity or as technique of financial arbitrage. I have analysed the financialisation of patents as assets. The financial forward-looking, speculative function of IP is reflected in the total reversal in the proportion between physical and intangible asset value in the S&P 500 index between 1975 and 2017. The last forty years have been characterised by increasing financialisation of knowledge-making and uses via IP, both through copyright and patent laws. Nowadays inventions, IP and innovation are routinely misleadingly conflated, and this is in part driven the patent offices’ rhetoric itself which equates more IP with more innovation. Patents are seen as a key asset in the so-called “knowledge economy” of disruptive innovations. In turn, knowledge enclosures create new forms of colonial dependencies, as we observe now in this current pandemic.

As much of the current financialised economy rests upon monopolies that are enabled through intellectual property law, unless health data and knowledge about them are safeguarded through privacy or other right-based measures, they will become as monetised and financialised as any other data. If they concern matters of global public health, IP rights will again stand in way of health equity. I can only hope that we will learn the lessons of this pandemic.

Like this interview? Let Kang know.

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II. POLICY UPDATES

  • Establishment of a COVID-19 mRNA vaccine technology transfer hub to scale up global manufacturing: WHO

    “WHO will facilitate the establishment of one (or more, as appropriate) technology transfer hub(s) that will use a hub and spoke model (REF) to transfer a comprehensive technology package and provide appropriate training to interested manufacturers in LMICs. This initiative will initially prioritize the mRNA-vaccine technology but could expand to other technologies in the future.

    The intention is for these hubs to enable the establishment of production process at an industrial or semi-industrial level permitting training and provision of all necessary standard operating procedures for production and quality control. It is essential that the technology used is either free of intellectual property constraints in LMICs, or that such rights are made available to the technology hub and the future recipients of the technology through non-exclusive licenses to produce, export and distribute the COVID-19 vaccine in LMICs, including through the COVAX facility. Preference will be given to applicants who have already generated clinical data in humans, as such clinical data will contribute to accelerated approval of the vaccines in LMICs.”

    WHO

    Notwithstanding the call for such a proposal, it is hard to get answers to a simple question: what is the mapped capacity for manufacturing vaccines. No clear responses from WHO yet.

  • IFFIm Returns to Market with US$ 750 Million 5-year Oversubscribed Vaccine Bonds: Gavi

    Some governments continue to underwrite vaccine bonds to essentially pay vaccine manufacturers, over and above strings-free investments via COVAX and CEPI. Also see updates on IFFIm here.

    “The issuance, IFFIm’s largest since 2006, will raise funding for Gavi’s core immunisation programmes and the Gavi COVAX Advance Market Commitment (AMC). The Vaccine Bonds are backed by pledges from 10 sovereign donors, including recent new commitments from the United Kingdom and Norway.”

    Gavi

  • The Gavi COVAX AMC Investment Opportunity: Gavi

    An investment case that curiously enough gives a glimpse into challenges facing COVAX. On SII and the spectre of bilateral deals:

    “…Gavi entered the market early with Memorandums of Understanding (MOUs), non-legally binding instruments to signal intent between particular manufacturers and COVAX on behalf of AMC-eligible countries and of self-financing participants in the COVAX Facility. An early significant rate limiting factor in respect of converting MOUs into APAs was limited availability of cash at hand and legally binding pledges from donors, as well as low risk tolerance in respect of recoverability of funding in the event of non-success of candidates and eventual licensure. The early and current strategy therefore focused on options negotiation, as well as firm order commitments.”..

    “..We have learned that insufficient cash and risk tolerance can be major impediments, particularly as other major purchasers are not as constrained ..”

    Gavi

    (See related story from Health Policy Watch where the recent event saw donations of $400 million)

  • Statement on the seventh meeting of the International Health Regulations (2005) Emergency Committee regarding the coronavirus disease (COVID-19) pandemic: WHO

    “Do not require proof of vaccination as a condition of entry, given the limited (although growing) evidence about the performance of vaccines in reducing transmission and the persistent inequity in the global vaccine distribution. States Parties are strongly encouraged to acknowledge the potential for requirements of proof of vaccination to deepen inequities and promote differential freedom of movement.”

  • The Pfizer-BIONtech contract with the European Union: Leaked in the Italian media

    Perhaps the lawyers among our readers can help us understand whether Pfizer asked for extreme costs of indemnification from EU member states, as it tried to do with African and Latin American countries.


III. WHAT WE FOUND INTERESTING

NEWS:

  • La guerre secrète de Philip Morris contre l’OMS et les experts de la lutte antitabac: An investigation by Le Monde

    On Derek Yach, Philip Morris International and the limitations of The Foundation for Smoke-Free World. Must read.

  • How the Tiny Kingdom of Bhutan Out-Vaccinated Most of the World: New York Times

    Size does not matter. A leaf from Bhutan’s vaccination campaign.

    “Vials of the Oxford-AstraZeneca vaccine arrived last month by helicopter and were distributed by health workers, who walked from village to village through snow and ice. Vaccinations proceeded in the area’s 13 settlements even after yaks damaged some of the field tents that volunteers had set up for patients.”

    New York Times

  • WTO DG’s vaccine event marked by sharply differing perspectives: Third World Network

    “The TRIPS Council chair Ambassador Dagfinn Sorli from Norway suggested at the meeting that no clear answers were provided about how certain provisions of the TRIPS Agreement could constitute a barrier, in what seemed to be a false statement, said people familiar with the development.

    In sharp contrast to Ambassador Sorli’s statement, the former TRIPS Council chair Ambassador Xolelwa Mlumbi- Peter from South Africa suggested that the time for questions centering on the IPR barriers is over and it is now time for moving rapidly to text-based negotiations so as to arrive at a balanced solution as part of the WTO’s contribution to the TRIPS waiver, said people familiar with the proceedings.”

    TWN

  • Officially, India Has the World’s Second-Worst COVID-19 Outbreak. Unofficially, It’s Almost Certainly the Worst: TIME

    The Indian numbers in perspective. Chilling.

    " “From what has been reported, I think India definitely has the most infections in the world,” says Ramanan Laxminarayan, director of the Washington, D.C.-based Center for Disease Dynamics, Economics and Policy.

    …“For every 30 infections, you’re pretty much only picking up one as a case,” says Laxminarayan, who says a similar disparity likely still exists now, even though India’s testing capacity is higher than last year, because of the signs pointing to the fact that the virus is running rampant in the population. “I would still apply the 30-fold undercount even now,” he says.

    If accurate, that math would put the real number of COVID-19 infections to date in India somewhere around 400 million — more than the entire population of the United States. “400 million infections in a country the size of India still means that a billion people are not infected,” Laxminarayan says. “So there’s still plenty of room for infection, even with a lot of people [already] being infected.” "

    TIME

  • The world's biggest vaccine producer is running out of Covid-19 vaccines, as second wave accelerates: CNN

    A comprehensive story on why India’s COVID-19 response has implications for the rest of the world.

  • India is running out of oxygen, Covid-19 patients are dying – because the government wasted time: Scroll.in

    COVID-19 is snuffing out lives across the world. A story from India that gives a granular picture in the difficulties in accessing medical oxygen.

    “With nearly two million people currently infected with coronavirus in India, oxygen is running out, despite many states redirecting all industrial oxygen production to medical purposes. The government said on Thursday it would import 50,000 metric tonnes of medical oxygen.”

    The new oxygen plants would have added a capacity of over 4,500 metric tonnes of oxygen per month. This would still have proven inadequate to meet the demand currently seen in the second wave but every additional capacity could have saved lives.

    Scroll.in

FROM THE JOURNALS / REPORTS:

  • The implicit ideological function of the global health field and its role in maintaining relations of power: BMJ

    Your weekly introspection on power structures in global health. This is written by a Gates Foundation employee. Must read.

    “Critiquing particular ideological contents does not address how ideology operates. Without understanding and critiquing how ideology operates, we risk losing sight of new narratives in the making to legitimise inequalities.”

  • The Time Is Now for U.S. Global Leadership on Covid-19 Vaccines: A CSIS Report

    The very first sentence in the report is instructive and set the politics straight:

    “It is in the United States’ strategic interests to ensure that the world mobilizes effectively to end the SARS-CoV-2 pandemic.” Read on.

    “The scarcity of vaccine supply can create a black market for both illicit and unregistered or unlicensed vaccines. Such a marketplace openly benefits China and Russia, which have each not adhered to the standard rigors for testing and verifying the safety and efficacy of vaccines. When the United States deployed the Defense Production Act to stimulate domestic vaccine development and production, it inadvertently created shortages abroad. That experience and similar actions by other governments have brought home the lesson that in the future it will be critical to bring about heightened coordination with respect to global supply chains.  

    The United States cannot ignore the geopolitical dimensions of this emerging crisis. China and Russia are attempting to leverage vaccine donations for diplomatic and political gain, with limited transparency about the development, safety, effectiveness, and approval of vaccines and often pairing efforts with disinformation campaigns targeting U.S. and other Western vaccines.”

    CSIS Report

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IV. WHAT WE ARE WATCHING:

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