Understanding Germany’s Trenchant Opposition To the TRIPS Waiver

Newsletter Edition #80 [The Friday Deep Dives]

Aug 13, 2021

Hi,

This week we bring you a comprehensive analysis that dissects the German opposition to the TRIPS waiver.

Our incisive story of the week is brought to you by Rithika Sangameshwaran, a visiting researcher with the Heidelberg Institute of Global Health in Germany. She examines how foreign-policy initiatives focused on global health security influence health systems, particularly with respect to access to medicines and vaccines.

Rithika is one of our Geneva Health Files Fellow who has joined us over the summer. We are honored to have her with us and grateful for her curiosity and enthusiasm.

Priti

Feel free to write to us: patnaik.reporting@gmail.com or follow us on @filesgeneva

Understanding Germany’s Trenchant Opposition To The TRIPS Waiver

By Rithika Sangameshwaran

In January 2021, Achim Kessler, member of the Left Party of Germany (known as Die Linke) co-submitted a motion in the Bundestag (Parliament). It called on the German Federal Government to support the TRIPS waiver. After months of deliberation, the motion was rejected in May 2021, with majority members voting against it. While they unanimously agreed that more needed to be done to increase global vaccine production, just like at the WTO, they differed on ways to achieve it.

“There is a difference even within the government, between members of the Social Democratic Party (SPD) and members of the conservative party. Some members of the Social Democrats have been more open. They also rhetorically supported the TRIPS waiver. But when it came to voting, and to the final votes, they opposed it,” Achim Kessler told Geneva Health Files.

First proposed by South Africa and India in October 2020, the TRIPS waiver proposal seeks to expand access to COVID-19 vaccines, diagnostics and related medical products by temporarily relaxing certain intellectual property rules. Almost a year later, the EU, led by Germany, remains a prominent opponent to the waiver. Notwithstanding the farrago of arguments against the waiver, it is useful to examine Germany’s reasons for doing so.

This story maps German policy positions and politics on intellectual property and its implications for the TRIPS Waiver discussions.

The politics of scientific knowledge: who owns it and who gets to use it?

The belief that relaxing patents would impede innovation was one of the main reasons for rejection of the Left’s motion. Responding to a question thereon, the federal government stated that it was skeptical about the need for a waiver. It added (translated from German; can be accessed here):

“The European Commission, which leads the negotiations in the TRIPS Council for the member states of the EU, has not yet been convinced by the arguments put forward, according to which intellectual property rights represent a barrier to increasing global production capacities for vaccines against Covid-19. It sees the protection of intellectual property rights as an essential stimulus for research and development of new vaccines and drugs. This position of the European Commission is shared by the German government. The current international and national legal framework for the protection of intellectual property rights already provides the basis for patent holders to grant other companies (voluntarily) licenses for the use of their pharmaceutical invention. Private companies are already making extensive use of this possibility of cooperation to expand the necessary resources and should do so even more in the current pandemic. If voluntary solutions to increase production are not sufficient, the TRIPS Agreement already enables the granting of patent compulsory licenses at national level.”

Germany, and in particular, Chancellor Angela Merkel’s party, the Christian Democratic Union of Germany (CDU), places great importance on intellectual property (IP) as a driver for innovation and considers it inviolable. “I think to understand Germany’s opposition to the waiver, we have to look back on German beliefs on IP rights. And I think in particular, in the German conservative party there is a strong belief that IP is key and an important incentive for creation of medical tools.” Lara Dovifat, International Campaign Manager at Médecins Sans Frontières (MSF) told Geneva Health Files in an interview.

However, this view does not acknowledge the importance of the ‘no-strings attached’ public investments that allowed the speedy development of vaccines. The German government awarded $445 million to BioNTech and $298 million to CureVac. “I think it’s a longstanding tradition in Germany that the German government funds medical research and development and yet allows private companies to hold a monopoly. This is an ethical and moral failure,” Dovifat added.

The role of IP as the primary incentive for R&D is debatable considering that some of the largest pharmaceutical companies, including Pfizer and J&J, rejected an EU proposal to develop vaccines against priority pathogens including coronaviruses in 2017. Further, ample evidence from present and past health emergencies, debunk the disingenuous claims of IP not being a barrier to lifesaving products.

While an analysis of the strengths and weaknesses of the IP system is beyond the scope of this article, it is interesting to note the concurrent emphasis on pathogens-sharing in this context. The rapid sharing of genomic data that contributed to vaccine development is desirable and even encouraged by the same countries filibustering the waiver. However, the resultant scientific knowledge and its benefits are not shared with similar fervour.

TRIPS waiver as a threat to the flourishing biotechnology industry

Although it may be difficult to establish with certainty, Germany’s decision to oppose the waiver may well be due to a desire to protect its thriving biotechnology industry. Hyo Yoon Kang, a reader in law at Kent Law School, University of Kent, referred to this as a case of economic nationalism coupled with biopolitical nationalism. She explains:

“German opposition to the TRIPS waiver is a clear case of economic nationalism (similar to the UK in relation to Vaccitech and Oxford University Ventures). It overlaps with biopolitical nationalism by artificially restraining knowledge dissemination and training that would allow other countries to produce vaccines locally and regionally at the earliest, lessening this unequal dependency of knowledge and manufacture. Therefore, this economic nationalism leads to a scarcity which justifies the biopolitical ‘my nation’s health first’ policy. What does the German economic nationalism entail? Germany holds some of the most valuable patents in mRNA technology. BioNTech has shared technology and know-how with Pfizer to manufacture its proprietary and patented mRNA vaccines. It knows that these patents are very valuable in the future for other therapies. Accordingly, it doesn’t want to share more information than what is currently contained in the patent documents. These are (by themselves) insufficient for reproduction of vaccines or by license agreements bound by non-disclosure clauses. Undoubtedly, Germany has most to lose by the systematic waiver of IP during this pandemic. Arguably, US stands to benefit the most from such a waiver in the future without having to pay license fees to BioNTech and being technologically able to work around existing BioNTech patents, if they were waived (therefore the Pfizer opposition to TRIPS waiver strikes me as ambiguous).”

Allegedly, the first calls made by the Chancellor’s Office following the US’ announcement supporting the waiver were to Bill & Melinda Gates Foundation and the chief executives of BioNTech, CureVac and Pfizer, a source familiar with the waiver discussions in Germany told Geneva Health Files on the condition of anonymity.

Prior to the pandemic, Germany’s biotechnology industry earned 4.87 billion euros (2019) in revenue. In contrast, BioNTech single-handedly hauled in over 5.3 billion euros between April to June 2021. BioNTech estimates annual revenues at 15.9 billion euros this year. Meanwhile, the German government has recovered its early subvention in BioNTech four times over with a whooping 1.75 billion euros in income tax up until June 30, 2021. While economic losses continue to ravage the Global South, Germany’s economy is predicted to grow 4% this year, with 0.5% attributable to BioNTech alone.

This is not to make a case against economic growth or profits for vaccine manufacturers per se. Clearly, there is a need for vaccines and companies will earn their profits irrespective of the waiver. The question is about meeting market demand and making vaccines accessible at an affordable price.

As Kang puts it, “BioNTech could also benefit by being the market leader with a proven track record of high-quality R&D. Beyond offering adequate compensation for sharing of its know-how and engaging in more tech transfer, it will benefit from its technology and market leadership, having the power to negotiate beneficial deals with license partners. BioNTech, if it wanted to, could call for better terms for itself and negotiate better supply for developing countries. Beyond IPR mechanisms, private companies engaging in publicly purposeful market activities can be rewarded in other ways such as via compensations, tax or subsidies.”

Photo by **Animesh Srivastava** from **Pexels**

Voluntary licensing as the pragmatic alternative

The insufficient focus on technology transfer in the waiver discussions is another recurring argument against it. German Development Minister Gerd Müller also emphasized this in an interview with the German weekly, Zeit. “A patent release does not mean that we can quickly eliminate the shortage of vaccines for developing countries. Rather, we need to rapidly expand production on the basis of licenses granted by pharmaceutical companies to qualified production facilities. This is different from uncontrolled patent release! This also ensures that vaccines are produced in the same quality,” he said when asked the reasons for not supporting the waiver. Additionally, arguments about the quality are baseless old tropes since all regulatory processes remain the same, many critics believe.

While proponents of the waiver have repeatedly acknowledged the need for tech transfer, it is important to remember that the implications of the waiver go beyond vaccines and extend to diagnostics, treatments, and related medical products required to respond to the pandemic. Nonetheless, there remains the question of how technology transfer should be achieved.

Germany has repeatedly insisted that voluntary licensing would be sufficient to increase vaccine production. Speaking on Germany’s perspective on global health cooperation, the Federal Minister of Health, Jens Spahn remarked that “tech transfer is easier if done on a voluntary basis and enforcing cooperation is not very productive.” He emphatically stated anticipating an overcapacity of global mRNA production the following year. However, these ambitions of overcapacity remain a distant dream. As per BioNTech and Pfizer’s quarterly reports, combined annual manufacturing capacity is expected to total only up to 3 billion doses by the end of 2021 and 4 billion doses by 2022. Furthermore, this is subject to continuous process improvements, expansion at current facilities, and addition of new suppliers and contract manufacturers.

It is also evident that companies which benefit most from the pandemic, have not done enough to address production shortages, a concern unaddressed by opponents of the waiver. Notably, Knowledge Ecology International (KEI)’s database estimates a timespan of 1-3 months for delivery of mRNA vaccines post technology transfer. This is comparable to BioNTech’s Marburg facility, which doled out the first vaccine doses in April 2021, post the final handover by Novartis in December 2020.

Moreover, in stark contrast to BioNTech’s expansion in Singapore and China, Pfizer/BioNTech’s bilateral deals with Biovac in Africa focuses only on the final phase of manufacturing. Experts argue that such fill-finish agreements do not involve any technology transfer and keeps Africa reliant on Europe. Notably, although Biovac is a partner with WHO’s mRNA tech-transfer hub, Pfizer/BioNTech have forged bilateral deals rather than committing to the hub. In this context, the promise of voluntary licensing and consequent technology transfer seems bleak. Lastly, if voluntary licensing was indeed the panacea Germany argues it to be, WHO’s C-TAP would not be languishing since its establishment in May 2020.

Compulsory licensing as the (un)viable last resort

Germany has persistently argued that, if pharmaceutical companies fail to cooperate effectively, the option of compulsory licensing already exists under the TRIPS flexibilities and an IP waiver is therefore not needed.

Despite its belief that IP is not a barrier, Germany altered its patent laws early in the pandemic. The Epidemic Protection Act (EPA) amended Germany’s patent laws by giving more powers to the Federal Ministry of Health. We asked Kang to explain how this move should be viewed in light of Germany's opposition to the TRIPS waiver: “From a legalistic point of view, the German government’s opposition to the TRIPS waiver is not necessarily inconsistent with its domestic patent law and provisions for compulsory license or “use order” under EPA 2020. It, and also the EU Commission, have stressed that the TRIPS allows for compulsory license “flexibilities”, which are individual governments’ responsibilities to streamline and strengthen, and that these existing possibilities are sufficient in times of pandemic, obliterating the need for a more systematic waiver of IP protection in times of a pandemic.”

The option of compulsory licensing to navigate the intricate web of intellectual property is a thorny one, particularly ill-suited for a world fraught with power imbalances. As Kang explains, “My view is that the terminology of “flexibility” gives the impression that there is a ground of equal set of rules applicable to everyone and that they give enough freedom to TRIPS member states to adjust to their individual circumstances. But the word is a euphemism. What these perfectly valid legalistic terminologies and arguments ignore are political realities of power differentials: jurisdictions who are net owners of IP rights have more power to invoke (or choose not to invoke) such compulsory licenses. International rules may look equal on paper, but they cannot be applied in the same way when the IP playing field is as starkly skewed as it is now, in the case of COVID-19 vaccines. There are intra-domestic and international reasons why compulsory licenses exist on paper but have been so rarely invoked either unilaterally by a country or under existing WTO route. Powers in global trade vary enormously. Therefore, the reference to existing TRIPS compulsory license provisions downplays the reality of already existing patent thickets.”

In essence, the rules of the game apply differently for LMICs and the rich world. Precedents exist of developing countries being discouraged from evoking compulsory licenses. The consequences of doing so, even for life-saving drugs (in the case of HIV, viral hepatitis etc.), have led to threats of trade sanctions from high income countries including the USA and the EU. Referring to history, Kang adds, “Germany seems to have understandable horrors of expropriation, as it was shaped by its war and post-war histories, but a compulsory license is not legal expropriation and the property title remains with the IP holder who is obliged to be compensated adequately.”

See: The TRIPS Intellectual Property Waiver Proposal: Creating the Right Incentives in Patent Law and Politics to end the COVID-19 Pandemic to understand the reality of global trade politics and why compulsory licenses are not enough.

Aid as a proxy to solidarity

Germany assumed leadership and financed its influence in global health in the backdrop of a changing geopolitical landscape during COVID-19. With US and China moving in opposite directions, the EU propelled by Germany and France, has decisively taken the reins on the international response to the COVID-19 pandemic and what follows after. Germany is currently the largest donor to WHO contributing $881.6 million. It is also a prominent donor to the COVAX Facility, having contributed about $2.58 billion so far. Additionally, Berlin will soon be housing the new WHO Hub for Pandemic and Epidemic Intelligence.

An article by the German Federal Foreign Office highlights Germany’s contributions to improve global vaccine distribution:

By the end of the year, Germany will be supplying at least 30 million doses of vaccine, mainly to developing countries, around 80% of which will be through the vaccine initiative COVAX and about 20% bilateral. The first tranche of 1.3 million doses of the AstraZeneca vaccine has already been received by COVAX and will be delivered to Afghanistan, Ethiopia, Sudan, Tajikistan and Uzbekistan. The recipient countries were selected by COVAX. These are states that have a particularly urgent need and can use the vaccine immediately in their vaccination campaigns. The federal government also dispenses bilateral vaccine doses on a smaller scale. The target countries for this include the Ukraine, Namibia and the states of the Western Balkans. All in all, the EU is donating at least 200 million doses and the United States has donated around 110 million to date, while the G7 will provide a total of 870 million doses by the end of 2022.”

Data shows the disparity between the share of fully vaccinated people in Germany, UK, Switzerland, Japan, Norway, Canada, compared to Afghanistan, Sudan, Tajikistan and Uzbekistan. The aggregate population of these four countries in the developing world is 123.74 million, the 1.3 million vaccine donations making up for a measly 1% of the population. Absolute numbers conveniently mask the magnitude of inequity. Note that most of the rich countries in this graph have expressed their opposition to the waiver proposal during the last few months.

The EU, under the leadership of Germany, has so far shared less than 3% of pledged doses, most of them AstraZeneca. Although praiseworthy, it cannot be denied that this results from the EU’s row with AstraZeneca, which has caused significant damage to the uptake of the vaccine in LMICs.

In contrast, the EU with a population of 450 million has ordered up to 2.4 billion doses from BioNTech alone. This also includes a provision to purchase new formulations that may address potential viral variants. Thus, if the crisis intensifies, contracts may well take precedence over pledges.

What does Germany’s position mean for the EU?

In a statement to the TRIPS council in February 2021, the EU remarked:

“Last year, Germany did not modify the conditions for the granting of compulsory licenses. The Patent Law was only amended to change the competence for the issuance of a government order (and again not the conditions for the issuance of a government order). Previously, a government order for the use of medicinal/pharmaceutical inventions required a decision by the Federal Cabinet (Kabinett-Beschluss). This has been changed. It is now the Ministry for Health which can issue such an order, provided that the (unchanged) requirements have been met.”

When asked whether this statement obscured Germany’s use of the TRIPS flexibilities, Kang explained that the statement was “consistent with Germany’s insistence that current TRIPS provisions are sufficient for introducing domestic exceptions to patent protection.” She further adds, “It is also consistent with the window-dressing function that compulsory license provisions (both at TRIPS and domestic levels) have played thus far in the history of TRIPS that have served US and Europe well in terms of IP capital dominance to the detriment of other countries’ development in science and technology.”

However, the statement is an inaccurate representation of the situation. It does not highlight the differing positions of Germany vis-à-vis other EU member states and the EU Parliament. As explained by Kang, “(The statement) obscures the complete picture by omitting that other EU states’ interests are not the same as the German government’s interest. I find it odd that the French, Spanish, Dutch and Italian governments’ as well as the European Parliament’s support for the TRIPS waiver are being consistently silenced and ignored at the Commission level. The EU does not seem to represent its member states’ interest regarding the TRIPS waiver accurately.”

A Geneva-based trade source familiar with discussions at the WTO told us that Germany is increasingly isolated, but decisively becoming the only EU country to block the TRIPS waiver. France, Netherlands, Spain, have varyingly made statements suggesting support for the waiver proposal, as individual member states. But since the EU votes as a bloc at WTO, Germany can effectively coerce others to oppose the waiver. As the largest EU economy, Germany has the latitude to do so, in addition to being dictated by domestic political priorities.

See: Confidential Communication on the TRIPS Waiver Shows the EU's Unwillingness to Negotiate

A test of internationalism

In its arguments, Germany and other opponents to the waiver miss a crucial point. It is well-known and conceded that companies around the world are working hard to ramp up vaccine production and that the world’s vaccine needs will be met at some point in the future. However, the questions that demand an answer are: who will need to wait for the vaccines? (Hint: it will always be LMICs) And for how long? (Hint: Depends. Even in the best-case scenario, it could be 2023).

The arguments against the waiver hinge upon suppositions that depend on multiple factors; some of them beyond our control, such as new variants of SARS-Cov-2. None of the waiver’s opponents can assert exactly when and how the rest of the world will be vaccinated and who is to be held accountable if this fails to happen. Based on how the pandemic has unfolded so far, here is what one can say with reasonable certainty: As new variants emerge, rich countries will hoard up vaccines; they will ensure multiple booster shots for their population; their population will have access to better quality healthcare irrespective; they will mostly not face a shortage of masks, diagnostic tests, or therapeutics. Suffice to say, if the conditions were reversed, this issue might have never warranted this long a debate.

The COVID-19 pandemic in Germany presently is unlike anywhere else in the world (except, perhaps other rich countries). As of July 2021, half of Germany is fully vaccinated and every fifth 12- 17 year old has received the first jab. Vaccination campaigns nationally are now plateauing and vaccine hesitancy persists. Despite lack of evidence, the country intends to administer booster doses from September 2021. All this, while it deals with the ‘problem’ of excess vaccine doses, which it now plans to donate to other countries. Against this background, it may be worthwhile to remember Chancellor Merkel’s call for the vaccine to be a global public good. Ursula von der Leyen, President of the European Commission echoed these sentiments. Yet, more than a year into the pandemic, vaccines are far from being a global commons. With the Delta variant posing a new challenge, it is clear no country can booster-shot their way out of the pandemic.

As Chancellor Merkel’s term ends, Germany is in a state of flux with elections scheduled for September 2021. Morality and a sense of duty require that Germany do the right thing. As Kang eloquently puts it, “Germany ought to be informed by an obligation to internationalism rather than by its current economic nationalism that is leading to devastating effects outside Europe.”

It remains to be seen whether, as the champion of global health, Germany will place people over profit.

Geneva Health Files