investigation Analysis Covid-19 vaccines | Part 3: The EU-US agreement

Covid vaccines: Patent waivers won’t budge Big Pharma

Despite the EU Parliament casting a vote on the suspension of vaccine patents, the EU-US agreement signed on 15 June will not make a dent in Western pharmaceutical companies' monopoly. Third and final part of Stefano Valentino’s report.

Published on 16 June 2021 at 12:28

The battle for equal access to Covid vaccines is gathering steam. On June 10, the European Parliament signalled an important turning point, voting in favor of the suspension of Covid-19vaccine patents. However, realpolitik prevails: rich countries will centralize production in the factories of their pharmaceutical giants, while poorer countries wait for the crumbs.

Moving things further in this direction, on 15 June at the Transatlantic Summit in Brussels, where US President Joe Biden paid his first official visit to NATO headquarters, the EU and US signed an agreement. Its objective is to increase the global distribution of vaccines by liberalising exports (which the US, in contrast with the EU, have restricted), and promoting voluntary collaborations piloted by Big Pharma. None of this, however, leaves a mark on the latter’s monopoly on the vaccine. The agreement confirms the commitment to donate 2 billion doses to low and middle-income countries through the Covax international fund by the end of 2021. A billion vaccine doses from now until next year was promised by the G7 leaders, gathered until 13 June in Cornwall. 500 million from the US, 400 million from the EU, Germany, France, Italy, Canada and Japan, and 100 million from the United Kingdom.

The US-EU plan envisages the creation of a joint task force to expand the production network, with the aim of vaccinating at least two thirds of the world population by the end of 2022 (the remaining 2.5 billion will be on a waiting list until 2023). The agreement in fact espouses the arguments of the European Commission, which has declared that “patent waivers are not the best immediate response”.

EU foot-dragging at the WTO

The tug-of-war between Brussels and Washington within the World Trade Organization (WTO) over patent waivers is a game that slows down the transfer of technology and facility upgrades in developing countries. Experts consider these crucial factors for accelerating the immunization of the poorest populations and creating a global pharmaceutical arsenal against future epidemic threats to the West.

At the Treaty On Intellectual Property (TRIPS) council meeting held on 8 and 9 June, the EU (backed by the UK and Switzerland) remained the only formal opponent of patent protection waivers.

According to the proposal of India and South Africa, waivers would only remain in force for the time necessary to eradicate the pandemic (limited to three years). This would allow third parties to produce vaccines (as well as therapeutic drugs and diagnostic tools) without requiring authorisation from the relevant authorities, running into judicial reprisals or having to pay royalties.

Instead, the European Commission, on behalf of the 27 member states, has proposed that countries with insufficient doses (namely, the poorest countries) should be able to obtain them through compulsory licensing as a last resort. "Licences would have to be sought in multiple jurisdictions for all the elements required to produce the vaccines, with red tape that the EU pretends to ignore," says Brook K. Baker, Professor at the Boston-based Northeastern U. School of Law and policy analyst at Health GAP (Global Access Project). The TRIPS meeting in early June was the eleventh devoted to the patent waiver proposal of October 2020, with little progress thus far. Backed by nearly one hundred countries, Joe Biden declared on May 5 that the US was supporting the initiative.

However, the US delegation at the WTO, along with Russia and China, has scaled down its support by pushing for a compromise that satisfies everyone. Negotiations on the text should begin at the next session on June 17.

A monopoly holding back vaccination

"According to the WHO’s latest weekly epidemiological bulletin, while positive cases are decreasing in most of the world (17 percent less in Europe), they are increasing in many African countries, with possibly serious consequences for everyone, should new dangerous variants emerge," warns Sara Albiani, head of global health at the NGO Oxfam. "This is what the EU is called to respond to, not only the ethical imperative, but also the public health needs, rather than continuing to protect patents that have allowed pharmaceutical companies to decide how much, where and with whom to manufacture, ensuring unequal access to vaccines”.

Oxfam's calculations show that the richest nations, while representing less than 15 percent of the world's population, have hoarded more than half of all doses of the most promising vaccines. At the current rate, it would take low-income countries 57 years to reach the full protection that wealthy nations will secure by January 2022. The figures come from updated calculations by the People's Vaccine Alliance, a coalition that advocates for vaccine equity and has renewed its call on the G7 to defend public interest against private interest. "A general  TRIPs waiver will allow manufacturers the freedom to operate by removing the legal barriers to accessing technologies, and empowering governments to facilitate the sharing of know-how that is often protected as trade secrets thereby allowing acceleration of production by other manufacturers," clarifies Sangeeta Shashikant, legal counsel at research center Third World Network. For many, the waiver alone is not enough, and active technology transfer by vaccine owners is a necessity.

None of these vaccine owners, however, have so far joined the Technology Access Pool (C-TAP), established over a year ago by the WHO. The mechanism is proposed as a third way between patent waivers and compulsory licensing. It enables the drafting of production and technology transfer contracts with multiple licensees at the same time, through royalty payments, saving time and costs. Pharmaceutical giants have preferred to sign bilateral agreements with a small number of partners, outside of C-TAP, to maintain control over the supply chain. Pfizer-BioNTech, Moderna, and Curevac have all ignored the WHO's recent call to participate in technology transfer centers on messenger RNA vaccines that have been shown to be most effective, and which would be replicable through rapid plant conversion, according to a study by the U.S. consumer association Public Citizen.

"There needs to be an internationally binding instrument that mobilizes public funds and compels the sharing of knowledge and intellectual property, in the context of this pandemic or the next," says Kaitlin Mara, a consultant at Medicines Law & Policy. Too bad that at the informal WHO meeting on May 31, the US and the EU delayed the pandemic treaty, which was supposed to have been drafted in time to be signed next November at the General Assembly, which will now only discuss whether to draft the treaty or not.

Production in poor countries is a pipe dream

The industry is against decentralizing production globally as a strategy to combat the pandemic. "You cannot give up patents and hope that hitherto unknown factories will get their heads around the complex process of vaccine production," warns Nathalie Moll, Director General of the European Association of Pharmaceutical Companies. "You would weaken established supply chains, diverting supplies to less efficient sites."  

The point is echoed by Abigail Jones, Director of Communications for the sector’s international federation: the priority is removing trade barriers to facilitate cross-border sourcing of production materials and to increase exports of doses from producing countries to poorer countries.  Javier Guzman, technical director of the Medicines, Technologies and Pharmaceutical Services program at the nonprofit consulting institute Management Sciences for Health, countered, "It is not enough to increase and share the doses produced in high-income countries, which still have to vaccinate their populations and prepare for potential future recalls. Any unused capacity should be tapped."

A June 2020 survey by the Coalition for Epidemic Preparedness Innovations (Cepi), which has funded much of the Covid vaccine research, identified a hundred alternative manufacturers on all continents. Their combined potential capacity is 64 billion doses per year. The manufacturer actually employed can only produce 37,000 annual doses through 2023, according to Unicef data. The analytical forecasting company Airfinity estimates that only 3.6 billion doses are produced in developing countries by licensees of Western pharmaceutical giants.

More than half of these are produced by the Serum Institute's factories in India, which has had to reduce Covax deliveries to lower-income countries to respond to the explosion of infections within its borders. Many companies capable of producing in Asia, Africa, and Latin America have not been awarded contracts, or are relegated to the role of bottlers rather than being involved in the actual production phase. "We would potentially be able to produce any kind of vaccine, reaching about 360 million doses per year; we have contacted Moderna, BioNTech, Oxford University (owner of the vaccine produced by AstraZeneca) and Johnson & Johnson, but none of them have ever responded," explains Abdul Muktadir, President of the Bengali company Incepta Vaccines.

"The entry of new third party producers must be explicitly encouraged by providing adequate access to the market. Currently, since national and international procurement protocols often prefer to obtain supplies from those who offer the (lowest) competitive price, where incumbent companies can always play to the downside, restricting space for any new entrants which – even in the best case scenario – will probably have somewhat higher costs. Reserving some procurement from new companies with a slightly higher breakeven price can go a long way", points out Padmashree Sampath, expert in trade policy and access to medicines at Harvard's Berkman Klein Center," it would also be desirable that individual countries make the patentability of vaccines in their territory subject to the obligation for pharmaceutical companies to produce them on national soil, a common practice in the past, supplanted by TRIPs which has internationalized the validity of patents". Abraar Karan of Harvard Medical School adds: "If multinationals were to set up factories in poorer countries, there would be no need to discuss intellectual property".

EU-USA duplicity

Brook K. Baker, policy analyst at Health GAP, dissects the likely reasoning that went on behind the scenes of the surprise accord between the EU and US. The United States and the EU claim to want to respond to the concerns of the global South, promising to support greater production capacity in less developed areas. But at the same time, they are also proposing new incentives and subsidies to expand their domestic manufacturing capacity, through investment in research and development, infrastructure expansion and advance purchase agreements. Big Pharma has also made efforts to convince Western governments that, with and without their support, they could generate enough capacity to produce vaccines for the entire world. Baker estimates their combined hypothetical capacity at between 10 and 14 billion doses in 2021.

Industry resistance and ambivalent declarations about vaccine equity from rich countries are contributing to sluggish negotiations at the WTO. The postponement serves to ensure that the pharmaceutical giants have time to increase production until they reach their targets. Thus, the urgency to decentralize production could end up dampened. If the need to increase doses for the Global South falls over time, the economic incentives to open new plants in Asia, Africa and Latin America would no longer be sufficient to attract private capital or new producers willing to enter the market: in fact, they would not have a sustainable business model. In short, the two transatlantic partners intend to exploit the health crisis to strengthen their respective pharmaceutical sectors, increasing turnover, employment and tax revenues—at the cost of partial vaccination autonomy for the lower income nations left at their mercy.

👉 Read Stefano Valentino's other articles from this series:

This investigation is part of “Who is cashing in on the Covid-19 pandemic”, with the support of the Investigative Journalism for the EU initiative.

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