India’s COVID-19 Vaccination Drive and Patent Rights
Wealthy countries comprising 16 percent of the global population currently have nearly half of the world’s vaccine doses. Yanis Iqbal dives deep into the political economy of patents and the challenges manufactured by a system driven by profits impeding countries in Global South to effectively beat the pandemic.
Words by Yanis Iqbal
May 03, 2020
Illustration by Aarman Roy
Indian states and health experts warn that shortages of COVID-19 jabs might disrupt plans to immunise all adults and prolong India’s severe second wave. A prolonged crisis might, in turn, enable dangerous variants to evolve, spread and possibly evade vaccines.
Expanding access amidst acute vaccine shortages will likely exacerbate the situation on the ground, especially when India has vaccinated less than 2 per cent of its population to date. While the central government has implemented its plan to widen the inoculation campaign to everyone aged 18 and older, roughly 600 million more people – another 200 million people are still waiting to get their second jab.
Many states report that they are out of jabs, forcing them to delay expanding their inoculation campaign. Punjab, Rajasthan, Jharkhand, Chhattisgarh, Delhi, Maharashtra and Kerala, among others, said they might not be able to meet the increased demand for vaccines amid lack of adequate manufacturing capacity at Serum Institute of India (SII) and Bharat Biotech International Ltd (BBIL) to meet even the current demand from people above 45 years of age and healthcare and frontline workers.
The expansion of the inoculation drive amid a large production deficit is set to create complete chaos. The private sector and pandemic profiteers are expected to exploit market de-regulation to maximise their earnings. Indications of such intentions are already visible. In the case of Covishield, the Indian name of the Oxford-AstraZeneca vaccine, Adar Poonawalla stated on April 6, 2021, that SII was earning a profit of Rs 150 per dose. However, he said that SII wanted “super-profits” per dose. Initially, this urge for super-profits has resulted in prices shooting up to Rs 400-600 per dose. After widespread criticism, SII slashed prices to Rs 300; Poonawalla called this a “philanthropic gesture”.
The emerging vaccination plan will facilitate the development of an exclusionary vaccination architecture. While the rich will get vaccinated, hundreds of millions of Indians, who are desperately poor and malnourished, lack ready access to clean water and live in overcrowded housing, meaning they cannot implement social distancing measures and, in many cases, are already in compromised health with limited access to good-quality health care, will continue to succumb to the pandemic. Presently, all but a tiny fraction of the population remain at risk of infection.
One of the major hurdles which Global South countries like India face in obtaining vaccines is patents. Patents are temporary monopoly rights for the exploitation of various intellectual resources. After securing patents, patent holders typically take additional measures to deter and undermine potential competitors and to consolidate and extend their monopoly position for as long as possible by any means available.
By imposing patents on medicines necessary for the treatment of diseases affecting large sections of the developing world, such as AIDS or tuberculosis, costs of these drugs are inflated beyond the financial means of most patients. In 2015, Turing Pharmaceuticals bought the rights to Daraprim - a drug used by cancer and HIV patients to fight deadly parasitic infections - raising its price 50-fold from $13.50 to $750.
Patents are deemed to be imperfect solutions to market failure. Patenting prevents investors from being unable to recoup their investment in Research and Development (R & D) due to competition from other parties. But this is not likely to be the scenario for COVID-19 because companies here have received massive public funding and benefited from the anticipated purchase of large volumes of the vaccines under trial. In addition to this, demand for these items is so huge that these companies may, in fact, make significant profits based on the large quantities of products that are being, and will be, sold.
The US government provided $10.5 billion to vaccine development companies. Moderna’s vaccine emerged from a partnership with the National Institute of Health (NIH). Research at the NIH, Defense Department and federally funded university laboratories has been crucial for rapid US vaccine development. Pfizer has received a $455 million German government grant and nearly $6 billion in US and EU purchase commitments. AstraZeneca received more than $111 million from the UK government and more than $2 billion from the US and EU for research and purchase orders. In India, Pfizer legally blocked alternative pneumococcal vaccines from Médecins Sans Frontières (MSF). In South Korea, Pfizer has forced SK Bioscience to stop producing its pneumococcal conjugate vaccine (PCV). There have been other instances, too, where technical know-how has been denied to third parties based on patents’ contorted logic, which treats vital information as a commodity. Despite the absence of any economic case for patents during the pandemic, private companies have widely used them to decide who to deliver vaccines and medicines to and at what price, preventing many countries from accessing essential resources urgently.
Trade secrets may limit access to health technologies required to respond to COVID-19. For example, the multinational pharmaceutical company Roche initially refused to share with Dutch companies the secret formula for producing a buffer solution that is required for use in RC-PCR tests for COVID-19. Italian volunteers desiring to manufacture ventilator valves through 3D printing technology were denied access to the designs of some components, forcing them to engage in reverse-engineering. In the US, the governor of Kentucky admitted to difficulties in procurement and manufacturing N-95 masks owing to several patents. Indian generic companies have had to obtain a license from the patent holder to produce and supply the drug remdesivir, commonly used in COVID-19 treatment. The patent-holding company Gilead has permitted only five Indian drug manufacturers to make remdesivir, preventing a larger number of Indian companies from manufacturing the drug and ensuring adequate availability of the same at an affordable price.
The Waiver of Intellectual Property Rights
In October 2020, South Africa and India called for the World Trade Organization (WTO) to suspend Intellectual Property Rights (IPRs) related to COVID-19 to ensure that a minority of rich countries don’t appropriate the bulk of the available doses. The proposed waiver would cover patents, copyrights, trade secrets and industrial designs. This measure would allow developing countries to legally acquire and use proprietary technologies more quickly and efficiently than is made possible under the current exceptions available for health emergencies under the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).
Currently, wealthy countries comprising 16 per cent of the global population have nearly half of the world’s vaccine doses. The waiver would let countries buy or produce things like diagnostic kits, medicines, vaccines or protective equipment and ensure that their citizens have affordable access to them, without the looming threat of international intellectual property law. Sharing or suspending intellectual property rights will allow countries like India to use existing technology to scale up production and vaccinate their populations without being subjected to legal monopolies such as patents.
Intellectual property rights severely curtail the domestic technological capacities of developing countries. Countries in the Global South are told that they have no other way to industrialise except by generously inducing transnational companies to locate their activities in their economies. Historically, most vaccines have been developed in the North, often reaching the South much later. Hence, even in the context of a global pandemic, only a few Big Pharma companies are allowed to develop and produce vaccines from start to finish. The weakening of existing private monopolies enabled by international IP rules would significantly increase the access and affordability of life-saving drugs; while also giving developing countries better prospects for developing internationally competitive industrial and technological capabilities.
In an effort to disguise their imperialist outlook, rich countries cite that the TRIPS Agreement already has flexibility protocols (Article 31bis) to combat public health emergencies, such as the Compulsory License (CL). CL is an involuntary contract between an unwilling seller (patentee) and a willing buyer (licensee), which is enforced by the State. The rules allowing CL are very restrictive. Countries must negotiate contracts with companies for specific amounts, periods and purposes, deterring and thus often bypassing those with limited financial and legal capacities.
Where developing countries have made use of the CL concessions, they have faced international pressure from pharmaceutical giants and their governments to limit or eliminate the scope of these exceptions. Malaysia was the first country to use CL under TRIPS to produce sofosbuvir for Hepatitis C treatment. The drug, from patent owner Gilead, costs almost $84,000 for one course, while generic substitutes cost approximately $250. The Malaysian government faced pressure from the United States pharmaceutical industry to undo this action.
In India, sections 84 and 92 of the Patents Act, 1970 lay down the provisions regarding compulsory licensing. This can be granted to interested parties upon fulfilment of three conditions: if the unaffordable price of the invention leads to its non-availability to the public; if “the reasonable requirements of the public with respect to the patented invention” are not met; and if such an invention is not worked in the Indian Territory. Such an application to grant compulsory licensing is entertained after the expiration of three years of the grant of patent. However, the central government can grant it earlier in cases of national emergency, extreme urgency, or public non-commercial use.
In India, the first CL was granted for the manufacture and sale of the drug Nexavar (a drug used for the treatment of Liver and Kidney cancer) to Natco Pharma. The CL was granted based on the non-availability of the drug in India at affordable prices – Bayer was selling it at INR 2,80,428 instead of Natco’s application to sell it for INR 8,800 for a month’s dose. The grant was challenged by the patent holder Bayer all the way to the Supreme Court of India to no avail.
The Indian Pharmaceutical Industry
While liberalisation has eroded India’s robust pharmaceutical industry to some extent, a long history of regulation and state intervention has resulted in a situation where the country has managed to ensure access to relatively cheap medicines for its population, with no shortages in domestic availability of crucial drugs. The relative autonomy of the Indian pharmaceutical industry needs to be expanded in order to push down COVID-19 vaccine costs and accelerate their production.
There are three sets of measures that are particularly important to the current state of India’s pharmaceutical sector:
1) First, India’s decision to require leading foreign firms operating in its markets to dilute their foreign shareholding to 40% of total equity significantly restrained their power and enhanced the transparency of their operations.
2) Second, India’s early position on patents, which recognised process patents and not product patents, positively impacted drug availability and pricing. Indian scientists and engineers could identify the chemical composition of patented drugs and find alternative routes to manufacture them. This ensured that the production of medicines could not be monopolised and exploited by foreign patent holders. In the end, foreign firms chose to stay on in India’s large market and sell their own versions, even with prices much lower than those they received abroad. Once India signed into the Uruguay Round world trade agreement, which included a deal on IPR, India’s Patent Act, 1970 had to be amended thrice in 1999, 2002 and 2005, to bring it in line with the agreement on TRIPS. These changes culminated in recognition of product patents.
3) Third, starting from 1963, the government set ceilings on the prices that pharmaceutical companies could charge on different drugs. Those ceilings were part of the government’s policy of keeping essential and life-saving drugs affordable, even while seeking to provide a reasonable return to producers. The large size of its market helped India’s success in implementing these policies since it made aggregate profits significant even when profit margins were capped.