Don’t Delay! Stop the Expanded TRIPS Waiver Today

On June 17, 2022, the World Trade Organization (WTO) agreed to a misguided five-year waiver for intellectual property (IP) rights associated with COVID-19 vaccines. The decision to waive IP rights under the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement also stipulated member states must determine whether to extend the waiver to COVID-19 diagnostics and therapeutics within six months of the original decision. (The deadline is December 17, 2022.)

As ITIF wrote, expanding the waiver to include therapeutics and diagnostics would be wholly unnecessary, inappropriate, and harmful to future innovation and global health care. On December 6, 2022, the Office of the U.S. Trade Representative issued a statement supporting extending the deadline to “help the world make a more informed decision on whether extending the [waiver] to COVID-19 therapeutics and diagnostics would result in increased access to those products.” While that’s a tiny step in the right direction, the reality is the United States and its allies should not delay the decision. No more study is needed, and the United States and like-minded nations should announce their opposition to such a meritless expanded TRIPS waiver today.

With more than 640 million confirmed cases and more than 6.5 million fatalities over three years, the COVID-19 pandemic cannot be taken lightly. Even today, the virus continues to mutate and circulate. But these waivers for COVID-19 technologies have far more to do with political attacks on IP than genuine access to health care. India—the world’s largest producer of generic pharmaceuticals—and South Africa introduced the original TRIPS waiver for COVID-19 technologies months before any vaccines or therapeutics were available; a fact acknowledged in the original petition.

Thus, just as the original waiver for COVID-19 vaccines was never needed nor justified, further expanding the waiver to include COVID-19 diagnostics and therapeutics is neither appropriate nor necessary. There are at least three reasons why policymakers should reject the expanded TRIPS waiver: the global supply of COVID-19 therapeutics and diagnostics already outweighs demand; much like the vaccine waiver, no developing countries are likely to avail themselves of the expanded waiver adequately; and waiving IP does nothing to solve the real problems developing countries face amidst the COVID pandemic.

The purported purpose of the WTO’s TRIPS waiver for COVID-19 vaccines and the expanded waiver for therapeutics and diagnostics is to increase access to these products. However, there’s a product surplus, several treatment options available, and over 190 facilities worldwide engaged in manufacturing COVID-19 treatments thanks largely to voluntary licensing agreements. Thus, the expanded TRIPS waiver attempts to solve a problem that simply does not exist.

On November 1, 2022, Mexico and Switzerland submitted a communication to the WTO explicitly stating that data shows the supply for therapeutics and diagnostics outweighs global demand. The communication asserts diagnostics companies report a considerable product surplus. Likewise, demand for Pfizer’s Paxlovid and Merck’s Molnupiravir was less than 50 percent of each company’s production capacity in August 2022. Data from early October 2022* shows pharmaceutical manufacturers supplied more than 74 million total doses of COVID-19 treatments, surpassing global demand by over 14 million doses. Furthermore, of the more than 35 million doses of COVID-19 treatments purchased by governments and non-governmental organizations (NGOs) for low- and middle-income countries, only 10 million were administered as of September 2022. Additionally, many pharmaceutical manufacturers donate millions of doses to global healthcare initiatives and offer their treatments and vaccines to developing countries at cost (i.e., the companies do not earn a profit).

Not only does a surplus of existing therapeutics exist, but there are also several treatment options manufactured at various facilities around the world. As of October 2022, there are 36 COVID-19 treatments authorized for use somewhere in the world (16 approved in the European Union, United Kingdom, or United States; 20 only approved in other countries). The World Health Organization (WHO) endorses seven (less than one-fifth) of these: Baricitinib, Dexamethasone, Molnupiravir, Nirmatrelvir+Ritonavir, Remdesivir, Sarilumab, and Tocilizumab. Additionally, more than 850 COVID-19 treatment candidates are in clinical development, and over 800 are in preclinical development. There are more than 130 licensing agreements between pharmaceutical companies developing COVID-19 therapeutics and generic manufacturers, including several royalty-free agreements. Also, over 190 production sites for COVID-19 treatments are spread across more than 30 countries, including Brazil, India, Indonesia, Kenya, Singapore, and South Africa.

This is reminiscent of the state of the world when the WTO needlessly approved the TRIPS waiver for COVID-19 vaccines. In December 2020, six months before the WTO decided on the vaccine waiver, developing countries destroyed or turned away 100 million COVID-19 vaccines because the government could not distribute and administer them before their expiration date. The Congo alone destroyed 1.7 million doses, and Nigeria another 1 million. Much like in developed countries, vaccine drives declined in the wake of citizen apathy. Yet, the waiver still passed. As of October 13, 2022, not a single country has notified the WTO of any intent to avail itself of the waiver’s provisions, reiterating the futility of the agreement.

After the WTO’s decision, one of the chief advocates for the waiver, Indian Minister of Commerce and Industry Shri Piyush Goyal, unwittingly admitted to the fundamental unnecessity of it in the first place, noting that “vaccines have already lost relevance.” And the reason why is because technology transfer enabled by IP licensing agreements enabled IP owners to responsibly partner with developing countries’ manufacturers to ramp up needed production to meet global demand and then some. So much so that some manufacturers could not sell their product. Indeed, South Africa’s Aspen Pharmacare did not receive a single order for its version of Johnson & Johnson’s vaccine. Whether referencing COVID-19 vaccines, therapeutics, or diagnostics, the point is the same: supply vastly outweighs demand.

This is not to say there are no access barriers for these products that governments need to address. However—as is often the case with pharmaceuticals—none of them relate to IP. Regulatory delays, logistics, and distribution infrastructure pose some of the greatest challenges for citizens of developing countries attempting to access vaccines, therapeutics, and diagnostics. In emergencies, certain regulatory procedures cause needless delays. Governments should analyze and address their countries’ approval delays, additional regulatory and testing requirements unrelated to public health and safety, regulatory barriers preventing the adoption of proven methods, authorization restrictions, import or export restrictions, and manufacturing restrictions, identifying which regulatory delays hinder a rapid healthcare response within the country. Governments should also work with manufacturers to identify potential collaborations and facilitate voluntary licensing and technology transfer agreements, fund adequate and appropriate facilities, develop skilled labor, and identify potential supply chain bottlenecks and solutions. Furthermore, governments and NGOs should invest in appropriate distribution infrastructure, such as portable refrigeration units, pop-up clinics in remote areas, and a national system for determining and disseminating appropriate medical supplies. These are meaningful solutions to the real pharmaceutical access barriers plaguing developing countries.

Proceeding with an expanded TRIPS waiver for COVID-19 therapeutics and vaccines is not only unnecessary and inappropriate, but it is also harmful to future innovation. From alternate medicinal uses to generating initial capital and further research and development (R&D) incentives, waiving IP limits investments and the potential for future pharmaceutical developments, eliminates a vital incentive for innovators, and provides foreign competitors—namely companies supported by the Chinese Communist Party (CCP)—free access to U.S. (and allied nations’) innovations.

Often throughout initial and continued R&D, pharmaceutical manufacturers discover their innovations may be used to treat multiple ailments. For example, over several years before the COVID-19 pandemic, Gilead tested remdesivir—the first COVID-19 therapeutic approved by the U.S. Food and Drug Administration (FDA)—to determine whether it could treat hepatitis C, respiratory syncytial virus, Ebola, SARS, Marburg, and MERS. This continued R&D determined that remdesivir exhibits “a broad spectrum of antiviral activity,” meaning the drug is not limited to treating only one disease. And remdesivir is not alone. In fact, 18 of the 36 approved COVID-19 treatments are also approved for alternate disease indications, and four more are in either clinical or preclinical trials to treat an alternate disease.

Such clinical trials are perhaps the most costly part of developing new drugs or receiving regulatory approval for alternate indications, requiring estimated investments of $4 million, $13 million, and $20 million for phases 1, 2, and 3, respectively. Drug development represents an 11- to 15-year process wherein 0.05 to 0.1 percent of every 5,000 to 10,000 compounds make it from basic research into clinical trials. The FDA ultimately approves less than 12 percent of those in trials. Numerous studies examine the substantial cost of biopharmaceutical R&D, and most confirm new drug development requires, on average, $1.7 billion to $3.2 billion upfront.

This is significant, considering pharmaceutical manufacturers currently invest more than 25 percent ($83 billion) of revenues into R&D each year (compared to around 2.5 percent on average across all U.S. industries). It also means pharmaceutical innovation is a high-risk, high-cost endeavor. IP protections enable and incentivize this endeavor. Startups garner investments and generate capital by proving an innovation’s potential to earn revenues using IP. Manufacturers utilize IP to engage in licensing agreements that ramp up production, support multiple businesses, and protect consumers from harmful, counterfeit products.

In other words, IP enables and incentivizes innovation. Revenues and capital generated via IP are invested into future (costly) R&D efforts, including new treatments, cures for rare diseases, and alternate indications. Waiving IP jeopardizes this system, harms innovation, and disincentivizes innovators. It is not that innovators do not want to “do the right thing;” they literally cannot afford to continue innovating at current levels without adequate resources.

A TRIPS waiver for therapeutics and diagnostics would only benefit one group: CCP-supported companies. Throughout the height of the pandemic in 2021, China exported the most COVID-19 vaccines. Despite the life-and-death stakes, the CCP predominantly sold these vaccines with strings attached, such as diplomatic gestures, political agreements, or power plays over international disputes. During text negotiations for the COVID-19 vaccine waiver, China strongly opposed text excluding developing member countries “who exported more than 10 percent of world exports of COVID-19 vaccine.” Although the CCP agreed not to avail itself of the waiver’s provisions if the text was removed, it never agreed not to avail itself of any expanded TRIPS waiver. Without safeguards such as text excluding the country, China will avail itself of U.S. IP for therapeutics and diagnostics, despite being the global leader for patent filings associated with COVID-19 therapeutics (totaling 887 as of October, followed by the United States at 292).

This is cause for alarm. The CCP availing itself of U.S. COVID-19 IP threatens national security, jobs, and innovation leadership, as waiving IP for COVID-19 innovation equates to forced technology transfer of government- and privately-funded technologies. Over a decade before the pandemic began, the Defense Advanced Research Projects Agency (DARPA) researched ways to rapidly cure new pathogens soldiers might encounter in the field. This research played a role in paving the way for COVID-19 mRNA vaccines, alongside decades of mRNA research from private sector pioneers. Thus, the TRIPS waivers offer American IP and potential national security secrets, free of charge, to the CCP—whose mercantilist policies threaten global innovation and whose Made in China 2025 strategy explicitly identifies dominating the biotechnology field as a goal. Endorsing the waiver would mean American innovators are doing the work and investing significant time, money, and resources, only for China to profit at their expense.

There is nothing meritorious about an expanded TRIPS waiver for COVID-19 therapeutics and diagnostics IP. Just like the TRIPS waiver for COVID-19 vaccines, the expanded waiver proposal is unnecessary, inappropriate, and harmful. The United States and its allies must not allow it to continue.

*Note: All August 2022 data referenced in the Mexico and Switzerland communication is based on a report by Airfinity that is not widely available to the general public. All October 2022 data is based on an updated version of this report.