A case for compulsory licensing
Author: Diya Dave
Institution: NALSAR University of Law, VI Semester
Many consider patent rights to be ethical rights as they advance innovation and incentivise the production of knowledge. The need to balance patent rights with access to information and essentials is the most popular discourse in today’s time. Generally, this debate arises in the field of biotechnology and becomes a heated political issue. Arguments against granting patents contend that there are inventions like genetic engineering, which are so beneficial to the humankind that they should be available to all. This has given rise to the concerns regarding the ethical implementation of patenting practice in the discipline of biotechnology. This paper will discuss one of the flexibilities granted in the patenting laws in the form of compulsory licenses with respect to the production of COVID-19 vaccines in India while critically analysing the government’s reception of the same.
Keywords: Compulsory Licensing, COVID-19 Vaccines, Patents, TRIPS, Essential Drugs
It was on January 16th 2021, that the first dose of the COVID vaccine was administered in India to a sanitation worker from AIIMS, Delhi. It marked the beginning of the first phase of vaccination in the country. The target population was that of the healthcare workers, sanitation workers, front line workers, those who are of 50 years and above and people below 50 years of age with co-morbidities. It was called the largest vaccine drive globally, planning to cover around 300 million priority groups. However, as the further phases of this drive unravelled, the country was in a panic situation caused due to a heavy shortage of vaccines. The government’s poor planning for the second wave and the vaccination programme was blamed for this anxiety amongst people. In January itself, the Prime Minister began Vaccine Maitri (vaccine friendship), a “humanitarian” initiative wherein, as of 19th May 2021, India has donated 663.698 Lakhs of vaccine doses to foreign countries. Was it humanitarian is a hotly debated issue as millions of Indians in the middle of the second wave, are craving vaccines. At the same time, their homeland is the largest producer of vaccines in the world. Another issue is that they failed to use the Serum Institute of India (SII), the manufacturer of the vaccine sold under the trade name “Covishield”.
The government missed the SII’s offer to sell 10 crore doses at a discounted rate way back in December 2020. With the SII CEO Adar Poonawalla fleeing the country on getting unprecedented threats for not fulfilling the vaccine demands of the country, scholars and policymakers have been thinking of other alternatives to help meet the domestic demands for vaccines. As Professor Girdhar Babu, the head of Public Health Foundation of India has expressed to the media that if India wants to make the smallest of a difference in its fatality rate, it needs to start administering approximately 7 to 10 million vaccines per day, for which it will require five times more of the current production. India is in dire need of vaccines amidst the second wave, fearing an already predicted third wave of coronavirus. One of the significant policies that could succour India and the globe is compulsory licensing.
What is Compulsory Licensing?
Beginning with the basics, according to WIPO, a patent is “an exclusive right granted for an invention, which is a product or a process that provides, in general, a new way of doing something, or offers a new technical solution to a problem”. This means that a person who has invented a “new” product, or a process can have the right to restrict anyone else from making use of their product or process for 20 years. However, there are certain flexibilities granted by the WTO’s TRIPS (Trade-Related Aspects of Intellectual Property Rights) Agreement, and one of those is the policy of compulsory licenses. Compulsory Licenses are granted by the government to produce a product or use a process patented by someone else without their consent. Article 31 of the TRIPS discusses the provisions that need to be met before granting the compulsory license; Sub-paragraph (b) of Article 31 lists out three requirements for the same; (1) national emergency, (2) extreme urgency and (3) for public non-commercial use. However, this does not imply that the patentee has lost all rights over their product or process completely. They can still get compensation or remuneration for the profits made through the use of the compulsory license in the form of the license fee.
In India, the parallel provisions for this are mentioned in chapter XVI of the Indian Patent Act of 1970. Section 84(1) lays down three conditions on which any person can request a compulsory license to the Controller. Firstly, the “reasonable requirements” of the public are not satisfied by the patented product. Second, the product is not affordable for people and third that the product is not worked in India. Further, Section 92 gives the power to the government to notify a “national emergency” or “urgency” for “public non-commercial use”, making way for the Controller to issue a compulsory license and ensure that the products are available at the lowest possible price. Licenses must be granted after the terms and conditions given in section 90 are complied with. Moreover, paragraph 5, sub-paragraph (c) of the Doha Declaration gives the power to the states to determine what amounts to a national emergency or situations of extreme urgency in their domestic contexts.
,The first such instance of granting compulsory license was in the case of Bayer Corporation v. Union of India for the lifesaving drugs used to treat kidney and liver cancers. Since the patentee company Bayer Corporation, sold the medicine Nexavar at exorbitant prices, the license was awarded to Nacto Pharma which brought down the price significantly. All the other conditions given in the Act were met.
An important observation is that these provisions are not exclusive of those against anti-competitive practices. The Controller in India has the power to issue a compulsory license if he finds the conduct of a patentee to be anti-competitive, as done in the case of Koninklijke Philips Electronics N.V. vs Rajesh Bansal and Ors. These provisions have been read in conjunction in other jurisdictions as well; for example, in 2007, the Brazilian government decided to issue a compulsory license in favour of Abbott Laboratories for the production of Kaletra, a patented drug used for AIDS, after the patentee company, Efavirenz refused to lower its price.
Compulsory Licensing of COVID-19 Vaccines
Before the signing of the TRIPS agreement, India was one of the countries which only granted patents on the process of creating a product. This enabled other entities to use reverse-engineering and recreate some generic pharmaceutical products and keep the market affordable. With the advent of TRIPS in India, patents started to be issued for both the process as well as products which came as a hurdle in the pharma industry of India and the public good.
To overcome such obstacles, the flexibility of compulsory licensing is a lucrative option to go for. This needs to be done at a domestic as well as international level. For instance, Covishield is an intellectual property of Oxford University, the license granted to Astra Zeneca, a British company. It was further sub-licensed by them to the Serum Institute of India. Taking a precedent from there, this can be done internationally with companies such as Moderna, who have willingly agreed to waive their patent rights during the period of a pandemic. Section 90(3) of the Act facilitates the government to import patented products from other countries in ,more prominent public health interests. This is subject to the condition that proper remuneration and royalty fee is paid for the same. This provision is the key for India to try and negotiate with as many foreign vaccine manufacturers as possible for them to grant their licenses to Indian manufacturers and fulfil the gap between the demand and supply of vaccines. Moreover, as per sub-paragraph (f), Article 31, in case the vaccines are imported through a compulsory license, they must be to meet domestic demands and would be provided either free of cost or at affordable prices on a no-profit basis.
The WHO launched an initiative in May 2020 to have a voluntary pool of companies giving away their patent rights, sharing knowledge and technology for worldwide production of drugs used to fight the pandemic. Countries like Chile and Israel have already approved the resolutions to issue compulsory licenses for any COVID-19 related medicines in their markets. At home, while discussing the suo moto action on COVID-19 issues in the Supreme Court, Justice Ravindra Bhat and the Solicitor General Tushar Mehta asked the centre to enable section 92 of the Patents Act, giving examples of how India was one of the first countries to do so in the Nacto case. Hence, at this hour, considering the crisis that India is facing, large and significant humanitarian steps are required to tackle the situation.
At the domestic level, the only Indian COVID-19 vaccine is sold under the trade name “Covaxin”. Since Covaxin is made by Bharat Biotech with the support of the Indian Council of Medical Research (ICMR) and the National Institute of Virology, Pune, it should be easy for the government to grant an open license to anyone who can produce the vaccines. The government can issue a mandatory time-bound license in favour of other entities which have the producing capacity to manufacture these vaccines. Sub-paragraph (c) of the TRIPS Article 31 says that the duration of such a license should be limited to the cause for which the license is being granted. This means that the licenses must be granted for a year or two or as and when the demand and supply of the vaccine are synchronized.
This, in no way, implies that Bharat Biotech will have absolutely no rights and benefits for their product. They can still have a certain percentage of profits as their license fee. The goodwill and the brand name will still be theirs to use. They can resume their exclusive rights over the product after the expiry of the time period for which the license was granted; meaning that after the license gets outdated, the company will restrict other companies from making these drugs and be able to claim its monopoly in the market.
Similar suggestions have been put forth in a Public Interest Litigation (PIL) in front of the Kerala High Court by Advocate Gopalkumar G.K where he pleads two things; one, that the court must make a declaration saying that it is perfectly valid to grant compulsory licenses for the production of COVID Vaccines and second, that the court must direct the respondents (Union of India and others) to issue compulsory licenses to eligible pharma companies to manufacture Covaxin. The current situation of India during the second wave of coronavirus disease does qualify for an extreme emergency considering a 7-day average of 4,140 deaths as of May 22nd. There’s a significant shortage of hospital beds, essential medicines and oxygen supply and a long-term solution for this situation is the supply of the vaccine. The petitioner presented a case for compulsory granting license arguing that the current crisis in the country meets all the requirements for the same and calls for a humanitarian action like this.
Even though the government has given the license to produce Covaxin to a public sector enterprise, Haffkine Bio-Pharmaceutical Corporation Limited, it will take at least a year to start producing the vaccine due to its small capacity. This is a step too small to improve the vaccine supply as there are other, more capable entities with larger manufacturing capacities and infrastructure to be able to help in this situation. Surprisingly, the union government has taken a stand against the compulsory licensing of the vaccines, putting them outside the purview of “essential drugs”, stating that it will be “counter-productive” at this stage. In an affidavit filed in the court on the 9th of May, 2021, it said that “any discussion or mention” of this issue will bring “serious, severe and unintended” consequences for India.
Interestingly, the stance taken by India on the international forum is contradictory to its domestic standpoint. In October 2020, India and South Africa had put forth a proposal to waive off the intellectual property protections to make medicines, vaccines and testing available to all. This proposal has gotten the support of more than 120 countries, including the US. Putting this into action would require a global consensus on the matter, but the EU is still posing a big hurdle in its way.
In the current trying times, India is in a dire need of vaccines at a five times larger rate. The current production capacity does not seem to make up for the rising demands for vaccines. As aforementioned, this is one of the most important and vital solutions for Indian manufactures to be able to make an effort towards meeting the demands for the vaccines, which must be taken into consideration. The most apt questions to raise in this time of crisis is that are patent protections still ethical?