SUPPLY OF DRUGS AND COVID-19: BYPASSING PATENTS?

Covid-19 has made the private and the public organization to respond in a way that was never expected by them. Trying for ways to diagnose, treat, and prevent Covid-19 has made the pharmaceuticals industry to work round the clock. The pressure is not only mounted on the industry but also on the government to provide an effective mechanism to ensure that an optimum number of tests are conducted and vaccines are effectively delivered at a subsidized price. News like shortage of Personal Protection Equipment (PPE) kits has made headlines. But this shortage was not for a long duration due to the concerted efforts of government and private and public organizations. Many countries have often resorted to restrictive exports to protect their own. In all these situations, one often forgets to discuss Intellectual Property (IP). Do we need to bypass the IP for the effective development and distribution of vaccines? Let us consider some of the mechanisms in different jurisdictions to compare the bypass of IP.

Bypassing Patents Rights

The grant of patent rights by the government cannot be easily taken away by the government itself. Even if taken the support of the international agreement of TRIPS, we find only exceptional circumstances for this bypass namely compulsory licensing.

  • In the UK, we find that compulsory licensing can be granted after three years of the grant of the patent, thereby making it only beneficial for older patents. It is necessary to show that the demand is not met on reasonable terms. For the newer ones, the UK government can rely on Crown Use provision, but still, it needs to be proved that the demand is not met.
  • In Germany, the government is more likely to rely upon the ‘coronavirus crisis package' which has amended the Infection Protection Act, providing the Health Ministry to use patents in the interest of the public during the national epidemic.
  • Similarly, in Austrian Province, the provision of compulsory licensing can be used on the premise of broad public interest and removing the need for prior negotiation in a situation of a ‘national emergency' or ‘other circumstances of extreme urgency'.
  • In the US, we have two mechanisms, first being the Title 28, US Code Section 1498, and the other one being March-in rights under the Bayh-Dole Act. For using the first one the government must ensure that the use is by or for the United States. The second one is having a broader scope whereby the government is satisfied that the reasonable needs are not fulfilled.
  • In India, we have the provision of compulsory licensing under Chapter XVI of the Patent Act 1970 talks about the compulsory licensing in which Section 84 to 92 deals with the same. Under Section 84, the pre-requisite of the compulsory license on the requirements that the patented invention has not satisfied or it is not available at a reasonable price or it is not available in the territory of India. Under Section 87 and 88, the procedure and power to the controller for granting a compulsory license are specified.

Analyzing TRIPS

When we analyze the TRIPS Agreement for bypassing the patents, we also accustomed ourselves to a couple of limitations. Firstly all those rights are domestic. The TRIPS specifically provides the compulsory licenses for the supply in the domestic country. Much deliberation was done on this restriction which leads to the 2003 waiver decision which introduced a waiver to the restriction on the exports. The second limitation that comes up is of bypassing ‘only' the patents and not other aspects that are associated with them. The pharmaceutical industry spends a huge amount of funds on the clinical trial data which is confidential to the company while submitting to regulatory approval. The protection of this test trial data is commonly known as Data exclusivity. The bypass of patents can be done but these aspects still restrict the availability of the drug.

Will bypassing be beneficial?

We will see the need to have such bypassing of the patent, but it does come up with counter-arguments. Even if the government is aware of their power to issue compulsory licensing, they are also aware that such practices will damage the long-term incentives to the pharmaceuticals industry, thereby, hampering the development of drugs, even at the time of the pandemic. Pharmaceutical companies will be very conscious not only of the reputational advantages which will accrue from helping to solve the crisis but the damage which could be caused if they are perceived to be unfairly profiting. They will be keen to agree upon reasonable terms that allow access to COVID-19-related drugs and products while protecting their broader rights. Therefore, while these provisions are likely to be used as part of negotiations, the prospect of large numbers of compulsory licenses or use orders being granted remains low.

These aspects are important to understand from the purview of patent protection. The jurisprudence behind IP also talks about the Utility theory which substantiates that it's the incentive to the invention which motivates the inventor to create in lieu of those incentives. This similar fundamental approach is being applied here as well. The government has to be very cautious in its approach of adopting Compulsory Licensing or any other measures which bypass the patents or the trade secret to give effective room for innovation.          

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