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NITI Aayog’s Position on Compulsory Licensing Fails Both Niti and Nyaya

NITI Aayog’s Position on Compulsory Licensing Fails Both Niti and Nyaya

Representative photo: A medical worker prepares a syringe with a dose of the Sinovac vaccine at a vaccination center in Bangkok, May 24, 2021. Photo: Reuters/Athit Perawongmetha

The NITI Aayog released a press statement on May 27, 2021, entitled ‘Myths & Facts on India’s Vaccination Process’. A substantial portion of the document was devoted to the question of how effective the Centre has been in addressing India’s COVID-19 vaccine crisis, a part of the document raises substantial concerns for India at the global level.

Specifically, it assumes a concerning position on compulsory licenses for COVID-19 vaccines.

The statement clearly indicates that India is not planning to issue any compulsory licenses for COVID-19 vaccines. It justifies this position by saying that, in the context of vaccines, “it is not a ‘formula’ that matters but active partnership, training of human resources, sourcing of raw materials and highest levels of biosafety labs”. The statement also says technology transfer is the key for vaccine production and that active cooperation of the companies that initially produced the vaccine is a must.

It has even posed a question as to why no firm has thus far manufactured the Moderna vaccine even after Moderna said that it won’t enforce patents relating to its mRNA vaccine during the COVID-19 pandemic.

NITI Aayog’s stance is problematic at multiple levels.

First, the arguments in the statement sharply contradict India’s position at the global level for IP waivers. India and South Africa placed the IP waiver idea before the World Trade Organisation (WTO) after considering the global social, economic, political and scientific contexts of the pandemic. When NITI Aayog says IP is hardly a hurdle in the production of COVID-19 vaccines, it is echoing the pharma lobby and leaving the country a laughing stock in front of international negotiators on the subject.

Second, by issuing a statement on the subject of compulsory licensing, NITI Aayog undermines the powers vested in statutory authorities who are legally empowered to deal with the issuance of compulsory licenses. Different provisions of the Patents Act 1970 provide elaborate procedures for compulsory licensing of patents and for the Centre to acquire inventions and patents. When the concerned authorities adjudicate on those applications, they engage in a quasi-judicial function by following due process and by taking into consideration diverse legal and factual issues.

NITI Aayog, however, has no statutory role to play in determining the grounds for issuing a compulsory license for a patent or to decide when the government may use an invention or a patent according to the procedures provided under patent law. In these circumstances, a public statement regarding the use of compulsory licenses for COVID-19 vaccines is unwarranted and unjustified.

Third, NITI Aayog says no firms have thus far manufactured any mRNA vaccines based on the patents owned by Moderna – even if the firm has said it won’t sue any firm for using its patents during the pandemic. But it conveniently ignores the fact that there are thousands of other patents relating to mRNA vaccine technology that are not owned by Moderna. Without access to these patented technologies, it’s not possible to make the Moderna vaccine. This is why prominent researchers working in the area of mRNA vaccines have argued in favour of IP waivers.

The trees and the forest

The NITI Aayog’s views on compulsory licensing are completely detached from broader realities. One of the more important lessons from the current pandemic has been that most developed countries will pursue a nation-first approach when it comes to addressing crises — even if all ethical and rational arguments suggest a more equitable, collaborative global approach.

For example, public health specialists around the world have always been pointing out that a risk of infection somewhere portends the risk of infection everywhere. This would suggest that it’s in the best interests of all nations to work together to ensure that COVID-19 infections are prevented everywhere at the earliest. However, the data on vaccine procurement and vaccination shows most economically rich countries pursued a path of hoarding vaccines, and not the path of justice, equity and collaboration.

Consider the data on the fractions of populations that received at least one dose of any two-dose COVID-19 vaccine (as on May 28, 2021). Israel has covered 62.9% of its population, the UK 56.5% and the US 49.4%. A substantial fraction of the population in these countries had also received the second dose. In India, the first dose has reached only around 11.3% of the population and only around 3% (a subset of 11.3%) has received both doses. In Nigeria, only 0.9% has received the first dose.

Per the latest available data, the average percentage of the population in low-income countries that has received at least the first dose is 0.7%. If this isn’t inequity, what is?

The manner in which many countries, like Germany, have defended the IP rights of major pharma companies illustrates the extent to which they will defend the economic interests of firms in their jurisdictions. Even during a pandemic, the right of firms to protect their IP rights is being prioritised over the right to life of millions around the world. There is data to indicate that the world’s existing production capacity means most low-income countries will be able to vaccinate significant fractions of their populations only by 2024. The only way to address the crisis is to ramp up production in as many countries as possible.

Important step

Of course, most vaccines and technologies related to production are wrapped in several layers of IP. In an ideal world, pharmaceutical companies would have engaged to voluntarily share IP based on reasonable royalties to enable a radical increase in production. But as the failure of COVID-19 technology access pool, a WHO initiative from May 2020 to voluntarily pool technologies, indicates, pharma companies have hardly any interest in technology-sharing.

It’s from within this broader context that we need to evaluate tools like compulsory licensing and India’s and South Africa’s proposal before the WTO to waive IP protection in certain areas, for a certain period. The waiver would allow local companies to manufacture vaccines and other healthcare technologies related to COVID-19 without fear of IP infringement.

While such a waiver alone won’t lead to higher production, it is an important legal step that could prompt companies around the world to step into this area and address the longer term crisis. Thus far, the proposal has received the support of 62 countries; the US also recently indicated that it is willing to support the waiver for COVID-19 vaccines.

However, the pharma lobby has been vehemently opposed to the waiver, primarily on the arguments that it would affect their incentives to engage in research in emerging challenges and that a waiver won’t help increase vaccine production. Both arguments fail on multiple counts.

Much of the fundamental research underlying vaccines, including the risky exploratory work, is typically publicly funded. The incentive justification for strong IP protections may have limited relevance in the context of COVID-19 since most companies’ financial risks were addressed ex ante through advance purchase agreements with governments. Pfizer alone expects to make more than $26 billion in 2021 just from its COVID-19 vaccine. And the pharma lobby’s argument that an IP waiver wouldn’t result in greater production is hard to take seriously given the vehemence of its opposition.

As experts observed in a recent working paper, it is important that during the pandemic, we need to see compulsory licensing measures under national laws and IP waiver efforts at the global level as complementary measures, and not as substitutes, to force firms to engage in technology-transfers.

The WTO’s decision on the IP waiver will take some time as member states will have to reach a consensus. In the meantime, we need to initiate compulsory licensing measures at the national level on healthcare technologies related to COVID-19.

* * *

Of course compulsory licenses and IP waivers aren’t silver bullets, but they are necessary tools with which we can ensure pharmaceutical companies don’t use IP to perpetuate the crisis and earn unjustifiable profits from a pandemic.

It would also be good to remember that any act jeopardising efforts to facilitate the transfer of crucial technologies to local companies during the pandemic is bound to set both niti and nyaya back in India and across the ‘global south’.

The Government of India should issue a clarification clearly distancing itself from the position NITI Aayog has taken on compulsory licensing.

Arul George Scaria is an associate professor of law and co-director of the Centre for Innovation, IP and Competition at the National Law University, Delhi. The views here are the author’s own.

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