Amidst exponential increase in demand for vaccination, Indian policy makers are looking for all possible options to ramp up supplies. A major hindrance in the way is the intellectual property rights (IPRs) associated with new drugs which are mostly discovered and developed by multinational pharmaceutical companies. For instance, Covishield (it accounts for about 90% of doses administered in India so far) was discovered and developed by Astra-Zeneca in collaboration with Oxford University; a license for its manufacture has been given to Pune based Serum Institute of India (SII).
The most crucial of these rights – incorporated in the TRIPs (trade related intellectual property rights) Agreement of the World Trade Organization (WTO) that came into force in 1995 requiring compliance by developing countries from January 1, 2005 – relates to patent. The patent granted to an innovator company for a new drug gives a period of ‘market exclusivity’ during which no other firm can manufacture and sell the said drug unless it has prior consent of the patent holder.
How much of the new drug, at what price would be available; depends on the innovator company. In the instant case, manufacture of the vaccine on the required scale and at an affordable price would require that it gives consent to several companies and charge a nominal amount towards royalty. In case, however, it allows only one or two firms to produce and keeps the royalty amount high, both availability of the vaccine and the price will be severely impacted.
For Covishield, only SII has the license to produce and royalty is also pretty high; for that very reason, the company is charging Rs 300 per dose on supplies to states and Rs 600 per dose from private hospitals. As for supplies to the Government of India (GOI), against a price of Rs 150 per dose, it was charging hitherto (that was for priority group viz. healthcare workers and those > 45 years), for fresh supplies beginning May 1, 2021, the company is insisting on Rs 300 per dose though the former wants the old price to continue.
There are three ways to overcome these barriers. First, relates to the use of compulsory license – a flexibility available to developing countries under the TRIPs agreement. A compulsory license (CL) authorizes a generic firm to manufacture and market a patented product without prior consent of the patent holder. Accordingly, member countries have made necessary provisions in their respective laws.
Under Section 84 of Indian Patent (Amendment) Act 2005, a CL can be issued for “private commercial use” if it is found that the patent holder has not taken required steps to make patented product available in “sufficient” quantities or price charged is not “affordable.” In 2012, the Government had used this section to grant CL to Natco Pharma – an Indian generic company – to make cheaper version of German major’s Bayer’s kidney and liver cancer drug Nexavar.
Further, under Section 92 of the Act, the GOI can issue the CL citing circumstances of “national emergency or extreme urgency or in case of public non-commercial use.” The unprecedented situation created by the Covid – 19 that has affected tens of million Indians and caused over 250,000 deaths is a perfect fit for invoking this section. Using this, the Government can issue CLs to several Indian generic companies and ask them to pay a nominal fee to the innovator company (say, Astra-Zeneca) for use of its intellectual property. But, this by itself does not assure that they will be able to produce.
Unlike generic medicine, that are chemical compounds and are replicated extra simply with a recipe e book of types (using what is commonly known ‘reverse engineering’), vaccine is an organic entity and making it is a different ball game altogether.
Even a easy protein (AstraZeneca vaccine is much more complex containing a bio-engineered adenovirus that expresses the Sars-Cov-2’s spike protein) is far more advanced and complex than a drug like, say, paracetamol. While, there are ways to make the latter, and it might turn into precisely that, for the former, getting access to the method is daunting and even when available, the ultimate product may still not be the same in its closing form and type. Moreover, there is no guarantee that this would be as ‘secure’ and ‘effective’ as the original/unique developer meant it to be.
As for the power of copying the product or the method, the generic manufacturer can’t get a clue merely by studying a patent, which does share quite a lot of the generic data, but does not divulge the specifics. The process of manufacturing or technical know-how is a commerce secret. It is proprietary in nature and gets protection under the provisions of TRIPs independent of the patent.
By issuing CL, the Government may cross the patent barrier but for access to know-how, the generic manufacturer will still have to go to the innovator. Add to this, the problem of sourcing raw materials and other components needed for making the vaccine. We have already seen how in case of Covishield, in the initial stage, the production was hamstrung due to issues in importing raw material. This is when the SII has a license from AstraZeneca. What would happen if we go into confrontation mode – inevitable when CL is issued?
A second option is to seek temporary waiver of TRIPS provisions pursuant to a resolution unanimously adopted by the WTO (2001) to deal with public health emergencies. In this regard, India along with South Africa had submitted a proposal in October 2020 and has already received support of majority of members including USA (EU too is willing to come on board). The WTO will soon start text-based negotiations on the proposal.
If, approved, this will give global legitimacy to several companies getting to produce the vaccine – without having to seek nod of the innovator. One wonders whether this will clear hurdles in the way of their having access to technical know-how, raw material etc. Much will depend on how far WTO goes in waiving (apart from patent) provisions relating ‘trade secrets’ and ‘registration data’ (acronym for test data needed to demonstrate the ‘safety’ and ‘efficacy’).
But, the big question for now is whether the proposal will be cleared at all. The doubt arises because all decisions at the WTO are taken by consensus; even if one member is not on board (for instance, Germany is opposed), the proposal won’t be passed.
A third option is ‘voluntary license’ (VL). A voluntary license is an authorization given by the patent holder to a generic company, allowing it to produce the patented drug. The license sets quality requirements and defines the markets in which the licensee can sell the product. In the present crisis situation when India needs to vaccinate over 2 billion in shortest possible time frame, VL offers the best bet as under this arrangement, the Indian company need not worry about technical knowhow and raw materials.
While, forging tie-up with the innovator, our dominant focus should be on ensuring uninterrupted supply of the vaccine on the intended scale even as the GOI can leverage its bulk buying power (current practice of states issuing global tenders for sourcing their requirements should be shunned) to seek reduction in price.