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Indian Pharma on a Profit Trip(S)

Whether WTO approves India-South Africa proposal for TRIPS waiver or not, Indian industry will remain pivotal to global plans to tackle pandemics

Illustration by Raj Verma Illustration by Raj Verma

In the first week of May, Hyderabad-based Natco Pharma approached the Supreme Court with an unusual request. It said it wanted to produce the low-cost generic version of Baricitinib, a patent protected medicine for Covid-19 treatment, and sought a directive to the Drug Controller General of India (DCGI) to quickly dispose of its applications for Emergency Use Authorisation (EUA) and clinical trial waiver. It sought similar directions for another experimental Covid-19 drug Molnupiravir. It also asked the court to ask the Indian Patent Office to expedite its request for Compulsory Licence to bypass market exclusivity of the patent holder, Eli Lilly. Natco said without the regulatory hurdles, it can bring down the per person cost (for a two-week regimen) of Baricitinib from Rs 42,287 (innovator's price) to Rs 420. But even before the court looked into the case, Natco received EUA. It launched the product at the pre-decided price without waiting for Compulsory Licence.

Natco’s action was fit case for a legal challenge from the patent owner over infringement of intellectual property rights (IPR). However, instead of a legal notice, on May 17, Lilly gave Natco a voluntary licence — a royalty-free, non-exclusive licence allowing it to continue selling the product. Lilly also granted similar licences for making and selling Baricitinib to over half-a-dozen local competitors of Natco. Luca Visini, Managing Director, Lilly India, considers this as proof of Lilly’s commitment to support India in its fight against Covid-19 by making available its breakthrough medicines. “We will continue to explore other initiatives to support patients and the healthcare system in India,” says Visini. Around the same time, US-based Merck (MSD) signed non-exclusive voluntary licensing agreements with five Indian generic companies for Molnupiravir.

Lilly and MSD are not the only companies that have shown Covid-appropriate behaviour. Several global pharmaceutical and vaccine giants — Gilead, J&J, AstraZeneca, Novovax, Merck KGaA, to name a few — have shed their obsession with protecting IPR and inked out-licensing agreements with generic pharmaceutical firms, including many in India. “The industry is doing what society would have expected us to do — engaging in unprecedented partnerships and technology transfers. I have counted 272 partnerships which the industry has signed on Covid-19. More than 200 of them involve technology transfer,” says Thomas Cueni, Director General, International Federation of Pharmaceutical Manufacturers and Associations (IFPMA), Geneva.

There are humanitarian concerns behind these decisions for sure. However, that is not the only reason. Global pharmaceutical companies are also acting in response to an ongoing global push, initiated by India and South Africa at the World Trade Organization (WTO), for temporary waiver of IPR on Covid-19 drugs, vaccines, diagnostics and other treatments. The initiative is gathering strength. Over 60 countries are co-sponsoring this proposal at the WTO’s Council for TRIPS (Trade Related Aspects of Intellectual Property Rights). If all 164 WTO members agree, a waiver agreement could be readied when the WTO General Council meets on July 21-22.

The global pharmaceutical industry hopes to prevent this through voluntary interventions. Will its strategy work? Or will the India-South Africa proposal lead to creation of a new template to share IPR during current and future pandemics? An international game, too close to call, is on.

The Proposal

On October 2, 2020, India and South Africa submitted a proposal to the TRIPS Council for temporary waiver from a few provisions of the TRIPS Agreement for equitable prevention, containment and treatment of Covid-19 at a global scale. By April 30, 2021, over 100 countries supported the move. The proposal, revised on May 25 to address concerns of some members, called for a three-year waiver of copyrights and patents on Covid-19 products and technologies.

The speed at which the discussions happened can be understood from the fact that a formal two-day meeting of the TRIPS Council that ended on June 9 decided to negotiate the actual text of the revised proposal with July-end as the possible approval deadline. Barring the European Union (EU), there is near unanimity among members that the proposal is aimed at improving the international response to Covid-19 and achieving the common goal of providing equitable access to vaccines and other medical products. The high point came on May 5 when the strongest votary of IPR, the US, announced that the Biden-Harris administration supports waiver of protections for Covid-19 vaccines.

“When we presented the proposal in October 2020, it was presumed that vaccine and treatment will be available but not cater to the scale which will be required, therefore all available tools must be used for removing supply-side constraints. Global immunisation is needed to get rid of the virus. So, we must provide 10 billion doses of vaccines in a couple of quarters, and whatever it takes to do that, the (WTO) leadership should do that,” Brajendra Navnit, Ambassador & Permanent Representative of India to the WTO, said at a recent online discussion from Geneva.

India says such waivers make economic sense as universal vaccination would mean enormous savings. A 1 per cent drop in economic output costs the world $850 billion. Countries have already given fiscal stimulus of $10-12 trillion in response to the crisis. The cost of 10 billion Covid-19 vaccines, even at an average price of $10 per dose, will be only $100 billion.

James Love, Director of US-based Knowledge Ecology International, an NGO that advocates public interest in IPR policies, termed the India-South Africa proposal as ‘practical’, though not ‘ideal’. “If they (WTO members) have text-based negotiations, it (the proposal) will evolve with a core objective of expanding and scaling up manufacturing, which is important,” he says. Love points out that compensation or incentive should not come in the way of the waiver as for Covid “nearly all R&D money for all approved vaccines has come from governments, and IPR has mostly been about making money off government investments and the pandemic.”

India had, in fact, clarified in the formal TRIPS Council meeting on June 8-9 that the proponents of the proposal have no intention of denying holders of IP rights benefits beyond the waiver period. It also stated that one of the key revisions in the proposal — to change the preamble of the negotiating text to reflect the balance between commercial interests of IP rights holders and public health — was meant to show that the co-sponsors are not against incentives for R&D and innovation even while acknowledging the importance of public health during a pandemic.

Civil society pressure on WTO members is also building up. “Following US’ groundbreaking expression of support for the TRIPS waiver this month, there is a growing global consensus that this needs to happen, and happen fast. We urge the last remaining governments that keep dragging their feet, especially the EU, to urgently get behind this proposal and stop acting as though ‘business as usual’ will get us out of this pandemic,” says Leena Menghaney, South Asia Head, MSF Access Campaign. RSS affiliate Swadeshi Jagran Manch (SJM) has gone a step further. It joined like-minded groups in 20 countries on June 20 to observe “World Awakening Day” to demand universal access to Covid-19 vaccines and medicines. “We are submitting a petition signed by over 14 lakh people to WTO, governments and companies that are coming in the way of this noble cause of vaccine and medicines for all,” says Ashwani Mahajan, National co-convenor, SJM.

The Opposition

On June 4, the EU submitted its own proposal for a multilateral plan to expand production of Covid-19 vaccines and treatments and ensure universal and fair access. Unlike India-South Africa and other proposals, it does not seek TRIPS waiver. The EU wants countries to agree to limit the use of export restrictions and keep supply chains open. It also wants governments to encourage vaccine companies to expand production and ensure supply of affordable vaccines to low- and middle-income countries through licensing agreements, sharing of expertise, tiered pricing (including non-profit sales to low-income countries), contract manufacturing and new investments in manufacturing facilities in developing countries. It also talks about the need to facilitate the use of compulsory licensing within the WTO’s existing agreement on TRIPS. “The TRIPS agreement provides this flexibility, which is a legitimate tool during the pandemic that can be used swiftly where needed,” an EU statement says. In a broad sense, the EU is seeking what Lilly and other companies are doing on their own. If that does not happen, it wants countries to exercise TRIPS flexibilities and grant Compulsory Licences like the one sought by Natco in India.

Compared to the EU, the US may seem as taking a favourable view towards temporary waiver of vaccine patents, but as long as it allows vaccine companies to hold on to their propriety technology, vaccine manufacturing may not be easy for generic players. Incidentally, Astra Zeneca has reportedly said that it cannot share technology as its engineers are not available. US-based Moderna, which has vaccines developed out of mRNA technology, says it will not enforce Covid-19-related patents against those making vaccines intended to combat the pandemic, but is silent on technology transfer. Even those who support the IP waiver can thus effectively be on the other side if they are not transferring technology.

Even before the EU finalised its proposal, IFPMA, in December 2020, said that in view of the progress made in providing Covid-19 solutions and partnerships in place to boost research and scale up manufacturing of vaccines and treatments, diluting IP frameworks would be counterproductive. The industry body’s argument was that the IP waiver “will not lead to faster research and development or access, but will undermine confidence in what has proven to be a well-functioning IP system, allowing the industry to partner with confidence with academia, research institutes, foundations and other private companies, significantly expediting the research and development of medicines.” This is reflected in the EU proposal.

Indian generic pharmaceutical and vaccine companies take a balanced view as they have been benefiting from voluntary partnerships right from the beginning of the pandemic. For instance, US-based Gilead Sciences has signed non-exclusive voluntary licensing agreements with Cipla, Dr Reddy's, Hetero, Jubilant, Syngene and Zydus Cadila in India to manufacture and supply Remdesivir, prescribed for some Covid-19 patients. The companies have the right to receive the Gilead manufacturing process to scale up production more quickly. The licensees set own prices for their generic product. Similarly, Covishield, produced by Pune-based Serum Institute through a partnership with UK's AstraZeneca, is what is driving India’s Covid-19 vaccination. Serum has a Covid-19 vaccine tie-up with Novovax. It is also collaborating with Merck KGaA to develop neutralising monoclonal antibodies to fight the Covid-19 pandemic. While J&J has partnered with Hyderabad-based Biological E, Russian Direct Investment Fund has been offering technology and manufacturing licences for its Sputnik Covid-19 vaccine to several Indian companies.

Sudarshan Jain, Secretary General, Indian Pharmaceutical Alliance (IPA), which represents major home-grown generic players, says IPA has always respected IPR and stood for a balance between innovation and access. “During Covid-19 times, what we are saying is that since technology is very complex, if you have only patent waiver and compulsory licensing, it will not serve the purpose. Developing MRnA technology, for instance, is not easy. In such a situation, a voluntary licence is important. And patent waiver has to be accompanied by technology transfer,” he says. “If a company gives the licence on its own, why should we ask for a compulsory licence? We will always be looking for more cooperation. We respect IPR and if companies are ready to cooperate to ensure access of medicines to patients, we should support such initiatives. A classic example is Gilead. They gave Remdesivir licences to seven companies. So, if the company is supporting, there is no need for compulsory licensing. They have also supported differential pricing, which is very important,” he says.

James Love, on the other hand, is not a fan of voluntary technology transfer agreements. “I don't see great technology transfer (happening). I think you will have more secret agreements, some toxic tech transfer agreements that feature NDAs (non-disclosure agreements), and many firms not being able to use capacity,” he says.

The Wait

The WTO takes decisions by consensus. Hence, the global pharmaceutical industry has hope until every member country agrees to the India-South Africa proposal. Even if there is an agreement, it could cover only vaccines and considering the US has so far pledged vaccine-specific support. The EU may not be comfortable unless there is a proposal that further limits the scope of patent waiver. Also, WHO members have initiated a parallel move to address future pandemics at a global level. The plan is to propose an International Pandemic Treaty to find mid- and long-term solutions. If the WHO proposal gains strength, it may divert some attention from moves at the WTO.

The shape of the international response to finding preventive and curative solutions for pandemics may depend on how serious the global community has taken India's parting words. What is certain for now is that whatever the decision, Indian pharmaceutical and vaccine makers will have a significant role to play. The wait for the fine print continues.

@joecmathew