Switzerland and Mexico have recently filed a communication entitled “TRIPS Council discussions on COVID-19 therapeutics and diagnostics: Evidence and questions on intellectual property challenges experienced by Members” at the TRIPS Council. This communication (IP/C/W/693) purportedly provides evidence on the supply and demand landscape of therapeutics and diagnostics, voluntary licensing and the affordability and accessibility of these products, but it does so on a highly misleading basis. Switzerland and Mexico claim, based on their self-selected information, that the international community is not facing a situation where there is an IP-induced lack of manufacturing capacity or affordable access to COVID-19 therapeutics and diagnostics. As a consequence, they argue that no adjustments to the IP system are required and further that the WTO TRIPS Decision, if extended, would have a significant detrimental effect leaving the world ill-equipped to fight the COVID-19 and future pandemics effectively.
“Available information shows that no shortage of therapeutics exists.” Switzerland and Mexico, relying on PhRMA supplied data, focus on false evidence of suppressed demand rather than actual need and further calibrate supply availability according to option agreements rather than actual purchase orders.
The 138 voluntary licenses collectively covering 127 LMICs and licensed to multiple LMIC companies are, by implication, sufficient to meet the need for expanded supply. There are bilateral voluntary licenses with Gilead (remdesivir) and three voluntary licenses agreements negotiated with the Medicines Patent Pool, MSD (molnupiravir), Pfizer (nirmatrelvir+ritonavir), and Shionogi (ensitrelvir fumarci acid), but they all suffer from common defects particularly in terms of geographic scope.
Innovators bring their products to different markets of the world based on a tiered pricing system, by implication resulting in price that are affordable to LMICs. While it is true that most of the companies are offering tiered prices, their tiered prices are not necessarily affordable and are in almost all instances significantly more expensive than what competitive generic prices would be.
The threat to the therapeutics pipeline requires preservation of the status quo in terms of IPRs. Switzerland and Mexico exaggerate the risk of the extension of the WTO TRIPS Decision to cover therapeutics and diagnostics, arguing that the whole IPR stack of card might come tumbling down.
Switzerland and Mexico also posed a series of questions to proponents of the extension. These questions, though a frivolous waste of time, are easily answered.
1. Against the background of the demonstrated availability of therapeutics like Molnupiravir and Paxlovid, especially with regard to the idle production capacity, what would be the added benefit of an extension of the MC12 TRIPS decision?
2. Given that already 138 bilateral or MPP-based voluntary licensing agreements have been signed, many with LMICs, no systemic hurdles seem to exist that prevent other companies from also signing voluntary licensing agreements. Why do proponents of an extension consider it necessary to facilitate the issuing of compulsory licenses that do not contain technology transfers, training and other benefits that come with most voluntary license agreements?
3. Given that already a large number of producers for therapeutics and their generic versions exist and that these producers face declining demand for their products, why do proponents consider it necessary to facilitate the issuing of compulsory licenses so that additional producers can produce for an already saturated and shrinking market?
4. As the market for therapeutics is already saturated and served by many companies including producers for generic versions of therapeutics, the profit margins are small. How likely do the proponents consider it that a company bestowed with a compulsory license would be willing to make large upfront investments just to have very modest returns on investment and a break-even point in the very distant future?
5. For many months, we have discussed a potential waiver and whether such a waiver is necessary to improve access to COVID-19 vaccines. Yet, since the adoption of the MC12 Decision, no country has made use of the possibilities provided for by the Decision to grant a compulsory license for the export of COVID-19 vaccines. Against this background and taking into consideration that supply of therapeutics exceeds their demand, how do the proponents of an extension justify the need for such extension?