IP rights: are vaccines a common good or a luxury product?

By Andrea Visentin, 10th June 2021

Are vaccines a collective good of humanity that should be available equally to everyone, or are they just another product that provides profits to big companies? In other words, can the rules of capitalism be put aside when they go against basic human rights?

Source: @3dparadise / Unsplash

On 2nd of October 2020, India and South Africa made a joint proposal to the World Trade Organization titled “Waiver from certain provisions of the TRIPS [Trade-Related Aspects of Intellectual Property Rights] agreement for the prevention, containment and treatment of Covid-19”. Basically, they asked to remove intellectual property (IP) rights from the vaccines in order to be able to start producing it without the need for licensing. Right now, vaccines can only be produced by those who own their intellectual property, namely the big pharmaceutical companies that have created them, or by other companies who have received a license. Most of the production is taking place where the vaccines were initially created, and countries that cannot produce them receive donations of surplus product.

The reason for a TRIPS waiver is to increase production of vaccines everywhere, not only in the high-income countries, and therefore to ensure even distribution across the world. This not only seems right from a moral point of view of global equality: as Agnes Binagwaho, Co-Chair of the Africa Europe Foundation Strategy Group on Health, has recently said in a conference about the topic, “the governments that are pushing for vaccine nationalism are wrong” because they don’t consider the virus’ mutations: if only a small percentage of countries reaches herd immunity, there is a high chance that the other countries that are still fighting the virus develop variants that can spread back to the immune countries, and we don’t know if the vaccines we have are useful against all variants. If we don’t all reach herd immunity at the same time, what we have done so far might become completely useless. 

The TRIPS waiver has been backed mostly by developing countries, in what looks like a classic debate of rich against poor. The only big difference this time is that at the beginning of May the United States have decided to support the Indian proposal. However, this is still not enough: all major decisions at the WTO are reached by consensus of the membership as a whole, and not by voting. This means that every member Country has to agree to a final decision that will be negotiated with everyone. In particular, the European Union does not seem convinced by the proposal.

In the latest plenary session of the European Parliament that took place between the 17th and the 20th of May, the Commission and the Council stated their position on the matter. They are both open to discussing a waiver of the TRIPS agreement, but they do not see it as the best solution. Their priority is to ramp up production in the short term, and a waiver of the TRIPS agreement would do nothing in the short term. They would rather make use of the existing flexibilities of the agreement and use compulsory licences instead of the voluntary ones. In particular, Valdis Dombrovskis, Executive Vice-President at the Commission, had announced that the Commission intended to present a proposal at the WTO based on three components: trade facilitation and export restrictions; expansion of production, including through pledges of vaccine producers and developers; clarification and facilitation of the TRIPS agreement and its flexibilities relating to compulsory licences. According to Dombrovskis, and so according to the Commission, “this is the best way to speed up the supply in the EU and globally and this is the best way to tackle new variants in the virus”.

Valdis Dombrovskis speaks at the Parliament during the plenary session. Source: screen capture from the plenary session of 19th May.

The members of the Parliament also gave their opinions on the topics, and the split is clear: left parties were strongly in favour of the TRIPS waiver, whereas members from the right parties were strongly against. What are the reasons to be against such a proposal, other than those already listed by the Commission? To answer this question, we can ask ourselves another question: why do IP rights exist at all? The main reason is to foster innovation: by ensuring a period of monopolization, researchers and innovators – or rather, those who finance them – are guaranteed a steady stream of profits that counterbalances the risks and the costs taken during the research. So, if we now remove IP rights from vaccines, opposers argue, we will create a precedent that can seriously undermine the whole mechanism of innovation. Moreover, vaccine producers would lose the incentive to fight the potential variants that are still emerging.

Now, vaccine producers have already made a lot of profit. For example, Pfizer had 3.5 billion dollars in revenue from the vaccine in the first quarter of 2021. And some companies have even received public funding to develop the vaccine, so they never really had big risks in the first place. Considering how much the world needs to recover from this pandemic, giving to everyone the possibility to produce their own vaccines is the best solution. Of course, the TRIPS waiver alone is not going to be enough: developing countries also need the facilities and the technology to be able to produce vaccines at a qualitatively high level, but at least they won’t be completely bound by the marketing decisions of a few big international companies.

Indeed, this looked like the direction that the European Parliament was taking. On the 20th of May, a resolution to tackle the AIDS epidemic was approved. This might seem unrelated to the TRIPS waiver, but this resolution, at paragraph 14, “calls on the EU to support the Indian and South African WTO initiative for a temporary waiver on intellectual property rights for COVID-19 vaccines”, thanks to an amendment advanced by The Left. The Parliament had therefore already indirectly backed the Indian-South African proposal. However, this amendment passed with 293 votes in favour, 284 against, and 119 abstentions, which is not a big win. In fact, at the voting session of the 9th June, a resolution was passed that basically follows the direction laid by the Commission. Almost all of the amendments in favor of the TRIPS waiver were rejected, and although the resolution does call for negotiations for a temporary waiver, the overall discourse of the text is focused on the other short-term solutions proposed by the Commission.

Finally, the European Union is not the only actor at the WTO that could block the TRIPS waiver. There are a lot of other countries that have interests in keeping the intellectual property rights for themselves, so the proposal is unlikely to pass. But you never know – this might actually be an occasion in which capitalism is briefly put aside in favour of a more humane approach. The WTO will decide it.