COVID-19 Drug Regulation Patent

Intellectual Property Rights in Covaxin – Part 1 (Waiver of IPRs)

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(This post has been co-authored by Anik Bhaduri and myself. Anik is a fourth year student at NALSAR University of Law, Hyderabad.)

A recent piece in the Economic Times argued that the Indian government should buy out the intellectual property rights to Covaxin, to bolster the commitment to its WTO proposal along with South Africa, to waive all IPRs on patents, copyright, industrial design and undisclosed information pertaining to vaccines for Covid-19 (covered previously on the blog here, here and here). The indigenously developed Covaxin has been created by Bharat Biotech and the Indian Council for Medical Research (ICMR). In Part I of this three-part post, we discuss the possibility of waiver of the patent and trade secret rights in Covaxin. In Part II, we explore the broader issue of IP ownership in outcomes of publicly funded research and in Part III, we analyse the opacity surrounding the clinical trial data generated during the Covaxin trial, which has not been publicly shared on grounds of IPR concerns.

Who Owns the IPR in Covaxin?

As per Rule 233(i) of the General Financial Rules, 2017 (GFR), pertaining to the Funding of Sponsored Projects or Schemes, the Government Ministries or Departments sponsor projects or schemes undertaken by Universities and other similar Autonomous Organisations such as the ICMR etc., the results from which are expected to be in national interest. Normally, the totality of the expenditure on such projects, including the capital expenditure is borne by the relevant Ministry or Department. Crucially, this Rule also provides that in addition to the submission of technical and financial reports on completion of the project, “a stipulation should be made in such cases that the ownership in the physical and intellectual assets created or acquired out of such funds shall vest in the sponsor.” This does not seem to constitute binding law as it only suggests that such a stipulation is desirable and should be made while clause (ii) of the Rule provides that post completion, the sponsor/government ministry “should decide and communicate to the implementing agencies whether the assets should be returned, sold or retained by them.

Mrinalini Kochupillai had noted that Rule 215(3)(i) of the GFRs 2005 (whose text is exactly the same as that of Rule 233(i), GFRs 2017) was in direct contradiction to the then applicable Department of Science and Technology’s (DST) (Ministry of Science and Technology), Guidelines for Technology Transfer and Intellectual Property, which encouraged institutions receiving grants from the DST to seek protection of IP resulting from the funded R&D projects. She argued that the patchwork of unclear policy statements makes the issue of ownership in publicly funded IP uncertain, and often liable to be trumped by contrary stipulations in funding agreements. We explore more on this broad issue in Part II of our post.

The funding agreement between Bharat Biotech and ICMR is not available online and it is unclear whether the government retains the IP rights to Covaxin. Since the vaccine has been co-developed as part of a public-private partnership between the ICMR-National Institute of Virology (NIV) and Bharat Biotech, the government should have had some voice over the rights to IP in the vaccine.

The collaboration between Bharat Biotech and ICMR-NIV is reported to have begun in early May, 2020. It is unclear what role both Bharat Biotech and ICMR-NIV had in the collaboration as well as the amount of Indian taxpayer money used to fund the development of the vaccine. This is in stark contrast to developments in the United States, where for instance, large pharmaceutical companies have been criticized for benefiting out of US public funding as part of Operation Warp Speed and reaping gigantic profits via the development of their vaccines. There have been recent reports of Bharat Biotech collaborating with the US based pharmaceutical firm Ocugen Inc to co-develop Covaxin for the US market, which would make it seem that Bharat Biotech possesses the requisite rights over the IPR in the vaccine. This assumes greater significance as there is another vaccine being developed by Genova, Pune with the help of funding via a seed grant by the Department of Biotechnology. This vaccine uses novel mRNA technology, and if it succeeds in clinical trials, it would be a breakthrough and a first of its kind from the developing world. As a result, global demand for this vaccine may be significantly higher than that for Bharat Biotech’s vaccine which relies on conventional technology. Thus, the government’s retention of IPR in Covaxin and the novel mRNA vaccine in the pipeline, would enable it to be in a position to share them with the rest of the developing world in light of the spirit of its proposal at the WTO.

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Removing the Patent Barrier

The simplest way to ensure that patent rights do not hinder the free transfer of information on the drug would be for the government to ensure that all Covid projects funded by it will not claim IP rights in the first place by putting the outcomes of publicly funded research for Covid in the public domain, or to retain the patent rights purely as defensive patents, i.e., by not enforcing them. Another way of achieving a ‘waiver’ like status could be to operationalise section 157A of the Indian Patents Act (following on from Art 73(b) TRIPS) (as covered previously on the blog here).

The waiver of intellectual property rights is in many ways superior to the alternative solution of compulsory licensing of drugs, which has been advocated by a number of countries that are opposed to the idea of a patent waiver. Firstly, compulsory licensing requires the payment of adequate compensation to the patent-holders, and the TRIPS does not clarify what counts as ‘adequate’ or how the quantum of such compensation is to be calculated which often leads to lengthy negotiations between the patent holder and the government. Secondly, manufacturers can only produce predefined quantities in compulsory license which hinders the objective of mass production of vaccines. Thirdly, large pharmaceutical corporations often retaliate against countries that impose compulsory licensing of drugs, leading to potential unemployment and a decline in investment. For instance, Abbott withdrew its products from Thailand after the imposition of a compulsory license. Developed countries, particularly the USA, have sometimes imposed trade sanctions on countries that have imposed compulsory licensing, outweighing the benefits derived from such licensing. A WTO waiver of obligations for all member states would preclude such targeting but it would be hypocritical if the countries that raised this demand do not waive similar IPRs on their vaccines, at least domestically.

One of the key arguments against the complete waiver of patent rights is that it reduces incentives to pharmaceutical companies to engage in research as they cannot recover the amounts, they had spent on developing the drug – in the case of Covaxin such an argument may be weakened since the research was at least partly funded by state agencies. Further, as this article in the Economist points out, if subsidies and tax breaks are accounted for, the American private pharmaceutical industry pays for only about one-third of the country’s biomedical research, while reaping a disproportionately large share of profits.

Since India has moved the demand for waiver of IPRs at the international arena under Article 73 of the TRIPS, it is reasonable to expect that the government will follow a similar policy in the domestic sphere by waiving the IPRs on Covaxin.

Lack of Proactive Disclosure of Know-how

While patent waivers are intuitive to consider in this scenario, the waiver of protection over technological know-how constituting commercially sensitive business information or trade secrets has not received adequate attention. Trade secrets in India are protected under contract law, or in the absence of a contract, under an equitable duty of confidence. As J. Prabha Sridevan has argued, the issue of access to vaccines and medical treatment amidst a pandemic is not just a concern to be negotiated among private parties at a price set by wealthy corporations. It should be perceived via a constitutional lens, as part of the right to health which constitutes a part of the inalienable right to life with dignity. This right overrides the state granted monopoly to a patented invention or contractually protected trade secret rights, making a strong case for a waiver of protection.

However, in practice this is complicated by the difficulty of enforcing such a waiver of trade secret protection since what exactly is sought to be shared may not be clear unless companies volunteer to make this information accessible. Manufacturing sites may be able to share some of this information but at the risk of jeaopardising their relationship with the company. Skilled personnel who can translate the technical know-how into actionable knowledge may also be required in addition to local manufacturing capacity. Thus, for the practical utility of such a waiver to be realised in real time, companies volunteering to opt in, into the sharing process would yield the most effective results. Many people are therefore cynical that a waiver of protection without proactive disclosure of ‘know-how’ would make little difference if pharmaceutical companies refuse to share their know-how which is essential to manufacture the vaccines.

Interestingly, it may be useful if the drug regulator shares data on clinical trials or any other confidential information available to it, once Article 39 of the TRIPS, which protects undisclosed information is waived off. Pertinently, Article 39(3) provides that when pharmaceutical products utilizing new chemical entities require the submission of undisclosed test or other data as part of gaining regulatory approvals, this data shall be protected against disclosure “except where necessary to protect the public.” We will explore the issue regarding disclosure of clinical trial data in more detail in Part III of the post.

Please click here and here to view Part II and Part III of this post.

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