COVID-19 Drug Regulation Patent

Supreme Court Weighs in on the Crisis: Vaccine Price Equity, Compulsory Licensing and Free Speech Online


Supreme Court of India

Building of the Supreme Court of India

After being heavily criticized for taking matters into its own hands by transferring matters related to the Covid-19 crisis from High Courts, the Supreme Court had its first hearing in the suo motu case on 30th April. A three-judge bench consisting of Justices DY Chandrachud, L Nageswara Rao and Ravindra Bhat looked into a wide variety of issues such as Oxygen & Covid drugs shortage, (the lack of) equitable pricing of vaccines, protection of health workers, possibility of invoking compulsory licenses and clampdown on free speech on social media platforms, resolving to issue interim orders for the time being. While the order revealing the definitive directions that shall be binding is yet to be released, during the hearing, the apex court has raised some extremely pertinent questions on India’s current vaccine and drug policies.

Equitable Pricing of Vaccines

The central government is set to procure 50% of the vaccines, while the remaining 50% would be procured by the state governments. This is a little strange considering both sets of procurements will ultimately be administered to the public (barring union territories and exports). Recently it was announced that Covishield, i.e., the AstraZeneca vaccine manufactured by Serum Institute, would be sold to state governments at INR 400, while it is currently priced at INR 150 for the central government. After severe backlash, Serum Institute slashed the state government price to INR 300. It later announced that the INR 150 price was for the initial 100 million doses only, and the price will soon increase for central government procurement as well – the Health Minister, however, contradicted this, creating massive confusion. Similarly, Bharat Biotech’s Covaxin, which is publicly funded and developed in India, is being sold at INR 150 to the central government while states will be charged INR 600 (See here for details on vaccine prices). This differential pricing contributes to the already confounding mystery that is Covaxin’s IP ownership (see here and here).

The Supreme Court thus asked the question all of India has been asking: why this difference? It questioned why the Central government wasn’t procuring all of the vaccines and distributing it equitably among states, similar to the National Vaccine Policy, considering it was in the best position to do so. The bench drew attention to Rules 19 and 20 of the Drugs Price Control Order. These rules empower the government to monitor prices and set ceiling prices for drugs in extraordinary circumstances in public interest. It was also pointed out that AstraZeneca shots have been priced at much lower prices in other countries. Notably, Serum Institute has sold vaccines to Covax Facility at a per dose price of INR 225 and to Bangladesh at INR 300 while the UK-manufactured AstraZeneca is being sold in UK at INR 225, EU at INR 160,  US at INR 300 (approximate prices, converted from USD).

However, the bench refrained from issuing any specific directions in this regard and merely asked the central government to look into the matter.

Covid Medication and Compulsory Licensing

An important development was the bench’s reference to the Doha Declaration on TRIPS and Sections 92 and 100 of the Patents Act, 1970, asking the government to consider compulsory licensing for Covid drugs with sunset clauses. It recommended that these steps be considered in order to ramp up manufacturing as its affidavit showed 10 PSUs that have the requisite capacity. In fact, the Patents Act contains a number of provisions relating to CLs, as explained by Swaraj and Varsha here, and the pressure to invoke these is mounting day by day. Delhi HC had recommended grant of CL recently. Earlier, the Maharashtra government too had written to the centre, asking it to invoke a CL on remdesivir for generic manufacture.

Packets of remdesivir

Four packed vials of Hetero’s Remdesivir injection COVIFOR (image from here)

Once treated as a remote, exceptional provision, CLs have come alive in the international consciousness since the beginning of the pandemic. Several countries have made arrangements for CLs on Covid medication (see Swaraj and Varsha’s post). After years of chastising countries for such measures including India’s Nexavar CL in 2013, the US and other developed countries are now supporting CLs and other TRIPS flexibilities as appropriate and adequate measures to tackle the Covid crisis (as opposed to the divisive TRIPS waiver proposal). Despite criticizing Hungary earlier for its manner of granting a CL on remdesivir, the US in its Annual Special 301 Report, in a welcome change, recognises CLs as a tool to handle the ongoing crisis. In March, a Canadian company sought a CL to manufacture Johnson & Johnson’s single-dose vaccine. If granted, it will become the first CL granted on a Covid vaccine. Amidst these international developments and domestic pressure, it remains to be seen whether the government decides to take the leap, be it for drugs or vaccines.

The Supreme Court also touched upon issues relating to Covid drug procurement through importation. Like Pankhuri discussed here, the apex court too, pointed towards Section 107A, highlighting that since Bangladesh, being an LDC, was not obliged to protect product patents, importing remdesivir from generic manufacturers operating there could be considered. The discussion however did not throw any light on the possible problems that may be associated with this option that Pankhuri had underscored.

Despite this much needed questioning of drug and vaccine manufacturing, the court unfortunately did not dig deep into the issue at the heart of the manufacturing hurdles – Covaxin’s IP ownership status. While Covaxin’s manufacturing has now been expanded to multiple facilities to a total of 700 million doses per year and the government has permitted Haffkine Institute to manufacture it as well, it is unclear why IP rights on the same have not been lifted so as to properly breach the demand-supply chasm. Given vaccination has now been increased to the 18-45 year age group, it is only a matter of time before supply runs out.

Clampdown on Free Speech on Social Media Platforms

As the devastating consequences of the second wave unfold all over India, citizens have taken to social media including platforms like Twitter, Instagram and Facebook to seek help procuring oxygen, beds, remdesivir and plasma for their family members as well as helping each other by passing around information regarding supply. Citizens as well as political leaders severely denounced the government, with calls for the Prime Minister’s resignation gaining traction too. As a result, the government ordered Twitter to take down several tweets that criticized the government’s handling of the public health crisis. Facebook too happened to block a hashtag temporarily, subsequently restoring it after backlash. In Amethi, UP, a man was arrested for creating fear among people through spread of misinformation for asking for oxygen cylinders online.

During the hearing, the Supreme Court specifically addressed this issue and stated that the use of social media by citizens to voice their grievances during a crisis can in no way be termed misinformation. It threatened to treat any clampdown on free exchange of information as contempt of court.

Concluding thoughts

Without a proper application followed by the hearing and grant of compulsory license; or an announcement by the government revealing the status of IP in Covaxin, there is no conclusive progress. The Supreme Court has mostly touched upon some of the important issues, without delving deep or issuing even interim orders (so far). The next hearing is scheduled on 10th May. Meanwhile, the state high courts continue to address local problems such as regulation of election rallies and oxygen supply to hospitals. While this SC hearing would undoubtedly increase the pressure on the central government, concrete steps remain to be taken so as to bring out actual results in the form of increased manufacture and supply of vaccines and drugs.

Once the interim order is out, we will be updating our readers on the Supreme Court’s directions. In the next few days, we will also be coming out with suggestions on the overall situation and what can be done going forward from here.

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