IP IMPLICATIONS OF PANDEMICS ON INTERNATIONAL TRADE: COMBATING THE COVID 19 CRISIS
Article by Amreen Taneja Berkeley Law LLM Class of 2020,
IMPLICATIONS OF PANDEMICS
Infectious diseases count as one of the top ten leading causes of death worldwide. They have plagued mankind throughout history and have played a major role in shaping the society as we see it today. The 1918 Spanish flu pandemic swept across the world killing more than 50 million people and is known to have contributed in ending World War I. Pandemics and epidemics along with posing a great health crisis for mankind also have several socio-economic impacts. In today’s hyper globalised world where nearly, every product is manufactured and sold through an international supply chain, it has become increasingly difficult for countries to remain insulated from the adverse impacts of such infectious diseases. Pandemics are a sour reminder of human vulnerability. The SARS CoV which is known to have emerged in China in 2002 due to exposure with infected palm civets affected almost 8000 people across the globe and adversely impacted the South East Asian economies leading to an economic loss of $18 billion.
The MERS-CoV found to have been transmitted through camels was another form of corona virus which plagued the middle east in 2013 bringing in its clasp,regions of United Arab Emirates, Jordan, Qatar, Iran, Oman, Yemen, Lebanon Jordan as well as South Korea and Canada adversely impacting their travel related service sectors as well as foreign trade.
The economic impact of pandemics may not be long lasting if public health containment procedures and coordinated responses are ensured to mitigate spread of the infecting pathogen.It is nevertheless an overwhelming realisation, that these diseases are only a short plane ride away from threatening another nation’s regional and economic stability. A pandemic therefore has the potential to not only disrupt nations but also upset the global economy by altering the course of supply and demand. The lockdowns of businesses, restrictive social interactions as well as the discord between nations for allocation and distribution of antiviral drugs and vaccines can lead to disturbances in diplomatic and trade relations between States. The COVID 19 virus recorded to be one of the biggest pandemics of the 21st century has led nations into a similar dilemma. The UN Department of Economic and Social Affairs has declared the virus responsible for undermining global supply chains and foreign trade potentially leading to a global financial slump of 0.9% in 2020 contrary to the previously projected rise of 2.5%. This estimate is directly linked to the expected 13% to 32% decline in world trade in the present economic year.
COVID 19 CRISIS
Disruption of normal economic activity caused due to the world being in a virtual lockdown will result in massive blows to services related trade given the imposition of stringent travel restrictions. Such strains on the economy force national leaders to flagrantly prioritise the urgent demands of their nations which often lead to a conflict of interests between them. The recent deflecting of Chinese shipments of protective face masks by the US meant for export to Canada and Germany serve as an example of such friction. Such actions prompt imposition of retaliatory measures by affected countries in the form of tariff and non-tariff barriers.
Another potential political challenge that the world will face is with respect to free trade of the upcoming vaccine for novel COVID 19. The existence of a vaccine itself does not ensure the eradication of this disease. Like all drugs, the COVID 19 vaccine which is currently under development by about 80 pharmaceutical giants of the world will be protected by a thicket of patents. Thus, the pricing of these drugs and vaccines which have been developed by spending billions of dollars in research will ensure that these will not come cheap. These drugs which will also include profit margins for pharma. companies will only be available to those who can afford to pay the price thereby empowering pharmaceutical giants to essentially decide who will live and who will die. In addition to drugs, the recent conflict between Canada and an American company 3M, over protective gear like N95 respiratory masks which are also subject to patent protection has caused a massive stir. Thus, 3M which holds over 400 patents for pulmonary protection devices, along with many such other drug companies, has been called upon to make these survival tools accessible to all. Some of the most promising treatments for COVID 19 such as Remdeivir used for treating Ebola, Favipiravir developed for treating influenza and the HIV treatment drug Kaletra are also protected by patents. All of this has made many countries take preemptive measures to ensure that they do not fall prey to the legal monopolies of the pharmaceutical industry.
COMPULSORY LICENCING DEVELOPMENTS
The mounting economic and political pressures caused by the health crisis has made countries reconsider their stance on the contentious compulsory licensing provision of Trade Related Aspects of Intellectual property Rights (TRIPS). Article 31 of the TRIPS Agreement of WTO allows for member state governments or third parties authorized by such governments to engage in ‘other use’ of the subject matter of a patent without the authorization of the right holders. This exception enables governments to invoke the provision during situations of extreme urgency such as a public health crisis like COVID 19.
Many countries are now working on streamlining their compulsory licensing laws while others are swiftly introducing them into their legal systems. The Republic of Chile on March 17, 2020 passed a resolution for granting of non-voluntary licenses to facilitate access to medicines and technologies instrumental in the diagnoses and treatment of COVID 19.France, on March 23, 2020 introduced an article L.3131-15 in their public health code allowing the Prime minister to permit launch of generic products on French territory before the expiry of a duly registered patent. Many countries which already had such provisions in place are now seeking to strengthen their laws in order to ensure swift and seamless distribution of medicines. Germany, home to some of world’s largest pharmaceutical giants, recently made a new addition to its legislation: ‘Prevention and Control of Infectious Diseases in Humans Act’ allowing the Federal Ministry of Health greater powers in times of an epidemic. Israel on March 18, 2020 debuted its first ever compulsory license since the provision’s inception in the country’s patent law in 1967, becoming the first and so far the only nation to issue a COVID 19 related Compulsory license for importing a generic version of Kaletra from India.
SUGGESTIONS FOR THE ROAD AHEAD
These individual efforts may be effective in domestic restoration but can only go so far in ensuring a sustainable solution to these increasingly recurring outbreaks. Thus, a structured and system driven approach must be adopted. This can be done through a common research fund created specifically for resources devoted to R&D for infectious diseases wherein all possible testing methods, vaccines and medicines can be developed and offered freely for production to all member states. This common pool can be created through a joint program between the World Health Organisation and World Trade Organisation whose members can fund this project as a health investment towards a secure future for the entire world. This permanent fund could also have a provision for outright purchase of such technologies from rights holders who may have already developed effective testing kits, treatment protocols or vaccines for diseases which have the potential of turning into pandemics.
This two-part funding system will not only guarantee a streamlined channel of implementation but also satisfy the crucial need of fostering and encouraging innovation by respecting the rights of intellectual property holders. Such a system could play the imperative role of adequately compensating the losses incurred by a rights holder on issuance of a compulsory license by any country on an independent basis in times of such pandemics.
This mechanism can be instrumental in ensuring that the original mandate of TRIPS as laid down under Article 7 of Agreement which states that ‘protection of intellectual property rights should be for the purpose of promoting innovation in a manner conducive to social and economic welfare, and to ensure a balance of rights and obligations’ is fulfilled. This would also prevent potential conflict of interest that may arise by use of Article 73(b) of TRIPS Agreement which calls for suspension of enforcement of any intellectual property rights including patents, designs and trade secrets which is being advocated by certain interest groups.
Member states can provide such legitimate exceptions to rights conferred under Article 30 of the TRIPS Agreement which allows “limited exceptions to the exclusive rights conferred by a patent, provided that such exceptions do not unreasonably conflict with a normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent.”
This provision could be used to allow such a fund to acquire any such successful technology and make it available for global access to all member countries while protecting the legitimate interests of the rights holder thereby striking the critical balance between public and commercial good.