On Eve of WTO COVID Meeting: Director General’s “Third Way” Is Same Old Way of Big Pharma Control Over COVID Vaccine Supply, Rebranded

For Immediate Release: April 13, 2021
Contact: Matthew Groch (202) 454-5111, mgroch@citizen.org

WASHINGTON, D.C. – The World Trade Organization (WTO) Director General (DG) is holding a “Third Way” COVID-19 vaccine confab in Geneva on April 14th that at best is a distraction from an effective initiative that falls squarely within the WTO’s actual remit. That would be a temporary COVID-19 waiver of patent, copyright, industrial design and undisclosed information terms of the WTO Trade Related Aspects of Intellectual Property (TRIPS) agreement, to the extent they hinder the “prevention, treatment and control” of the COVID-19 pandemic.

By design, what the WTO DG has dubbed the “Third Way” is unlikely to help bolster COVID-19 vaccine or treatment supplies because it leaves the same few pharmaceutical firms in total control of supply. Relying on contract manufacturing and voluntary licensing is the approach that has led to massive shortages with a few firms controlling if, where and when supply will be manufactured and can be sold or distributed and at what price. Horrifyingly, the world is not expected to reach herd immunity until 2024 under this regime.

The WTO DG has said that current annual global COVID vaccine production capacity is 3.5 billion doses. But between 10-16 billion are needed to reach herd immunity, assuming 70% of population vaccination levels and some vaccines being two-shot regimes. There is no option but to create significantly more production capacity, especially given the prospect that these will not be one-time shots but perhaps needed on an ongoing basis if, like flu vaccines, they must be repeated or if booster shots have to be given.

The role of the WTO and its DG should be to facilitate negotiations among WTO member nations to fix the problem that is caused by existing WTO rules on intellectual property. Many health and vaccine-specific agencies already have initiatives underway that have failed to coax vaccine originator firms to license or otherwise share their technology. And, not one firm has participated in the World Health Organization’s voluntary COVID-19 Technology Access Pool (C-TAP). Various global and even national agencies are better suited than the WTO to play matchmaker between originators and prospective manufacturers.

But missed connections are not the issue: Until policies change so vaccine originating firms do not have total control over production, such as a WTO TRIPS waiver and related government actions to pressure for tech transfers, supplies of vaccines and treatments will remain short. Many qualified firms in developing nations have sought licenses or contract manufacturing deals. Instead of agreeing to boost global production, vaccine originators have used their IP monopolies to effectively block production to supply markets they consider unprofitable. Their focus is not on global access. Consider Pfizer’s investor relations VP’s recent announcement that the firm will shift production next year to boosters for sale to rich nations at higher prices.

Had the TRIPS waiver of some WTO Trade Related Aspects of Intellectual Property (TRIPS) been agreed when proposed last year, perhaps more than 27% of people in low- and middle- income countries (LMICs) would be projected to get vaccines in 2021. Instead, few will have access until 2022. Many will wait until 2024. The pandemic will rage largely unmitigated among more than three quarters of the world’s population.

A temporary TRIPS waiver can make sure “trade” rules are not an obstacle to countries’ efforts to protect their residents’ health and crush the pandemic. Indeed, the agreement establishing the WTO does not provide authority for the DG to broker deals between private firms. This activity is simply outside of its mandate.

In contrast, negotiating waivers of the obligations contained in WTO agreements due to the development of exceptional circumstances is an explicitly authorized function of the organization. If the COVID-19 pandemic does not constitute such exceptional circumstances, it is unclear what would qualify as such.

Today more than 100 WTO members support the waiver and consider it critical to boost worldwide production of COVID vaccines, treatments and diagnostic tests. Many hoped that the arrival of new WTO DG, economist Ngozi Okonjo-Iweala, might move countries currently blocking the waiver. Because South Africa introduced it and the WTO Africa Group supports it unanimously, some WTO members and activists worldwide hoped that the first African WTO DG could help facilitate progress. However, Okonjo-Iweala did not endorse the waiver. Instead, she diverted attention away from it by suggesting a “third way” that is more of what has failed.

Namely, corporations determine where and how much vaccines and other drugs are produced through highly restrictive voluntary licenses and contract manufacturing arrangements, with the monopoly-holding firms deciding if, how much, where and under what terms chosen partners may produce. One example of what the WTO DG proposes is South African firm Aspen’s contract manufacturing arrangement with Johnson & Johnson (J&J). According to South Africa’s WTO Counselor, for many months 91% of doses produced in South Africa had to be sent for sale in Europe, while only 9% could be used in South Africa.

Many pharmaceutical industry interests oppose the waiver and have a litany of arguments intended to redirect attention away from the core problem of their monopoly control over supply. They claim developing country firms cannot make these vaccines, even as they make limited contracts for such firms to do so. They claim that IP barriers are not a real obstacle to greater production. If IP was not an obstacle, manufacturers all over the world would already have begun to organize more production to fill the chasm between supply and demand. Instead, there are a limited number of market-segmented contract manufacturing arrangements, as determined by developers who restrict access to the technology. Moderna declined to partner with a qualified Bangladeshi vaccine maker while other firms report never getting any response to their inquiries. Just in Africa, “Biovac and Aspen in South Africa, Institute Pasteur in Senegal, and Vacsera in Egypt could rapidly retool factories to make mRNA vaccines,” notes a group of medicine-production experts in a recent Foreign Policy article. Indeed, while COVID-19 shone a spotlight on the mRNA platform, for two decades researchers around the world have attempted to harness it for vaccines and therapies. A former Moderna director of chemistry revealed that with enough technology transfer and knowhow-sharing, a modern factory should be able to get mRNA vaccine production online in three to four months. The result of the originators’ unwillingness to partner is a huge gap between needed global supply and the production levels that vaccine developers deem useful for their business strategy, which is focused mostly on selling at higher prices to rich and upper-middle-income countries.

Failure to enact a waiver in the face of this unprecedented health and economic crisis could be the final blow that dooms the WTO. The existential and intensifying crisis that has wracked the WTO in recent years is in no small part a consequence of the organization getting involved in or being used to dealing with issues clearly outside of its mandate. And the WTO’s increasing irrelevance is related to the body not succeeding in managing problems and concerns that are directly in its remit.

The “third way” approach would double down on the same mistakes. By not prioritizing the negotiation of waiver language agreeable to all WTO member countries and desperately needed to address THE priority concern of many, the organization will become more irrelevant, while also alienating 100-plus countries that support the TRIPS waiver. If the new DG pulls the WTO — an organization devised to negotiate and administer rules — into instead pretending to become an international deal broker, it will only amplify concerns about the WTO staff and structures overstepping the authorities provided by member countries.

The way forward at the WTO is clear. Existing WTO rules are obstacles to scaling up global production and thus facilitating more equitable distribution of affordable, safe and effective COVID-19 vaccines, treatments and tests. Eliminating these obstacles is not the final step to greater production, but the first, so there is no time to waste. The DG’s priority should be to pave a quick path to countries engaging in text-based negotiations on a waiver. If some WTO member countries have specific concerns with the waiver that South Africa and India have proposed, then the way forward is to offer changes to that proposal. Facilitating negotiations among WTO members to fix a problem caused by existing WTO rules, by preparing a waiver text that can be approved by all at the WTO General Council, is precisely the role of the DG and the WTO.