Author: Ken Heydon, LSE
India’s death rate from COVID-19 has reached alarming levels and this has heightened attention to the trade in providing vaccines to help.
Trade is a crucial element in the fight against the pandemic. Some countries, like China, have requested credit for providing vaccines to others, while cooperation through the COVAX initiative has seen vaccines shipped from the Serum Institute of India to some of the poorest countries in the world.
But trade policy has also been a serious obstacle to the free flow of vaccines, vital vaccine inputs and the knowledge that underpins their production.
At critical times, several countries – including the United States, the European Union and more recently India – have imposed embargoes or administrative barriers to the export of vaccines. Ironically, India also imposed a 10 percent tariff on imported vaccines.
Restrictions have also been placed on the materials needed to manufacture vaccines. In February, the United States‘ invocation of the Defense Production Act – which requires U.S. suppliers of materials and equipment for vaccine production to seek permission to export – endangered global access to 37 critical vaccine inputs.
Adar Poonawalla, director of the Serum Institute in India, linked the global shortage of bags of bioreactors – critical in the vaccine supply chain – to US policy to prioritize domestic production. The potential for supply disruption due to political interference is glaring: Pfizer’s vaccine needs 280 components from 86 suppliers in 19 countries.
As part of the ongoing debate over intellectual property rights, the United States has now expressed support for the proposal launched at the WTO by India and South Africa to temporarily remove them on COVID-vaccines. 19, including messenger RNA technologies used in Pfizer-BioNTech and Moderna and those used in adenovirus vaccines produced by Oxford-AstraZeneca. Nonetheless, even if the waiver receives the necessary support from 164 WTO members, this will not prevent restrictions on intellectual property rights from preventing developing countries from acquiring knowledge about new techniques for designing vaccines. and to develop the cell lines necessary for the manufacture of vaccines.
Ensuring the free flow of necessary inputs through the supply chain is essential to foster global vaccine production. On April 14, 2021, WTO Director General Ngozi Okonjo-Iweala met with government and industry officials to discuss ways to strengthen supply chains. A guiding principle to facilitate trade will be the provision in Article XI of GATT that any export restriction must be temporary, noting that even a “temporary” restriction can be very disruptive within a supply chain. complex world.
More ambitiously – with an emphasis on facilitating cooperation rather than simply removing restrictions – it might be possible to build on the Trade and Health Initiative proposed by a group of members of the WTO at the end of 2020. This would imply the establishment of an internationally coordinated program of and subsidized production of vaccine components.
the key here would be the need to overcome the reluctance of countries that lack public health incentives to provide subsidies on the scale required to meet global demand. These countries would only benefit from the “externality” of solving their own public health crisis if they were guaranteed access to other countries’ vaccine production through trade.
Going forward, the trade regime will need to be better aligned with continuing knowledge to deal with future pandemics, including those resulting from variants of SARS-CoV-2, against which current vaccines are likely to be less effective.
Notwithstanding the complexities arising from the patent paradox – namely, restricting knowledge now to increase it in the future – action is still possible that would go beyond a temporary waiver.
More should be done within the WTO to implement changes to the Agreement on Trade-Related Intellectual Property Rights (TRIPS) aimed at improving developing countries’ access to medicines. In 2010, India and Brazil initiated dispute settlement actions at the WTO and argued that the repeated patent infringement seizures of generic drugs – originating in India and passing through the Netherlands to reach other developing countries – were inconsistent with the TRIPS Agreement. The case drags on, but Article 31 of the TRIPS Agreement still sheds light on the issue of the seizure of drugs in transit.
More should also be done under preferential trade agreements to facilitate developing countries’ access to medicines. The Trans-Pacific Partnership is a good example. When the United States actively participated in the negotiations, it requested a 12-year data exclusivity period for biologic drugs, some of which are used in COVID-19 therapy.
Even with the United States leaving the agreement, the CPTPP’s provisions on data exclusivity protection for biologics – which many health authorities see as a significant barrier to research and a source of increase. of public spending on drugs – are still suspended.
To be fully effective, action on the trade front must be combined with reform of public health in developing countries. The impact of COVID-19 in India, for example, has been accentuated by decades of underinvestment in public health infrastructure. The shortage of staff, beds and oxygen demonstrates this dramatically. As always, trade cannot bear the full burden.
Ken Heydon is a visiting scholar at the London School of Economics. He is a former Australian civil servant and senior member of the OECD secretariat. He is the author of The political economy of international trade: putting trade in context (Politics, 2019).
This article is part of a EAF special series on the COVID-19 crisis and its impact.