Vaccination in India: Compulsory Licensing, Indemnity and TRIPS waiver

Reading time : 10 minutes

Introduction

The second wave of COVID-19 took millions of lives, shattered many homes and left people starving for beds, oxygen cylinders and medicines. The entire healthcare infrastructure of the country was overwhelmed as the number of coronavirus cases was unprecedented. Now, when the country is anticipating a third wave of COVID-19, measures need to be taken to ensure that the infection and transmission of virus is prevented as far as possible. ‘Vaccination’ of the entire country is the best way possible to protect the public and prevent any further tragedy and causalities. All can be safe only when none is left unvaccinated.  India, a pioneer in vaccine manufacturing is facing a shortage of vaccine in the country There is a huge gap between the demand and supply of vaccines in the country. The vaccines are patented innovations and the Intellectual Property Rights on the vaccines are acting as a hinderance in the universal access, production, supply and affordability of the vaccines.

This article discusses the methods that India has used and can use to ramp up vaccine production. It deals with the India’s demand for TRIPS waiver of Intellectual Property Rights of vaccines at the international level and at the domestic level, how the provisions of compulsory and voluntary licensing can be beneficial in the present context of vaccine shortage. It also highlights India’s attempt to procure vaccine from foreign manufacturers and their demand for Indemnity from all legal proceedings against them in the territory of India. In the end it suggests some measures that can be implemented by the government to speed up vaccine production.

Current state of Vaccination in India

India has been grappling with the second wave of COVID-19. The death toll and the rate of infection and transmission has been at an all-time high in India. New mutants, variants of coronavirus are being discovered, the most recent being the ‘Delta Variant’. In India only 3.7% of the total population is fully vaccinated and 14% is partially vaccinated.[i] The government has the goal of vaccinating about 1.3 billion population. It aims at producing 2.6 billion doses by end of the year 2021.

Only 0.9% of people in low-income countries have received at least one dose. India has halted the exports of vaccines due to increased demand for vaccine in India. Serum Institute has said that it will continue the exports only by the year end. The domestic demand for vaccine is not being met. The export of vaccine was halted when India was stuck with the deadly second wave of COVID-19.

As a part of Global Alliance for Vaccines and Immunizations (GAVI) and its COVAX facility to help in the distribution of vaccines across the world, India also has the responsibility of supplying vaccines to the poor countries. Therefore, India needs to take certain concrete and urgent steps to fulfil the vaccine demands of its own citizens as well as of nations that are dependent on it for vaccine supply.

In April 2021, a shortage of raw materials for vaccine production was also experienced by the vaccine manufacturers across the world. It was due to the invocation of the Defense Production Act ,1950 by the Biden Government in United States. It gives the president powers to allocate “materials, services, and facilities” and award contracts that take priority over any other contract to “promote the national defense.” In this case, the law is being used to defend the country against the virus. [ii]This led to utilization of all the raw materials for vaccine production being given priority for domestic use in the US. It resulted in a major setback in the production and supply of vaccine in other countries. Though the US government has lifted up the ban on exports of the raw materials, still a lot of underutilizations of the production capacities and damage has been caused.

 It shows that even after the vaccines have been launched in the market, maintaining their supply is a herculean task. It calls for greater coordination and collaboration between countries.

On India’s part, the country was slow in realising the extent of danger posed by COVID-19. Moreover, when the other countries had already booked huge orders for vaccine, before even the completion of the clinical trials, India has been less proactive in securing vaccines. For a country of such a massive population and an already overburdened medical infrastructure, it is must that vaccination is given a rampant rollout. The Government has recently made the vaccination free. Small steps are being taken by the government.

India is one the largest vaccine manufacturers in the world. Still the whole burden of vaccination of the entire country is being borne primarily by Serum Institute of India (SII), Bharat Biotech. SII is producing Covisheild and is also launching ‘Covovax’ soon. Bharat Biotech is manufacturing Covaxin, India’s indigenous Covid-19 vaccine. Sputnik V, the vaccine funded by Russian Direct Investment Fund (RDIF) is being imported and distributed by Dr. Reddy’s in India.

The novel vaccines are protected by patents. With a view to ease the access to production and procurement of vaccines , patents and IP rights on the vaccines need to be given some relaxations.

GLOBAL EFFEORT BY INDIA TO WAIVE IP RIGHTS ON VACCINES: TRIPS WAIVER

After the advent of coronavirus cases across the globe, there was a race among the developed countries and pharmaceutical companies for development of vaccines. When the vaccines were finally introduced in the market, there arose a debate that whether the rights of the patent holders be protected by providing them with a monopoly over the vaccines or there be equitable distribution of vaccines. The developing and low- and middle-income countries would not be able to afford the patented vaccines and thus, will be neglected/fall behind in protecting their citizens from the virus.

With a view to make the vaccines generic, affordable and equally accessible across the globe, India and South Africa put forward a proposal in early October 2020, at the World Trade Organisation (WTO) for the waiver of Intellectual Property Rights (IPR) of COVID-19 vaccines.

FLEXIBILITIES IN THE TRIPS

WHO’s agreement on Intellectual Property, the Trade Related Aspects of Intellectual Property Rights (TRIPS) agreement lays out the provisions for the protection of the rights of the patent holder as well as the flexibilities available in patent protection.

Article 7 of the TRIPS Agreement states that the “protection and enforcement of Intellectual Property rights should contribute to the promotion of technological innovation and the transfer of technology in a way that is beneficial for social and economic welfare and to a balance of rights and obligations. Additionally, Article 8 of the it further states that “Members may, in formulating or amending their laws and regulations, adopt measures necessary to protect public health and nutrition, and to promote the public interest in sectors of vital importance to their socio-economic and technological development, provided that such measures are consistent with the provisions of this Agreement.”[iii] It can be said that these two articles of TRIPS agreement will establish very deftly the fundamental and principles to tackle the current situation.

It also provides for Compulsory and voluntary licensing of the pharmaceuticals. Under Compulsory Licensing, the government allows someone else to produce the patented product or process without the consent of the patent holder, with adequate remuneration to the patent holder. [iv]

Article 31 of the TRIPS agreement states that the member countries can issue non-exclusive, non-assignable, licenses for patented technology without the authorization of the right holder, if the country that seeks the Compulsory License pays adequate remuneration to the patentee. The country seeking Compulsory License should first try to obtain a voluntary license. However, this condition can also be waived off in cases of ‘national emergency’, ‘extreme urgency’ or ‘cases of non-commercial public use’.

The Doha declaration ,2001 proposed amendment to Trips agreement. Which came in the form of Article 31bis under which a country is able to import a patented pharmaceutical product from another country by compulsory licensing.[v] Though the Article 31bis of the TRIPS Agreement allows for export of medicines and drugs to nations that do not have the manufacturing capacity. The procedure of implementing this is cumbersome and convoluted. The country exporting has to make sure that the patented drug and medicine is only exported to the specified nation. The importing country will have to inform the TRIPS council. Moreover, the exporting country will have to ensure that the medicines are easy to identify, having some distinct features. This makes the whole process unfeasible and cumbersome. Hence, even if the flexibilities provided in the TRIPS agreement are put to use, they will not be of much help to the poor and developing nations who are not having adequate infrastructure and manufacturing capacity.

NEED FOR TRIPS WAIVER

Considering the current health crisis faced by the world and the catastrophic explosion in the number of cases and deaths in India and some other countries, IP rights of the vaccine and even of the know-how of technology and manufacturing process needs to be waived off. Through this it is possible that dependency with regards to supply of vaccine will be reduced and the market can be fuelled with players willing to manufacture.

This proposal was opposed by the developed countries like US, UK, European Union who were of the contention that the rights of the patent holders need to be upheld to facilitate innovation. Moreover, that the Low- and Middle-Income Countries (LMIC’S) do not have the required health care infrastructure to manufacture vaccines.

The countries opposing the TRIPS waiver are trying to highlight that the flexibilities provided by Article 31 and Doha Declaration are sufficient to license the patents and compulsory licensing can be done by the member nations. Also, that complete waiver of IP rights will dampen the spirit of the pharmaceutical companies in investing in vaccine development for future.

Therefore, the demand for the waiver is not unnecessary or exaggerate. But there is little hope that any action in this direction would be taken immediately. This leads India to explore the possibilities at the domestic front which are based on the Patents Act,1970.

Patents Act, 1970

A Patent is a grant of proprietary rights by the government to the inventor of the product , to prevent any any one else from selling, using and making that product. The product must have novelty, industrial application and inventiveness.[vi]

 The provisions of  India Patents Act, 1970 can be implemented to increase the production of vaccine in the country. This can be done by either issuing Voluntary or Compulsory Licenses. But we also need to take into consideration their effectiveness in context of India and other developing nations.

Section 84 of the Indian Patents Act,1970, states that at any time after the expiration of three years from the date of the grant of the patent, any person, irrespective of whether he/she is a holder of licensee of that patent , may make an application to the Comptroller General of India for grant of compulsory licenses, if any one of the following requirements are met, that-

1. The reasonable requirements of the public with respect to the patented invention have not been satisfied.

2. The patented invention is not available to the public at a reasonably affordable price.

3.. The patented invention is not worked in the territory of India.

Moreover, compulsory licenses can also be issued suo motu by the Controller as deem fit by him. This can be done under section 92, pursuant to a notification issued by the Central Government if there is either a ‘national emergency’ or ‘extreme urgency’ or in cases of ‘public non-commercial use’.[vii]

The current situation in India makes its important to decide whether there should be a demand for waiver of patents of vaccine. In India, free vaccination drive has been launched for all aged above 18. There is also centralised procurement of vaccine. People do have a choice to get vaccinated at private hospitals and pay the amount as mandated by the hospital and regulated by the State governments. Thus, the question of affordability has been eliminated in the present context. In these circumstances the government can think of granting compulsory licenses in light of non-fulfilment of requirement of public for vaccine.

In Bayer Corporation v. Union of India [viii], the court had held that the compulsory license granted by the Drug Controller General of India to Nacto Pharma for producing a generic version of the drug ‘Nexavar’ did not amount to infringement of patent rights. This was used in the treatment of patients of advanced stage of kidney and liver disease. This judgement of the court also set out that public health can be prioritised in cases where patents obstruct access to the drugs and medicines.  

Although it is possible to grant compulsory license in the present circumsatnces, the rights of the patent holders should also be given due consideration. Speculations are rife that India will soon have a third wave of coronavirus. Also, people might need a third dose of the vaccine to maintain immunity for the new mutants/variants of coronavirus being discovered. It is necessary that the funds needed for more Research and Development (R&D) and the rights of the patents holders are protected to facilitate innovation to fight against new variants. This is required when the situation is ambiguous, and vaccination is one of the best methods to prevent infection.

A lot of emphasis is being on Compulsory licensing of the IP rights of the vaccines, which can be seen as an option to ramp up the production. Nevertheless, we cannot ignore the fact that the vaccines are novel and have not completed all stages of clinical trials. It is therefore imperative that special care and caution is taken to ensure that the quality and effectiveness of the vaccines is not compromised in any situation.

Hence, another alternative to increase the production would be voluntary licensing of the vaccines. Firstly, it would protect the rights of the patent holder and give them a free hand to decide on the manufacturers they trust and are willing to license their products to.

In a country like India, where the public enterprises are not fully equipped and there is a lack of manufacturing capacity and raw materials, even if the government steps in and enables compulsory licensing of the vaccine for other manufacturers it would not be of much effect. The priority needs to be to get the required infrastructure and efficient professionals to ensure that the vaccine produced are safe. Lack of trust on the effectiveness and safety of the vaccines is also evident on the part of the people as seen by cases of people avoiding vaccination due to the fear of its side effects.

There is a conflict between the interests of the patent holders and the health and lives of the citizens. Vaccine manufacturing is a complex and expensive process with a major funds needed for research and development. It is important that the rights of the patent owner are also protected, duly providing them the remuneration for their efforts. The TRIPS clearly aims to provide that. But the current health crisis mandates that some relaxations are required to be made so as to ensure the equitable distribution of the vaccine.

However, compulsory licensing should only be used if no other alternative is viable. The government can use revocation of Patents under Section 66 of the Patents Act, 1970 as a valid threat to encourage the patent holders to give Voluntary Licences. But revocation of patents is an extreme step and should only be used as a last resort. Recently, the Indian Patent Office has rejected the application for compulsory license of ‘Dasatinib’, a cancer drug by BDR Pharma on the ground that it had not made efforts to procure a voluntary license from the patentee.[ix]

Voluntary licensing should be encouraged so that IP rights and profitability of the Patent holder is not infringed upon and at the same time maintaining the quality, efficacy and effectiveness of the vaccine. For poor countries, patenting off patented drugs is not a solution. [x]

INDIA’S EFFORTS TO PROCURE VACCINE FROM MODERNA AND PFIZER: INDEMNITY ISSUE

 To bring more vaccines in India, there have been talks with Pfizer and Moderna for supply of vaccine.

Moreover, it is the only vaccine around the world that has been authorised by FDA to be safe for emergency use in children aged 12-15 years. [xi]Speculations are doing rounds that there might be a third wave, primarily affecting children. In such a situation of uncertainty, it is reasonable enough that the country does not neglect the life and health of the children and be prepared. Therefore, it is advisable that the government also puts vaccination of adolescents priority and might even give in to the indemnity demand by the manufacturers.

The hinderance that is obstructing the supply of vaccine from these foreign manufacturers is their demand for certain relaxations. Firstly, that the government of India provides indemnity to them and secondly, that the vaccines supplied by them will not undergo the bridging trials mandatory for new vaccine being rolled out in India. The DCGI has the requirement of conducting post-approval bridging clinical trials and the requirement of testing of every batch of vaccine by the CDL can be exempted if the vaccine lot/batch is certified and released by the National Control Laboratory of the country of origin. The second condition has been accepted by the government, but both the parties have not reached any consensus yet regarding the indemnity clause in the supply contract.

Section 124 of the Indian Contract Act defines indemnity as a contract by which one party promises to save the other from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person. [xii]In the case of Vaccines all liability, damage and compensation will fall on the government for any adverse side effect caused by the vaccine administered.

NEED FOR INDEMNITY

Manufacturing vaccine is a complex process, requiring huge investment in R&D, with several new mutations of COVID-19 coming out every now and then, it is necessary that steps are taken to build trust between the vaccine manufacturer and the people. This would be beneficial in two ways-

Firstly, it will lead people being less sceptical about the effectiveness and safety of the vaccines. Secondly, This would give enough space to promote further research and production of novel and more effective vaccines against the novel mutants as the manufacturing company’s legal burden regarding the complaints of the adverse effect of vaccines will be taken care of by the government.

The only way to get Pfizer and Moderna’s vaccine in the country by accepting their demand for indemnification. The domestic production is not sufficient for vaccinating the whole country and the government will have to provide indemnity if it plans on expanding the vaccination in India by entering into supply contracts with Pfizer and Moderna.

If the government takes responsibility and liability for any and all adverse effects of vaccine then it would reduce the financial burden of the manufacturers and litigating burden of the petitioners as usually it is difficult for them to bring successful claims against the manufacturers. [xiii]Moreover, the trust shown by the government will in turn help in building public confidence about the efficiency and safety of the vaccine. This in a way might led to increase in vaccination and production of vaccines.

WILL GRANTING INDEMNITY HELP INDIA?

Nevertheless, we must see that Indemnity is a fairly broad legal framework to protect and safeguard the rights of the vaccine producers. It might seem absurd to demand indemnity when already huge funds have been given for the development of vaccines and all that the manufacturers now need to do is guarantee and stand by the safety of them. Serum Institute has been demanding indemnity from quite some time and if the government provides indemnity to the foreign manufacturers, then the government would be bound to grant indemnity to even them.

Across the globe people have reported side effects of vaccines be it Pfizer, Moderna, Covaxin or Covisheild. Providing a blanket immunity to the manufacturers against any legal proceedings due to vaccination will have serious consequences. Firstly, it can lead to a decline in the quality and effectiveness of the vaccine being administered. Secondly, providing indemnity to such a large number of manufacturers will cause a huge burnt in the government pocket and public finances.

The question to be considered here is that if Vaccines of Moderna and Pfizer are approved in India and contracts are signed for their supply, will that translate into an immediate increase in the vaccine supply in the country. The answer to this can be seen in the fact that the wealthy nations are also in line for getting the vaccines of these companies. Moderna has made it clear that it is already booked with pre-orders of vaccine exceeding 100 crore doses, from the wealthy nations. [xiv]

It is in talks with Cipla to supply a single dose vaccine in India, but that would only be launched into the market by next year.

INDEMNITY FOR VACCINE ACCORSS THE GLOBE

Pfizer has not supplied vaccine to any country without getting indemnity form all legal consequences in case of adverse effects from the vaccine. Most of the nations have brought forward a compensation system to protect the manufacturing companies from liability. WHO has initiated a special compensation program under COVAX for the 92 low- and middle-income countries.[xv] In US, the US Countermeasures Injury Compensation program is being used to cover vaccine related adverse effects. Out of WHO’s 124 member states, 25 have implemented no fault vaccine injury compensation programmes. Countries like Japan, France, Germany, New Zealand, Taiwan, Denmark, Finland, Norway and Sweden have also launched a ‘no-fault compensation scheme’ to compensate the victims in cases and protect the manufacturers. [xvi]Thus, In India the demand for indemnity by foreign manufactures cannot be deferred for long.[xvii]

Way Forward

The government needs to mobilise and utilize the public sector enterprises. Of 11 public sector units owned by India, many are of capable of going into production and they have the manufacturing capacity.  Recently in a PIL filed before the Madras High Court , the court has supported the revival of the vaccine institutes owned by the government. It has went on to say that the government is having vaccine manufacturing institutes and steps should be taken for the revival and effective use of the dying public sector undertakings.[xviii] Hence, they should be used to boost up the domestic production of vaccines.

At the global level there is a heightened need for better collaboration and coordination among the countries to tackle such deadly pandemics. The welfare of the people across the globe should be taken into consideration while drafting and implementing policies by WHO. Moreover, it is needed to have a more comprehensive framework, clearly mentioning the state of the Intellectual Property Rights in health emergencies. A balanced approach or mid path need to be established regarding the patents on vaccines, the rights of the patent holder, the welfare of the public and equitable distribution of vaccines across the globe. Dependency on other nations for the supply of raw materials for vaccine production should also be reduced. Indigenous plants should be established. There are patents also on the process of manufacturing, at least that hassle can be reduced.

India, has a lot to learn, analyse and implement from the second wave of COVID-19.India should take steps to infuse funds in the development  of healthcare infrastructure and R&D for the pharmaceutical companies. Also, incentives should be given to the pharmaceutical companies who are willing to enter the market and have the infrastructure to manufacture vaccines. This is the best opportunity for India to develop a robust and effective healthcare system. India has been lacking in this in face of its huge population. The lessons that have been learnt in this pandemic should be remembered and the world and India should be prepared more than ever for such health and production crisis.

CONCLUSION

Patents and Intellectual Property Rights are essential to promote Research and protect the rights of the patent holder to acknowledge the effort and funds it takes to develop an innovation. The patents should not be undermined in any way. But every rule has some exceptions, and the current global health care crisis is an exceptional circumstance and a health emergency. Therefore, the global organisations and even the government of India must devise methods to implement the provisions of Compulsory Licensing or voluntary licensing. It also needs to deliberate and decide at the earliest about the indemnity demand by foreign vaccine manufacturers. If it does not wish to accept their conditions, then India will have to look for other alternatives to increase its vaccine production and procurement. The TRIPS waiver will ease a lot of hardships but the possibility of it being granted is distant as of now. Just till the universal vaccination is completed, the ideas of profitability or enchasing on the lives of the people should be kept aside by the manufacturers, patent holders and the wealthy nations. This is the perfect opportunity to set forward a precedent of global collaboration, humanity and equity for the future pandemics and coming generations.

India needs to become more self-reliant in terms of production of vaccine and the raw materials is the best way to ensure the supply of vaccine. The government needs to take crucial and stringent measures be it for Compulsory licensing or accepting the demand for indemnity. Its imperative to complete universal vaccination at the earliest as Dr Maria Van Kerkhove, COVID-19 Technical Lead at the WHO has said that ‘the delta variant is more transmissible than the alpha variant and is spreading readily among the people that are unvaccinated.’ Its time for rise up to the challenge of vaccinating its population and protecting them.


[i]   Coronavirus (COVID-19) Vaccinations , available at: https://ourworldindata.org/covid-vaccinations. (last visited June 20,2021).

[ii]Is there a ban on Covid vaccine exports in the US? available , t:https://www.ft.com/content/82fa8fb4-a867-4005-b6c2-a79969139119 (last visited June 5,2021).

[iii] Trade Related Aspects of Intellectual Property Rights Agreement,1995,art.7,8.

[iv] https://www.wto.org/english/tratop_e/trips_e/public_health_faq_e.htm

[v] Vincent, Nicholas, TRIP-ing Up: The Failure of TRIPS Article 31bis. Gonzaga Journal of International Law (2020).

[vi]  Astha Srivastava, PATENT AND COMPETITION INTERFACE: ISSUES AND CHALLENGES IN INDIA ,4 International Journal of Social Science and Economic Research, 1522 (2019).

[vii] The Patents Act, (Act 39 of 1970), ss. 84,92.

[viii] Bayer Corporation v. Union of India (2014) SCC OnLine SC 1709.

[ix] https://www.lexology.com/library/detail.aspx?g=e4d73cb7-c685-4125-82fd-a33ca6fea0e3

[x] Harshita Math, “Compulsory Licensing under Section 92A: Issues and Concerns”, 13 Journal of Intellectual Property Rights 462-474 (2008).

[xi] Coronavirus (COVID-19) Update: FDA Authorizes Pfizer-BioNTech COVID-19 Vaccine for Emergency Use in Adolescents in Another Important Action in Fight Against Pandemic, U.S. Food and Drug Administration, May 10,2021, available at < https://www.fda.gov/news-events/press-announcements/coronavirus-covid-19-update-fda-authorizes-pfizer-biontech-covid-19-vaccine-emergency-use > ( last visited on June 15,2021).

[xii] The Indian Contract Act, 1872 (Act 9 of 1872), s. 124.

[xiii] Borghetti, Jean-Sebastien and Fairgrieve, Duncan and Goldberg, Richard and Howells, Geraint and Machnikowski, Piotr and Pilgerstorfer, Marcus and Rajneri, Eleonora and Rott, Peter and Santos Silva, Marta and Ulfbeck, Vibe (2021) ‘Procurement of Covid-19 vaccines: why were legal liabilities transferred to the public sector?’, InDret, 2021 (2). pp. 364-366.

 

 

[xvi] Yutaka Onda, Shuichiro Hayashi, No-fault compensation schemes for Covid-19 medical products, 397 The Lancet, 1707-1708 (2021).

[xvii] Sakshi Shairwal, Aditi Banerjee, Indemnity Protection for COVID Vaccination in India, Lexology, June 22,2021.

[xviii]  Madras-high-court-bats-for-revival-of-govt-vaccine-institutes-why-only-private-companies-manufacturing, available at: https://www.livelaw.in/news-updates/madras-high-court-bats-for-revival-of-govt-vaccine-institutes-why-only-private-companies-manufacturing-173871 (last visited June 18,2021).

Author: Mansi Pandey, Dr. Ram Manohar Lohiya National Law University

Editor: Kanishka VaishSenior Editor, LexLife India.

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