Access to Covid-19 Treatment and International Intellectual Property Protection – Part II: National security exceptions and test data protection

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Editor’s Note: Part One of this post can be found here.

In Part One, this post considered obligations under international law to offer patent protection for existing and future Covid19 treatment, and how that is likely to affect widespread access to affordable treatment around the world. Its showed how voluntary licensing and compulsory licensing should ensure that international patent law does generally not serve as major barrier for access to affordable treatment. It however pointed to specific legal issues for those WTO Members which had declared they would not use the ‘Article 31bis’ TRIPS system for enabling drug exports to countries with insufficient manufacturing capacity. This second part looks at alternative options to overcome those issues, in particular by relying on national security exceptions. It also discusses how another form of legal protection mandated under the WTO TRIPS agreement, namely in relation to the test data necessary to show the safety of a drug, can affect access to medicines. It concludes that test data protection, especially under FTAs, can raise complex legal questions about its interface with express allowances to override patent rights, and hence may well serve as legal hurdle to affordable access to medicines. Countries that currently pour resources into drug testing and development might therefore wish to try to ensure that IP rights later available for these drugs and their test data cannot be exercised to limit access.

Returning to the discussion in Part One, a further question revolves around the interplay between the Article 31bis system for export compulsory licenses and Article 73 TRIPS, setting out the (Article XXI GATT-equivalent) national security exception to commitments under TRIPS. Under Article 73, ‘[n]othing in [TRIPS] shall be construed (…) to prevent a Member from taking any action which it considers necessary for the protection of its essential security interests (…) (iii)  taken in time of war or other emergency in international relations.’ In principle, Article 31bis:5 TRIPS confirms that the Article 31bis system is ‘without prejudice to the rights, obligations and flexibilities’ that WTO Members have under TRIPS. Whether this also allows to ‘mix and match’ that system (invoked by an exporting country) and Article 73 (invoked by an ineligible importing country) – or whether both countries would have to rely on the national security exception – is not immediately clear. These complexities aside, the primary question concerns the applicability of Article 73 to our Covid19 scenario. Can a WTO Member that (for whatever reason) cannot use the Article 31bis system alternatively rely on Article 73, arguing that importing Covid19 treatment to address its own insufficient manufacturing capacity is ‘necessary’ for protecting its ‘essential security interests’? And does the current pandemic constitute an ‘emergency in international relations’ under Article 73?

The limited guidance from the so far only Panel Report addressing this issue (Russia – Traffic in Transit, discussed here and here) suggests that (1) the security exception ‘is not totally “self-judging”’ (para.7.102) – but rather requires an objective determination whether the requirements in the subparagraphs of Article XXI GATT (in our case: Article 73 TRIPS) are satisfied (para.7.101); and that (2) an ‘emergency in international relations’ requires a ‘situation of armed conflict, or of latent armed conflict, or of heightened tension or crisis, or of general instability engulfing or surrounding a state’ (paras.7.76, 7.111). Even though this definition is linked to situations akin to an armed conflict, the severity of the Covid19 pandemic and its far-reaching consequences across the globe, plus the clarifications under para.5c) of the Doha Declaration that ‘public health crises, including (…) epidemics’ can represent a ‘national emergency’, arguably support an application of Article 73(b)(iii) TRIPS. If WTO Members in the Doha Declaration (which the WTO Panel in Australia – Plain Packaging considered a subsequent agreement on the interpretation of TRIPS under Article 31(3)a) VCLT) refer to an epidemic as a ‘national emergency’, then a WHO declared pandemic should constitute an international emergency, especially if accompanied with general economic, social and political instabilities, as further discussed here.

In addition, the good-faith limit imposed by the Russia – Transit Panel when a WTO member exercises its (limited) discretion to decide what ‘it considers necessary’ to protect its ‘essential security interests’ (see para.7.132-38) should not pose a problem in the Covid19 context: given the number of mortalities and the severity of quarantine measures currently imposed as only real alternative, no-one can reasonably question a country’s decision that considers sufficient availability of effective treatment as a ‘matter of national security’.

A final legal hurdle in effective reliance on both compulsory licenses in general and on the specific system for compulsory licensing for export to countries with insufficient manufacturing capacity lies in the additional and separate protection for test data under TRIPS, FTAs, and national laws. Distinct from patent protection for a new invention, test data protection under Article 39:3 TRIPS obliges WTO Members to protect ‘undisclosed test or other data the origination of which involves a considerable effort’ when national authorities require such data ‘as a condition of approving the marketing of pharmaceutical or of agricultural chemical products which utilize new chemical entities’. While TRIPS only demands WTO Members to protect such data ‘against unfair commercial use’, and ‘against disclosure, except where necessary to protect the public’, a significant number of FTAs negotiated by the US, the EU and other IP demandeurs tend to oblige contracting parties to introduce specific periods of test data- as well as marketing exclusivity: that is, not to allow any entity (other than the one which had submitted the test data) to rely on that data to show to health authorities that its own (bio-equivalent) generic drug is safe to use; and not to allow any such entity to market its generic drug. In both cases of test- and marketing exclusivity, the periods mandated by FTAs tend to run for at least 5 years.

As most treatment for Covid19 (in particular a vaccine) would require marketing approval, any entity which submits test data to national authorities for this purpose would be eligible for test data protection described above. That in turn raises questions about overriding such protection for public health purposes – for example to allow other producers to obtain marketing approval so that a vaccine can be imported or produced in sufficient quantities for domestic supply. Under TRIPS, this should not be a problem: Article 39:3 TRIPS does not prohibit to disclose test data when that is ‘necessary to protect the public’. In addition, the (above discussed) national security exception under Article 73 would apply.

However, countries that have committed to test data exclusivity periods under a FTA might be prevented from allowing any other producer to request that data, rely on it for purpose of obtaining marketing approval for its generic versions of the vaccine, and to market that generic version – until the exclusivity period has expired. Unless the FTA includes any equivalent limitation on test data exclusivity or an equivalent national security exception, difficult questions about the potential application of the respective WTO/TRIPS limitations in the FTA context would arise. While answers will depend on the individual FTA provisions, a general argument might point to the FTA as a limited lex specialis addition to existing WTO/TRIPS rules – an inter-se Agreement which allows its contracting parties to fall back on general rules of TRIPS (such as national security exceptions) unless there is clear evidence that the parties intended to divert from these general rules.

In sum then, a rather complex picture emerges when assessing opportunities for countries to support another in ensuring fair and affordable access for an effective treatment against Covid19. Once a vaccine or another form of effective treatment is found, the main practical hurdle in the foreseeable future will be to produce and distribute that treatment on a global scale for all populations in need. One hopes that once patents are granted to public research institutions and/or private companies, they will be voluntarily licensed across the world, and on reasonable terms. Where that is not the case, the principal legal issues under global IP protection regimes will be to navigate the complex web of obligations under TRIPS, but even more so under IP chapters in FTAs that tend to go beyond the standards of TRIPS. For most countries that will find that they have insufficient domestic manufacturing capacities to produce for example a the Covid19 vaccine, the specific mechanism under Article 31bis TRIPS in principle serves as a (hopefully viable) legal solution. But more complex problems emerge for WTO Members that had declared not to use that system, as well as for any country bound by test data exclusivity periods. If those (legal) problems would effectively bar countries from accessing medicines, this would not only directly contradict the unanimous agreement of all WTO Members that ‘the TRIPS Agreement does not and should not prevent members from taking measures to protect public health’; it would also be a testament that international economic law does not serve the global community. In order mitigate such a scenario, countries that are currently pouring resources into drug testing and development should ensure – in particular by insisting on relevant terms in funding and cooperation agreements – that IP rights later available for these drugs and their test data cannot be exercised to limit access.

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Stephen McGibbon says

April 22, 2020

The link in the article to part i is broken. For those (like me) struggling to access it, it is here:

Alka Chawla says

May 19, 2020

Very thought provoking article prof. Henning