USTR Announces Support for Extending TRIPS Waiver Expansion Discussions and Launches USITC Investigation

Key Points

• On December 6, days before a deadline for WTO members to decide whether to expand the TRIPS waiver for COVID-19 vaccines to cover COVID-19 diagnostics and therapeutics as well, the Office of the USTR announced its support for an extension of the decision deadline to allow for further study and deliberation.
• In this regard, USTR announced the launch of a USITC investigation into the global market dynamics, price points, production and access of COVID-19 diagnostics and therapeutics.
• The USITC investigation will likely play a key role in shaping the U.S. position on whether to support the TRIPS waiver expansion. Indeed, this may also be one of the only outlets by which U.S. and foreign stakeholders—which includes both foreign countries and companies—can formally voice their opinion with the U.S. government on the question of the waiver’s expansion. We believe that the USITC will take these comments into serious consideration in crafting the findings in its report.

Background: The TRIPS Waiver and its Possible Expansion

In June 2022, World Trade Organization (WTO) member countries agreed (the “Decision”) to waive and clarify certain articles of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (the “TRIPS Agreement”) to expand intellectual property (IP) flexibilities for COVID-19 vaccines for a renewable period of five years. The “TRIPS waiver” allows eligible members (currently all developing countries except China) to ignore certain TRIPS obligations necessary to use certain flexibilities—such as compulsory licensing—on patent rights. Most notably, under the TRIPS waiver, eligible members:

• Can waive TRIPS article 28.1 obligations by authorizing the use of a patented vaccine without the consent of the right holder “to the extent necessary to address the COVID-19 pandemic.”
• Can waive TRIPS article 31 obligations by allowing (i) the use of a patented vaccine without obtaining authorization from the right holder, (ii) any proportion of the manufactured vaccine to be exported to other eligible members and (iii) the humanitarian and not-for-profit purpose of vaccine distribution programs to factor into determining adequate remuneration to the right holder.
• Must also “undertake all reasonable efforts” to prevent the re-exportation of patented vaccines that have been imported into their territories, and “ensure the availability of effective legal means” to prevent the importation of vaccines that were produced inconsistently with the TRIPS waiver.

The June 2022 Decision is limited not just to the vaccines themselves, but also includes the ingredients and processes necessary to manufacture them. Importantly, the Decision mandated that WTO members decide by a deadline of December 17, 2022, on whether the TRIPS waiver should be expanded to cover the production and supply of COVID-19 diagnostics and therapeutics, in addition to vaccines.

On December 6, 2022, the Office of the U.S. Trade Representative (USTR) announced its support for an extension of the deadline to decide whether to expand the TRIPS waiver. It also announced that it would ask the U.S. International Trade Commission (USITC) to “launch an investigation into COVID-19 diagnostics and therapeutics and provide information on market dynamics to help inform the discussion around supply and demand, price points, the relationship between testing and treating, and production and access.” We understand that this will be a USITC section 332 investigation.

The USITC Section 332 Investigation

Under section 332 of the Tariff Act of 1930, USTR may request the USITC to conduct investigations related to a wide variety of tariff and trade matters. Typically, such a request is formally transmitted by a letter sent from USTR to the Chairman of the USITC, setting forth in detail the topics for inquiry and a timeline for delivery of the final report. The “request letter” is most often a product of negotiation between the requesting entity—here USTR—and the USITC. The parties want to ensure that the language of the letter captures all topics of interest and that the USITC can perform the requested work and in the desired timeline. The resulting USITC report will only contain factual findings and analysis and will not result in policy recommendations.

In this instance, USTR’s announcement outlines five particular areas that the USITC should investigate:

• The COVID-19 diagnostic and therapeutic products that would be affected by the TRIPS waiver’s expansion, including their “key components, the production process, intellectual property protections, and a description of the supply chain.”
• The “global manufacturing industry” for the affected diagnostic and therapeutic products.
• The global market for the affected diagnostic and therapeutic products, including “demand and, to the extent practicable, an assessment of where unmet demand exists for key products and contributing factors; market segmentation; and supply accumulation and distribution.”
• Data on global trade in the affected diagnostic and therapeutic products.
• The relevant aspects of the TRIPS Agreement and UN Medicine Patent Pool (MPP), as well as a list of countries that are seeking to invoke the Decision and/or already have access to COVID-19 medicines under the MPP.

We believe USTR’s request letter will be published in the coming days, and that the letter will provide more detail on what USTR is asking the USITC to investigate and when it expects the report to be delivered. The USITC will subsequently provide further instructions for its investigation, including deadlines for written public comments and timing for a public hearing. Material related to the section 332 investigation will be available on the USITC’s section 332 webpage.

Implications

A decision by WTO members to expand the TRIPS waiver to cover COVID-19 diagnostics and therapeutics would have far-reaching implications on the international approach to intellectual property, both for the pharmaceutical industry and beyond. Such a decision would set down a clear precedent that IP rights are a barrier rather than an enabler to tackling a global pandemic. This is especially so considering what phase of the COVID-19 pandemic the world currently finds itself in, as well as the existing availability and affordability of COVID-19 counter-measures.

Whether WTO members decide to expand the TRIPS waiver will depend in large part on the position of the United States, which at this point has only stated a desire to gather further information on the question and has in the past made comments suggesting that any final decisions on this matter must be backed by a sufficient evidentiary basis. The results of the USITC investigation will not only shape the position of USTR and the Biden-Harris administration on the current TRIPS waiver expansion issue, but also similar future WTO discussions to come on the role of IP in the next heath crisis or other emergency. Moreover, at present, the upcoming USITC section 332 investigation is the only formal process available for public and private stakeholders to weigh in with the U.S. government on the question of expanding the TRIPS waiver. For those who hope to have their voice heard on this question, engaging in the section 332 investigation through submission of comments and participating in the hearing may be one of the few, if only, opportunities to do so. The international impact of this process is clear, as the WTO is set to keep discussing the TRIPS waiver expansion question in 2023 with another culmination in June 2023 (although the USITC section 332 process may not be completed by then). Moreover, this process will further inform the broader international IP landscape for years to come.