Senators Send Letter to USTR Urging Against COVID-19 IP Waiver

A group of Republican Senators sent a letter to Deputy United States Trade Representative (USTR) Ambassador María Pagán, urging her to reject the proposal before the World Trade Organization (WTO) to undermine intellectual property rights for COVID-19 vaccines. 

This letter was signed by Senators Mike Lee (R-Utah), Thom Tillis (R-N.C.), Tom Cotton (R-Ark.), and Marsha Blackburn (R-Tenn.).  

The Director-General of the WTO introduced a draft proposal to waive IP protections for COVID-19 vaccines that exist under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Supporters of this latest proposal are pushing for it to be adopted ahead of the WTO’s Ministerial Conference on June 12-15. If adopted, WTO members including China and Russia would be permitted to use compulsory licensing to seize the patents of American developed COVID-19 vaccines. 

ATR applauds the letter signers, as the proposal is unnecessary, would undermine the development of the next generation of treatments, would help America’s geopolitical rivals, and would harm American businesses and workers. 

This proposal would undermine the development of vaccines and treatments for future deadly pandemics. As the letter states, IP rights are the foundation of innovation: 

Intellectual property rights provide the grounds for businesses to take risks in turning novel ideas into concrete goods and services; that means fewer goods–not more–will be produced to combat pandemics if WTO-member countries stop enforcing IP protections. We urge you to consider the ramifications of waiving the TRIPS Agreement and ask you to defend the IP protections that have resulted in the majority of COVID-19 remedies that Americans—and millions of others around the globe—have utilized.” 

Developing new medicines is a costly, risky, and time-consuming process. A manufacturer must invest an average of $2.6 billion and ten years in research and development, according to the Tufts Center for the Study of Drug Development. In all, just 10 to 20 percent of medicines that begin clinical trials are approved.  

Without IP protections, COVID-19 vaccines would not have been completed or distributed as quickly as they were. Allowing the seizure of IP through a TRIPS waiver would undermine this system of medical innovation. 

This proposal will also help America’s geopolitical rivals including Communist China and Russia. If approved, the proposal would allow foreign countries to immediately seize patents and clinical data of American businesses in order to attempt to produce COVID-19 vaccines. This would give foreign countries access to sensitive and valuable proprietary information belonging to American businesses.  

The letter rightly points out that the Chinese government already consistently steals American IP: 

We are particularly concerned with the need to protect American IP from China. The Chinese government has consistently attempted to steal American intellectual property; any concession to the demands to waive the TRIPS agreement would effectively aid malicious actors in the theft of American IP.” 

There would be little protections available – while the draft proposal “encourages” countries like China to opt out of the waiver if they do not need the IP, every country would be eligible to participate in the waiver if they so choose. Even if a more geographically restricted waiver were implemented, China would still acquire US trade secrets and technology via other countries.  

China has an extensive record of repeatedly violating property rights and stealing IP from American businesses, so it is likely they would use this opportunity to again seize American IP rights. According to some reports, Chinese IP theft costs the U.S. $225 billion to $600 billion each year in counterfeit goods, pirated software, and theft of trade secrets. 

Further, this proposal is not necessary because there is no global shortage of vaccines. If anything, the world may be seeing an oversupply of vaccines due to extensive investment in production, increased competition, and slowing demand. In fact, in India manufacturers have slowed down manufacturing of new vaccines after production resulted in 200 million doses of stock – far more than was needed. 

Finally, undermining IP rights will also harm American competitiveness and workers. IP supports millions of high-paying jobs across the country. According to the United States Patent and Trademark Office (USPTO), IP-intensive industries accounted for $7.8 trillion in GDP in 2019, or 41 percent of the economy. These industries accounted for 47.2 million jobs, or 33 percent of total U.S. employment.  

Pharmaceutical manufacturers are no exception – these businesses invest over $100 billion in the U.S. economy every year, directly supporting over 800,000 jobs. When indirect jobs are included, pharmaceutical innovation supports 4 million jobs and $1.1 trillion in total economic impact. These jobs are high paying – the average compensation is over $126,000 – more than double the $60,000 average compensation in the U.S. 

Waiving COVID-19 IP rights would undermine the development of the next generation of treatments, help America’s geopolitical rivals like Communist China at the expense of American businesses and workers, and is unnecessary given the strong global supply of COVID-19 vaccines.