Intro/Outro (00:01):
Welcome to dial P for procurement, a show focused on today’s biggest spin supplier and contract management related business opportunities. Dial P investigates, the nuanced and constantly evolving boundary of the procurement supply chain divide with a broadcast of engaged executives, providers, and thought leaders give us an hour and we’ll provide you with a new perspective on supply chain value. And now it’s time to dial P for procurement.
Kelly Barner (00:31):
The world faced a lot of hardship during the COVID 19 pandemic, there was of course, tragic loss of life. There was sickness, and then there was the isolation of everyone being sent home to live on their own for so long. Now we also know there were a lot of business closures, especially in localized service sectors like restaurants and gyms. And then of course, anybody in this audience knows well that there were so many supply chain disruptions. There were also product shortages. And a lot of it was actually in response to new consumer patterns of demand. But all of those things aside, there were also some silver linings. And what we’re going to talk about in this episode is sort of an interesting offshoot from one of those silver linings. The invention of the COVID 19 vaccine was an amazing human and scientific accomplishment. Just one year after the virus was first identified, the Pfizer vaccine became the first to receive emergency youth’s authorization from the FDA.
Kelly Barner (01:47):
Now, according to the publication medical news today, typically this process would take 10 to 15 years and part of how they accelerated that so much was through collaboration. Researchers worked together and they shared information, so that progress could be made in parallel operation warp speed in the United States brought together the national institutes of health Emma centers for disease control and prevention or CDC. And the same thing was happening abroad. The European union supported research and the UK vaccine task force helped fund and create the AstraZeneca vaccine Pfizer. And Moderna were the first mRNA vaccines that humans received outside of clinical trials. So we have all of this incredible innovation that’s taken place. And of course the follow on question is who owns it and how can it be protected? How do we as a human race balance the calls for equitable access to cutting edge medicines and treatments with the very real concerns private companies have about investing in future research and production.
Kelly Barner (03:10):
I’m Kelly Barner, I’m the co-founder and managing director at buyers meeting point. I’m a partner at art of procurement, and I am your host for dial P here on supply chain. Now I am constantly scanning the news for interesting complex articles to discuss. And of course the goal is always to see what we can learn. I have a quick favor to ask we’re building out dial P’s independent following. So if you like, what you hear, please give us a review, give us a few stars, a share a like we’re grateful for you taking your time to listen to these audio episodes. Okay. Now, where were we? This episode of dial P was inspired by an early may article that ran in the Boston Herald. It was titled threat to global innovation now brewing at the WTO, and it was written by James pulley, former deputy director of the United nations world intellectual property organization, and a member of the center for intellectual property.
Kelly Barner (04:17):
Understanding I was instantly grabbed by the idea of this article and it gave me something to go and research. Now whether each individual person chooses to get it or not. We’re not getting into that here. The COVID vaccine was a miracle of modern research, production and logistics, but on the global stage, there are very different vaccination rates by country. According to the Brookings Institute in low income countries, fewer than 10% of people have received at least one dose of a vaccine that compares with about 80% in high income countries. And as with anything real, there are of course, multiple factors influencing these numbers. There are local manufacturing capabilities, the availability of transportation networks. We know this vaccine has to be stored cold and then on a human level, people are going to make the choices they’re going to make. There are varying levels of willingness to be vaccinated.
Kelly Barner (05:26):
Now, where does the world trade organization come into this? They exist to establish the rules of trade between nations. There are 164 member states who represent over 98% of global trade and global GDP. So effectively we are talking about all global business, the WTO oversees trade disputes, and they provide for intellectual property protections. Now in early may of this year, when the article I originally read, came out, the United States, European union, India and South Africa had just finalized a proposal to waive intellectual property protections for the COVID 19 vaccines. There was supposed to be a vote of all member states on June 9th, but that has been postponed to early July. So we’ll have to wait a little longer to find out exactly what’s going to happen with this proposal. In the meantime, we can consider what it would mean if it passed now, according to when Shia and that’s spelled X I E.
Kelly Barner (06:41):
If you wanna go research any of this, she’s a partner at global IP counselors. And here’s what she said. Quote, if this goes through member countries have the option to make use, sell, or import COVID 19 vaccines without the authorization of the patent holder, which is saying that the vaccine makers can’t raise a big fuss and take anyone to court on the grounds that their patents are being infringed. So this is where I stop and think. But wait a minute, we’re talking about trading selling. Is this really about equal access to medical care and treatments? Or is there something else going on now? We know that intellectual property protections is part of what the WTO does and they already have what’s called the trips agreement. T R I P S. This is the agreement on trade related aspects of intellectual property rights. It was established in 1995, right when the world trade organization began operating and it lays out the minimum standards for requiring member states to respect and protect each other’s patents, trade secrets, trademarks, and copyrights.
Kelly Barner (08:02):
Here’s the interesting thing that we don’t often think about when it comes to intellectual property, those rights, those laws, and then of course enforcement, they vary by country. The trips agreement is supposed to open trade by providing assurances and protections so that if you have a trademark or a patent on something in the United States or in Canada or in the UK, or in France, that even though technically it is legally only protected in the country of origin or where the patent was filed, that there is reciprocal acknowledgement of that elsewhere, knowing that these protections are in place is what allows a lot of the cross border selling exports imports, availability of innovations worldwide. There is no such thing as a global or WTO based patent. So instead there’s this notion through trips, that agreement that countries will respect the IP based in other countries. And we’ve already established that 98% of global business is subject to the world trade organization.
Kelly Barner (09:21):
So truthfully everyone worldwide should be respecting everyone else’s intellectual property laws. Now this becomes more and more important as an increasing percentage of global trade is based on IP driven products. Now, trips does have a provision that allows for emergency situations, for instance, in response to a public health crisis, like a pandemic. And what it allows for is for localized manufacturers around the world to produce something for which they do not hold the IP in order to help their local population. It allows temporary localized access to IP without violating the rights of the patent or trademark owner. So my first question is why do we need this new proposal? If there’s already a provision on the books that would address the exact situation we find ourselves in with the vaccine. And so as always, we dig into the details here on dial P. So I mentioned there’s four countries where I guess four trading blocks, if you will, because we’ve got the European union in there, the us European union, South Africa and India, those are the four countries or trading blocks that have signed on to this proposal.
Kelly Barner (10:44):
South Africa and India are both hubs of generic drug manufacturing, and they have global markets. Remember trips, emergency exception only allows you to use others’ IP to take care of your own local population. It’s an emergency provision. It’s not supposed to be about growing your market. Share the serum Institute of India, which is the world’s largest vaccine manufacturer actually has stopped making COVID vaccines because there was not enough demand for them. Africa’s centers for disease control and prevention has asked other nations to stop donating vaccines because their issues are not availability. It’s transportation and population hesitancy to receive the vaccine. So once again, we’re left with this question, why do India and South Africa need this exception now? Because this is a question of business. We have to think about the bottom line R and D is very expensive. Most of the well known companies in the pharma space spend about 25% of their revenues on R and D.
Kelly Barner (12:04):
If they lose the incentive to invest that money, because other members of the world trade organization can just choose to ignore their patents. It could actually change the treatments that become available to the people who need them. So is this proposal about access or is it about the ability to trade and profit off of someone else’s IP now naturally there is disagreement around this issue while some countries and leaders argue that the new proposal is a threat to the enforcement of IP rights worldwide. Others argue that it doesn’t go far enough, and here’s what they say. They say for now. It only covers vaccine, not the broader treatments that would actually be covered by a trip’s exception as set out in the current rules. And yet they do allow for the possibility that it would be expanded over time now, because this type of topic, business and healthcare, though, it might be, is so close to politics.
Kelly Barner (13:10):
You will always be able to find a source or an opinion holder that agrees with your general worldview, no matter what you will find, someone that agrees with what makes sense to you. My question is, can you read what others feel about this and understand where they’re coming from? One thing everyone does seem to agree about whether they support this proposal or oppose it is that it’s not really about the COVID vaccine IP waiver. That may be the topic of the moment, but that’s not really what’s at the core of the debate. The core of the debate is about the precedent that however, this proposal plays out, ultimately sets up for future IP protections, enforcement abuse. When Shia that I quoted earlier summarized the current status this way, what seems to be really happening with this so-called waiver is a multi-lateral agreement that some developing nations are going to not enforce COVID vaccine patents within their borders and the world trade organization is not going to retaliate.
Kelly Barner (14:22):
Now, one of the things that we definitely know about business in general, and we absolutely know about supply chain more specifically, is that when you’re trying to become more competitive, there are assumptions, there are constraints, and then you run the analysis against it. The more unpredictable a situation is the more difficult it becomes to figure out the right answer. If knowing whether or not IP protections will be offered and violations will be prosecuted. Worldwide becomes a huge question, mark. It changes the overall calculus of companies. Now, if you don’t think this is a big deal, remember pretty much everyone worldwide is a member of the world trade organization. And that includes China. There are currently a number of ongoing complaints against China over their violation of the trips agreement. Now, there are reciprocal complaints against the United States and a number of other countries I’m sure.
Kelly Barner (15:23):
And all of these countries have the option to work through the world trade organization, as well as to proceed unilaterally with their own laws. Of course, the most interesting thing of all about this proposal is that we only know about it because it leaked. So that always complicates things. And I will admit that the fact that the vote has now been delayed on top of this proposal, being leaked suggests that maybe they’re trying to figure out what the actual world temperature around this proposal is going to be before it’s put on the floor and brought to a vote. The language that is voted upon between July 7th and ninth. Now that’s based on the current schedule may or may not eventually have graduated provisions that expand the scope of the waiver. So right now, by the letter of it, it’s literally just the vaccine, but will it be expanded?
Kelly Barner (16:18):
As some people have said, it should be to include treatments as well. Now, global IP issues are not just the business of the world trade organization. This is a much bigger problem on March 7th, 2022 Russia’s government. Believe it or not legalized IP theft from what they call unfriendly countries. Now that’s a quote, those are their words, unfriendly countries. So if we’re gonna stay with that kind of language, you’ve got the one country on earth that pretty much everybody’s mad at right now. And they’re calling pretty much everybody else unfriendly. So who have they called out as unfriendly countries? Yes, of course the United States. We always top that list. Canada, Australia, Switzerland, Norway, Iceland, the UK, Japan, South Korea, New Zealand, Singapore Taiwan, and all 27 European union member countries. So everyone is an unfriendly country and they no longer feel that it’s necessary to compensate patent holders. If the patent holders are in those unfriendly countries, world economies are always changing and an awful lot of what we do in the United States and Europe certainly is knowledge based.
Kelly Barner (17:47):
And we’re not just talking about literal knowledge like professional services. We’re talking about technology software, chip design. We’ve certainly spent the last few minutes talking about pharmaceuticals and medicine development, but we’re also talking about physical engineering. If we, and I won’t say as a global economy, but I will say as a global set of national economies gets ourselves into a system where IP rights are enforced in some places, but not others. It is absolutely going to get in the way of global partnerships, global innovation and cross industry advancement. Personally, I’m not one who looks to governments to fix things, but I do think if there are rules already on the books that can address the challenges we’re seeing passing new rules does raise concern about what’s actually at the heart of the call for new, but that’s just my point of view. As I’ve shared others, hold differing opinions.
Kelly Barner (18:52):
You may be listening in and holding a differing opinion yourself. This is a complex issue, which is why it’s worth learning about reading, about talking about and trying to figure out I absolutely, as I do with all of these episodes, welcome you to do your own research. Don’t trust me, do your own reading. Bring your point of view back to the conversation. Let’s talk about it and see if we can figure out what makes the most sense until then. I appreciate you listening in to this episode of dial P for procurement. As I’ve said, don’t just listen, join the conversation and let me and others know what you think. Let’s disagree constructively and work together to figure out the best solution until next time. I’m Kelly Barner, your host for dial P for procurement here on supply chain. Now thank you as always so much for listening and have a great rest of your day.
Intro/Outro (19:51):
Thank you for joining us for this episode of dial P for procurement and for being an active part of the supply chain. Now community, please check out all of our shows and events@supplychainnow.com. Make sure you follow dial P four procurement on LinkedIn, Twitter, and Facebook to catch all the latest programming details. We’ll see you soon for the next episode of dial P four procurement.
