U.S. International Trade Commission Covid-19 Diagnostics and Treatment Development and Access Report

The U.S. International Trade Commission released a corrected version of its COVID-19 Diagnostics and Therapeutics: Supply, Demand and TRIPS Flexibilities Report in December of 2023.  Chapter 7 is a summary of views of interested parties.  I found that interesting, particularly the section on jobs related to the pharmaceutical and biotech industries.  The following is an excerpt from the Executive Summary:

The TRIPS Agreement sets minimum standards for the protection and enforcement of IP rights. It also includes flexibilities. Persons providing input to the Commission disagreed about the extent to which the 2022 Ministerial Decision expands flexibilities and whether the decision should be extended to COVID-19 diagnostics and therapeutics.

Determining a definitive scope of what products are covered by the terms “diagnostics” and “therapeutics” as they pertain to COVID-19 and what constitutes relevant COVID-19 diagnostics and therapeutics covered by patents is complicated and subject to interpretation. Based on definitions in the medical field of “diagnostics” and “therapeutics,” a COVID-19 diagnostic is a good used to diagnose or identify how patients respond to treatments for COVID-19, and a COVID-19 therapeutic is a good used to treat COVID-19. The universe of COVID-19 diagnostics and therapeutics covered by patents or in development that fall within those definitions is broad and varied. There are various parameters that could be applied, individually or in combination, to identify relevant COVID-19 diagnostics and therapeutics, including whether the product is covered by patent, whether the product is directed to COVID-19 (virus-directed), and whether the product has received regulatory approval or authorization; application of each comes with its own challenges.

The development and commercialization of COVID-19 diagnostics and therapeutics occurred on an extremely compressed timeline. Manufacturing of diagnostics and therapeutics involves multiple stages, each of which requires careful attention to detail and strict quality control measures. The two fields of diagnostics and therapeutics are composed of different producers, inputs, know-how, and so on. Generally, COVID-19 diagnostics can be brought to market faster than COVID-19 therapeutics, and the knowledge and manufacturing base globally for small-molecule drugs is larger than for biologics. Research and development of virus-directed COVID-19 diagnostics and therapeutics primarily occurred in HICs, but manufacturing of diagnostics and therapeutics occurred in countries of all income levels except for LICs. As of summer 2023, China (UMIC) reportedly had the highest number of manufacturers of COVID-19 diagnostics (247), and India (LMIC) had the largest number of reported therapeutics manufacturers (56). It is difficult, however, to ascertain how much COVID-19 diagnostics and therapeutics production came online or is still ongoing.

A variety of advantages and challenges are associated with the use of voluntary licenses to provide access to IP associated with COVID-19 therapeutics and compulsory licenses to access COVID-19 therapeutics and other patented pharmaceutical products. Voluntary licenses and compulsory licenses generally were not used to access IP associated with COVID-19 diagnostics. Voluntary licenses have been an important mechanism that was used to offer COVID-19 therapeutics for sale at reduced prices in LICs, LMICs, and some UMICs; however, many UMICs have been excluded from coverage under voluntary licenses. Voluntary licenses also provided a mechanism for technology transfer and knowledge sharing to support the manufacture and regulatory approval of less expensive licensed products. Compulsory licenses have been used by a small number of countries to access IP associated with certain COVID-19 therapeutics. The primary, commonly cited benefits for countries utilizing compulsory licenses are reduced costs and improved access. Another primary benefit of compulsory licenses reportedly is that they provide leverage to negotiate voluntary licenses. One of the main disadvantages is that they do not provide a basis for sharing knowledge.

The availability of supplies to meet global demand for COVID-19 diagnostics and therapeutics has been a moving target throughout the pandemic. Estimates or calculations of demand for these goods differ depending upon whether the metric is market demand or need. When infection rates rose sharply in early 2021, before manufacturers had scaled up production and regulators had granted approvals, access was limited and available only to a few HICs. During 2021, more products became available for procurement. By early 2022, infection rates and deaths from COVID-19 steadily declined as vaccination rates grew and natural immunity strengthened. By early May 2023, the World Health Organization (WHO) declared that COVID-19 would no longer be classified as a public health emergency of international concern. Today, market demand has waned in some countries, with several manufacturers no longer pursuing regulatory approval and stopping production altogether.

The disparity among countries of different income groups is wide in terms of access and availability to COVID-19 diagnostics and therapeutics. About 80 percent of government procurements were by HICs, 14 percent by UMICs, and 5 percent by LMICs. No government purchases were made by LICs, although products were made available to them through multilateral organizations. The wide disparity among countries in their ability to access COVID-19 diagnostics and therapeutics is the result of multiple factors, including access to IP, prices and affordability, regulatory approvals, healthcare infrastructure, and the healthcare priorities of governments. The importance of each of these and other factors impacting availability and demand varies greatly among countries, although high prices and the lack of price transparency appear detrimental to many countries seeking access.

Academic literature on the effects of patent protection, compulsory licenses, and the MPP is limited and would benefit from additional research. From the available evidence, patent protection is generally found to be more beneficial to innovation in the health sector for developed countries and less so for developing countries. Patent protection is often found to result in higher prices for medicines, which decrease access, but patent protection can also have some counteracting effects, such as increases in international trade flows of pharmaceuticals and faster drug launches in markets, that help improve access. Researchers have found that compulsory licenses and the MPP are associated with increased generics and lower prices, and increased access to pharmaceuticals. Researchers have not studied the relationship between compulsory licenses and the MPP and access to COVID-19 diagnostics and therapeutics.

U.S. FTC: Unpacking Technology Companies Acquisition of AI-related Technologies

The U.S. Federal Trade Commission is gathering information from major technology companies regarding their acquisition of technology from other companies concerning artificial intelligence.  The FTC press release states:

The Federal Trade Commission announced today that it issued orders to five companies requiring them to provide information regarding recent investments and partnerships involving generative AI companies and major cloud service providers.

The agency’s 6(b) inquiry will scrutinize corporate partnerships and investments with AI providers to build a better internal understanding of these relationships and their impact on the competitive landscape.  The compulsory orders were sent to Alphabet, Inc., Amazon.com, Inc., Anthropic PBC, Microsoft Corp., and OpenAI, Inc.

“History shows that new technologies can create new markets and healthy competition. As companies race to develop and monetize AI, we must guard against tactics that foreclose this opportunity, “said FTC Chair Lina M. Khan. “Our study will shed light on whether investments and partnerships pursued by dominant companies risk distorting innovation and undermining fair competition."

The FTC issued its orders under Section 6(b) of the FTC Act, which authorizes the Commission to conduct studies that allow enforcers to gain a deeper understanding of market trends and business practices. Findings stemming from such orders can help inform future Commission actions.

Companies are deploying a range of strategies in developing and using AI, including pursuing partnerships and direct investments with AI developers to get access to key technologies and inputs needed for AI development. The orders issued today were sent to companies involved in three separate multi-billion-dollar investments: Microsoft and OpenAI, Amazon and Anthropic, and Google and Anthropic. The FTC’s inquiry will help the agency deepen enforcers understanding of the investments and partnerships formed between generative AI developers and cloud service providers.

The FTC is seeking information specifically related to:

• Information regarding a specific investment or partnership, including agreements and the strategic rationale of an investment/partnership.
• The practical implications of a specific partnership or investment, including decisions around new product releases, governance or oversight rights, and the topic of regular meetings.
• Analysis of the transactions’ competitive impact, including information related to market share, competition, competitors, markets, potential for sales growth, or expansion into product or geographic markets.
• Competition for AI inputs and resources, including the competitive dynamics regarding key products and services needed for generative AI.  
• Information provided to any other government entity, including foreign government entities, in connection with any investigation, request for information, or other inquiry related to these topics.

The companies will have 45 days from the date they receive the order to respond.

The Commission voted 3-0 to issue the Section 6(b) orders and conduct the study of AI investments and partnerships.

U.S. GAO Report on Tracking U.S. Government Funding to Foreign Entities

The U.S. Government Accountability Office released a report on January 11, 2024, which studies federal funding provided to foreign entities for research and development.  The Report states:

According to the National Science Foundation, federal agencies obligated about $1.4 billion for R&D with foreign entities in fiscal year 2020 (the most recent data available). However, some foreign entities may try to exploit U.S. openness in sharing R&D for nefarious purposes.

The Research and Development, Competition, and Innovation Act includes a provision for GAO to review research funding provided to foreign entities of concern. The act's definition of such entities includes foreign terrorist organizations and foreign entities subject to the control, ownership, and jurisdiction of Russia, China, North Korea, and Iran.

This report examines challenges in identifying R&D funds awarded to foreign entities of concern and requirements for awarding and monitoring such funding.

The Report also states, in part:

GAO found that determining whether federal research and development (R&D) funds were provided to a foreign entity of concern is challenging. Such entities include foreign terrorist organizations and specially designated nationals, among others. Awarding agencies are generally prohibited from doing business with foreign terrorist organizations and specially designated nationals.

GAO found that government-wide databases which report on some of these entities lack common identifying information such as a unique identifier or personally identifiable information. For example, a physical address, date of birth, or other identifying information for entities on the foreign terrorist organization list is often unavailable as entities often try to conceal their identity or location, according to the Treasury Department. When personally identifiable information such as date of birth is available, similar information is not available in the public federal funding data source, USAspending.gov. Specifically, although awarding agencies collect other identifying information, such as phone numbers of entities seeking an award, not all such information is reported in USAspending.gov. Together, these challenges limit the ability to match foreign entities on certain lists with those receiving government-wide funding.

The full Report is available, here. 

Microsoft Threat Intelligence Report on Cybersecurity Attacks Against Universities

On January 17, 2024, Microsoft released a threat intelligence report concerning cybersecurity attacks against certain university researchers across the West and other countries.  The threat report states, in part:

Since November 2023, Microsoft has observed a distinct subset of Mint Sandstorm (PHOSPHORUS) targeting high-profile individuals working on Middle Eastern affairs at universities and research organizations in Belgium, France, Gaza, Israel, the United Kingdom, and the United States. In this campaign, Mint Sandstorm used bespoke phishing lures in an attempt to socially engineer targets into downloading malicious files. In a handful of cases, Microsoft observed new post-intrusion tradecraft including the use of a new, custom backdoor called MediaPl.

Operators associated with this subgroup of Mint Sandstorm are patient and highly skilled social engineers whose tradecraft lacks many of the hallmarks that allow users to quickly identify phishing emails. In some instances of this campaign, this subgroup also used legitimate but compromised accounts to send phishing lures. Additionally, Mint Sandstorm continues to improve and modify the tooling used in targets’ environments, activity that might help the group persist in a compromised environment and better evade detection.

The report is available, here.