KEI comment on the Medicines Patent Pool license with Gilead

KEI comment on the Medicines Patent Pool license with Gilead
July 12, 2011

FYI: James Love (Tuesday: +44.785.543.6510, james.love@keionline.org). Thiru Balasubramaniam (thiru@keionline.org) or Krista Cox (krista.cox@keionline.org, +1.202.332.2670).

Today the Medicines Patent Pool (MPP) and Gilead announced an agreement to license patents for the FDA approved antiretroviral drugs tenofovir (TDF) and emtricitabine, as well as elvitegravir, cobicistat and a four drug combination of elvitegravir/FTC/TDF/cobicistat — potentially important products in Gilead’s research and development pipeline for HIV/AIDS treatments.

It will take some time to review the text of the agreements, which were just released. These initial comments are based primarily upon oral briefings.

KEI welcomes the new agreement, which is the first between the MPP and an important private sector patent holder, subject to the reservations and comments presented below. With today’s announcement, the pool has widened the door for generic competition and lower prices for AIDS drugs in developing countries. Gilead is the first, and should not be the last, to recognize the importance of embracing the pool to formally share its technology to address this public health crisis. The licenses are not perfect, and there will be justifiable criticism of the geographic scope and several of the terms in the agreement. That said, the agreement seems to be an important step forward.

The MPP/Gilead agreement covers multiple products, each with a different geographic scope. The most expansive license covers 111 countries. According to some reports, in addition to AIDS, the licenses permit the sale of products to treat hepatitis B.

From the Medicines Patent Pool web page:

Per the Medicines Patent Pool transparency policy, the full text of the licences is posted below.

The licences are in three documents. The first is the primary licensing agreement signed by the Pool and Gilead. This agreement dictates that the Pool use the following two forms in its sub-licensing to generic companies. The first sub-licence document is a form “amended and restated” sub-licence agreement for existing Gilead sublicensees. The second is a form sub-licence agreement for new sublicensees.

The main licensing agreement between the Medicines Patent Pool and Gilead is available here .

The amended and restated form is available here .

The form sublicensee agreement is available here .

The license follows in many respects the approach taken in an earlier voluntary license for TDF and emtricitabine, which was the subject to an antitrust complaint by KEI to the Federal Trade Commission (FTC). The new agreement between Gilead and the MPP contains some of the shortcomings of the earlier license, but not all of them. Most important, while the new licensing agreement excludes many countries in Asia and Latin America, it does not prevent licensees from serving these markets through production from countries outside of India, or from India when countries outside of the voluntary license issue a compulsory license. The licenses explicitly state that exports of medicines from India to other countries under compulsory licenses do not constitute a breach of the license.

For further clarity, and nothwithstanding anything to the contrary in this Agreement, it shall not be deemed to be a breach of the Agreement for Licensee to supply an API or Product outside the Territory into a country where (i) the government of such country has issued a compulsory license relating to such API or Product allowing for the importation of such API or Product into such country, provided that Gilead and Licensee are in agreement (with such agreement not to be unreasonably withheld) regarding the existence, scope and content of such compulsory license, and/or (ii) the Government of India has issued a compulsory license allowing for the export of an API or Product from India and into such country, provided that (Y) there are no Patents containing a valid claim covering the use, import, offer for sale or sale of such API or such Product in such country or a compulsory license has also been issued by the relevant authorities of such country and (Z) Licensee and Gilead are in agreement (with such agreement not to be unreasonably withheld) regarding the existence, scope and content of such compulsory license.

This provision will work in combination with Section 92A of the India Patents Act. (See appendix below)

The new agreement, like the older license, would require the payment of royalties in countries where no patent exists. However, unlike the older agreement, it is possible to license some products and not others. CIPLA, for example, could use the licenses for the pipeline products, but continue to operate outside of the license for the TDF market, a product that is thinly patented within the geographic area covered by the license.

The new agreement is not a model agreement. For example, according to briefings, it requires active ingredient production be sourced from India (or a Gilead supplier), requires payment of royalties in countries without patents, and has limited developing country geographic coverage. That said, the terms of the license are an improvement over the previous agreement, more countries are covered, and the new pipeline products are considered quite promising. The license is also the first between the Medicines Patent Pool and a private sector patent holder and will allow civil society, donors, and developing country governments to put considerable pressure on other patent holders.

We are pleased that the licenses and key correspondence between the parties are public and will be available from the MPP web page. This sets a welcome precedent for transparency in the management of intellectual property policy.

Under Ellen ‘t Hoen’s leadership, and with the support, patience and leadership of the UNITAID board and staff (including the President, Philippe Douste-Blazy, and the Executive Secretary, Jorge Bermudez), the pool has rapidly positioned itself as a dynamic and ambitious international actor, focused on the public health aspects of controversial and complex intellectual property issues. Today’s announcement demonstrates the benefits of the collective licensing approach, and sets the stage for the next round of negotiations with other companies controlling key HIV treatment patents.

Civil society has long played a key role in the promotion and operation of the pool. These groups include the many who participate in the UNITAID civil society forums, as well as others, including NGOs in India, Brazil, Thailand and elsewhere that have long pressed the pool to protect consumer interests.

KEI and MSF played an early role in asking UNITAID to invest in the pool. Oxfam, Paris Act Up, Coalition PLUS, the UK Stop AIDS campaign, the Cameroon Coalition Against Malaria, the National Empowerment Network for People Living with HIV/AIDS in Kenya, and the African Services Committee have effectively monitored the UNITAID board meetings.

The Obama White House and the NIH decision to license patents it owned to the pool, and the support of DFID, and more recently a string of high profile endorsements from the G8, the WHO and the UN’s high level forum on AIDS have demonstrated broad political support for the pool – achievements that required considerable diplomatic and policy skills, and which will be quite important to the pool as it pursues voluntary licenses.

As noted above, the terms of the Gilead/MPP agreement are disappointing in several areas. This is largely a reflection of the relative bargaining power of the parties at this stage in the negotiations. It is an important step forward, but there is much more to do.

As the MPP moves forward, it will face many challenges in obtaining new licenses, expanded geographic coverage, and better terms. For the MPP to succeed in this next stage, it will be important to build upon the current levels of political support, and also to explore new incentives to induce licenses, such as the Donor Prize Fund proposal, and to increase engagement by developing country governments to persuade companies to license to the pool, and to expand geographic coverage. This includes by granting compulsory licenses on patents for products not licensed to the pool, for their countries. The United States government can also use its rights to other federally funded patents, including patents on ritonavir, lopinavir and other AIDS drugs invented with funding from the federal government, as leverage to get patents into the pool.

Without disparaging the many effective and determined civil society advocacy efforts that are associated with the pool, including our own, it is nevertheless true that it is difficult to maintain civil society and the general public attention on intellectual property issue for sustained periods of time. Thus, the existence of the MPP with a professional staff is helpful.

Finally, despite our reservations about some aspects of the Gilead license agreement, we note that Gilead and senior leadership deserves considerable credit for being the first company to license to the MPP, particularly given pressure from some quarters to avoid legitimization of the pool.

KEI believes it is very important that the pool succeed, and to broaden the geographic and product coverage and improve the terms of the licenses. The stakes are very high — and involve the lives of millions of persons living with HIV in developing countries.

Appendix

Section 92A of the Patents Act is a mandatory compulsory license “to any country having insufficient or no manufacturing capacity in the pharmaceutical sector for the concerned product to address public health problems.” It reads as follows:

(1) Compulsory licence shall be available for manufacture and export of patented pharmaceutical products to any country having insufficient or no manufacturing capacity in the pharmaceutical sector for the concerned product to address public health problems, provided compulsory licence has been granted by such country or such country has, by notification or otherwise, allowed importation of the patented pharmaceutical products from India.

(2) The Controller shall, on receipt of an application in the prescribed manner, grant a compulsory licence solely for manufacture and export of the concerned pharmaceutical product to such country under such terms and conditions as may be specified and published by him.

(3) The provisions of sub-sections (1) and (2) shall be without prejudice to the extent to which pharmaceutical products produced under a compulsory licence can be exported under any other provision of this Act. Explanation.- For the purposes of this section, “pharmaceutical products” means any patented product, or product manufactured through a patented process, of the pharmaceutical sector needed to address public health problems and shall be inclusive of ingredients necessary for their manufacture and diagnostic kits required for their use.