Voluntary Licensing: an analysis of current
practices and key provisions in antiretroviral
voluntary licences
C. Park, S. Moon, E. Burrone, P. Boulet, S. Juneja, E. ‘t Hoen,
M. Trabanco, R. Harshaw
XIX AIDS Conference, Washington
25 July 2012
Introduction and Definition
Background
7 of 8 ARV originator companies engage in non-exclusive voluntary licensing as
part of their stated access policies.
But, very little known about various provisions that can be included in voluntary
licences and their impact on access to affordable ARVs.
Definition of “Voluntary Licence (VL)” (for purposes of study):
A non-exclusive licence (or IFS or NAD) granted to one or more generic producers
by an originator company on an ARV as part of the originator’s stated access
policy.
Methodology and Research Questions
Methodology
Gathered publicly-available sources of information on VLs (company websites,
press releases, media reports, Medicines Patent Pool website, MSF Untangling
the Web report) on 8 ARV originator companies: Abbott, Boehringer-Ingelheim,
BMS, Gilead, J&J, Merck, Roche and ViiV to determine nature and scope of VLs
in place.
Questions Posed
1.  What are the most important aspects of VLs from the perspective of public
health?
2.  What is current industry practice along these aspects?
3.  What is the public health impact of various provisions?
4.  What are the “access maximising” provisions?
Current state of voluntary licensing
Drug
MVC
LPV/r, r
EFV
ETR
RAL
SQV, NFV
Geographic
Scope
none
none
South Africa
SSA
SSA+LICs
SSA+LDCs
SSA +LDCs
+LICs
Number of
licensees
0
0
5
1
2
Several
Several (none
for DLG)
Originator
ViiV
Abbott
Merck
J&J
Merck
Roche
ViiV (GSK/
Pfizer)
AZT, 3TC, ABC
BMS
d4T, ddI, ATV
J&J
DRV
SSA + India
SSA + LDCs
+India
Gilead/Pool
EVG
100 country list
Gilead/Pool
COBI
Boehringer
Total
Total
PLHIV in PLHIV in
LMICs
LMICs
(%)
Total # countries (millions)
0
0
0%
0
0
0%
1
5.6
18.5%
48
21.88
72.5%
57
22.393
74.2%
65
22.397
74.2%
69
22.735
75.3%
ATV=4
49
24.28
80.4%
66
24.797
82.1%
100
24.972
82.7%
103 country list
2
Unlimited (in
India)
Unlimited (in
India)
103
25.029
82.9%
NVP
All Africa+LDCs
+LICs
Several
78
25.314
83.8%
J&J
RIL
112 country list
112
26.456
87.6%
Gilead/Pool
TDF, FTC
112 country list
5
Unlimited (in
India)
112
26.456
87.6%
Key Terms and Conditions Covered
Geographical Scope of VLs
Number of Licensees
Provisions relating to API Manufacturing
Provisions relating to Royalties
Freedom to Co-formulate into Fixed Dose Combinations
Technology Transfer
Provisions Relating to Data Exclusivity
No-Challenge Clauses
Provisions Relating to Compulsory Licences
Other Important Considerations
Current
•  Wide variance within
the industry ranging
from no voluntary
licensing to 112
countries
Public Health
Impact
•  Wide geo scope allows
for maximum number of
people to benefit
•  Allowing manufacture
anywhere in the world
maximizes the pool of
potential licensees
AccessMaximising
Geographical Scope
•  All low- and middleincome countries
included within the
scope
•  Manufacture can take
place anywhere in the
world
160
140
No. of Countries
120
100
80
60
40
20
0
Low-income (LIC)
Lower-middle income (LMIC)
Upper-middle income (UMIC)
High-income (HIC)
Number of Licensees
BMS"
BI" AbboA"
0"
LPV/r,"r"
NVP"
1"
Number'of'Licensees'
2"
3"
4"
5"
6"+
Current
#'of'Licensees'
ATV"
Roche"
Merck"
Gilead"
RIL"
TDF,"FTC,"COBI,"EVG"
EFV"
Public Health
Impact
DRV"
RAL"
SQV,"NFV"
DLG"
MVC"
AZT,"3TC"
AccessMaximising
J&J"
ETR"
VIiV"(GSK/PFE)"
•  One to Unlimited Number of
Licensees
•  Lack of clarity on how
licensees are selected
•  Some licensees not currently
producing licensed product(s)
•  Limited number of licensees
may hinder robust generic
competition
•  “Scattershot” selection of
licensees by different
licensors may hinder
development of needed FDCs
•  Any manufacturer who is
interested and capable of
producing quality product
Number of Licensees – current practice
•  Bilateral negotiations between patent-holders and select generics are
common
•  Selection criteria not known
•  Licensees have little negotiating power
•  Generics often accept limited geo scope and restrictions to get started
quickly
•  Only some licencees have significant API manufacturing capacity
Aspen Aurobindo Cipla Emcure Hetero Matrix Ranbaxy Strides BMS (ATV) Gilead (EVG/COB) J&J (RIL) Merck (RAL) Viiv (DLG) J&J (ETV) Merck (EFV) BI (NVP) AbboL (LPV) AbboL (RTV) Viiv (MVC) J&J (DRV) Roche (SQV) 8
Relationship Between Number of
Producers and Price
Source: Médecins Sans Frontières (MSF), Campaign for Access to Essential Medicines: Untangling the web of antiretroviral price
reductions (online edition).[http://utw.msfaccess.org/] 14th edition, July, 2011.
AccessMaximising
Public Health
Impact
Current
Provisions Related to API Manufacturing
1J.
•  Some do not allow API manufacture (ETV, DRV), others provide for
freedom to manufacture and sell API
•  Cost of API is a significant portion of the price of the final generic
product1
•  Robust competition provides incentives for licensees to develop lower
costs of API manufacture
•  Lower cost through economies of scale can be achieved if companies
that specialise in low-cost bulk API manufacture are free to sell it to
finished product manufacturers
•  Minimal restrictions on the manufacture and sale of API by and
amongst Licensees
Bumpas and E. Betsch, Exploratory Study on Active Pharmaceutical Ingredient Manufacturing for Essential Medicines, Health, Nuturition and
Population Discussion Paper. World Bank, Washington, D.C. 2009.
AccessMaximising
Public Health
Impact
Current
Provisions on Royalties
2P.
•  Royalties range from 0% to 15% of net sales of generic product2
•  The Pool/Gilead licence contains a royalty waiver for paediatrics
•  Royalties have direct impact on price
•  However, accounting for factors such as disease burden and
country’s income level may provide opportunities for wider
geographical scope3
•  Lowest reasonable royalty to achieve broadest geographical scope
Beyer. Developing socially responsible intellectual property licensing policies – voluntary licensing initiatives in the pharmaceutical sector.
Research Handbook on Intellectual Property Licensing. Edward Elgar, 2012 (forthcoming).
3J. Love. Remuneration guidelines for non-voluntary use of a patent on medical technologies. Health Economics and Drugs, TCM Series No. 18,
UNDP/WHO, New York/Geneva, 2005.
Current
•  FDCs are recommended by WHO
•  Some FDCs are sometimes only available as
generics (e.g., ATV/r, TDF/3TC/EFV)
•  Overly restricted clauses on FDC
manufacture may hinder access to needed
combinations
AccessMaximising
•  Limited information publicly available
•  Licences for RIL only permit specified
combinations (i.e., TDF/XTC/RIL)
•  Licences for TDF, COBI allow for freedom to
co-formulate with any product
•  Licences for EVG require approval from
licensor
Public Health
Impact
Freedom to Co-formulate Fixed Dose
Combinations
•  Allow licensees sufficient freedom to
manufacture FDCs based on regulatory
approval and medical need
AccessMaximising
Public Health
Impact
Current
Technology Transfer
•  Limited information publicly available
•  Non-asserts and immunity from suit agreements come with no
technology transfer
•  The Pool/Gilead licences include tech. transfer
•  Can accelerate and facilitate generic product development
•  However, additional obligations based on tech. transfer (e.g., royalties)
can be problematic
•  Option to take technology transfer
•  Preferably without separate royalty obligations
•  Important to avoid further restrictions based on existence of tech.
transfer
AccessMaximising
Public Health
Impact
Current
Provisions Relating to Data Exclusivity
•  Limited information publicly available
•  The Pool/Gilead licence contains express waiver of data exclusivity
rights, where they exist
•  Data exclusivity, where it exists, can pose an additional obstacle to
access separate from patent rights
•  VLs should include express right of reference to the originator’s
regulatory dossier and/or explicit waiver of data exclusivity
Public Health
Impact
•  Limited information publicly available
•  Flat prohibition against challenging licensed patents may not be
enforceable in many countries (e.g., US and EU)4, but may be
enforceable as grounds for termination by licensor5
•  Ability to challenge patents can overcome barriers posed by
questionable patents
•  Successful challenge of questionable patents can relieve licensee of
further obligations (e.g., royalty)
AccessMaximising
Current
No-Challenge Clauses
•  No-challenge clauses or termination-for-challenge clauses should be
avoided
See Lear, Inc. v. Adkins, 395 U.S. 653 (1969); Commission Regulation (EC) No 772/2004 of 27 April 2004 on the application of Article 81(3) of the
Treaty to categories of technology transfer agreements, 2004 O.J. (L 123) 11.
5 See MedImmune v. Genentech, 549 U.S. 118 (2007); Commission Notice, Guidelines on the application of Article 81 of the EC Treaty to technology
transfer agreements, 2004 O.J. (C 101) 02, paragraph 112.
4
AccessMaximising
Public Health
Impact
Current
Provisions Relating to Compulsory Licences
•  Limited information publicly available
•  The Pool/Gilead licence expressly allows for sale outside the licensed
territory in the event of a compulsory licence
•  Countries outside the licensed territory that issue compulsory licences
could face practical difficulties in procuring generic versions of
patented ARVs if the major generic manufacturers of ARVs are
contractually prohibited from supplying them
•  Allow for manufacture or sale outside the licensed territory in the event
of a compulsory licence
Other Important Considerations
•  Freedom to manufacture and sell where there is no patent
at origin and at country of destination
•  Unbundling: when more than one product is licensed,
licensee should be able to pick and choose the products
and terminate on a product-by-product basis
•  Avoid exclusive grant-back provisions
•  Need for transparency of licence agreements
Miscellaneous provisions
•  Quality Assurance
•  National Registration Requirements
•  Grant-back Provisions
•  Pharmacovigilance Requirements
•  Anti-Diversion
•  Pricing Restrictions
•  Packaging
•  Dispute resolution
•  Others…
Conclusions and recommendations
•  Industry practice on VLs varies widely in
geographical scope, number of licensees, freedom
to manufacture APIs, and other important terms
and conditions
•  Full evaluation of important terms and conditions
hindered as a result of an absence of transparency
in VLs
•  Evaluation of whether VLs enhance access should
include critical analyses of many terms and
conditions that impact on access
•  Increased transparency in VL practices should be
encouraged, and companies should be encouraged
to adopt “access maximising” terms and conditions
Selected References
•
P. Beyer. Developing socially responsible intellectual property licensing policies – voluntary
licensing initiatives in the pharmaceutical sector. Research Handbook on Intellectual Property
Licensing. Edward Elgar, 2012 (forthcoming).
•
J. Bumpas and E. Betsch. Exploratory study on active pharmaceutical ingredient manufacturing
for essential medicines, Health, Nutrition and Population Discussion Paper. World Bank,
Washington, D.C. 2009, available at: http://www.unido.org/fileadmin/user_media/Services/PSD/
BEP/APIExploratoryStudy.pdf
•
Commission Notice, Guidelines on the application of Article 81 of the EC Treaty to technology
transfer agreements, 2004 O.J. (C 101) 02, paragraph 112.
•
Commission Regulation (EC) No 772/2004 of 27 April 2004 on the application of Article 81(3) of
the Treaty to categories of technology transfer agreements, 2004 O.J. (L 123) 11.
•
Lear, Inc. v. Adkins, 395 U.S. 653 (1969)
•
J. Love. Remuneration guidelines for non-voluntary use of a patent on medical technologies.
Health Economics and Drugs, TCM Series No. 18, UNDP/WHO, New York/Geneva, 2005.
•
Médecins Sans Frontières (MSF), Campaign for Access to Essential Medicines: Untangling the web
of antiretroviral price reductions (online edition). [http://utw.msfaccess.org/] 14th edition 2011.
•
MedImmune v. Genentech, 549 U.S. 118 (2007)