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)