Earlier this year, we had carried a post on UNITAID’s Medicines Patent Pool being in talks with several key pharmaceutical companies. In a press release by the Medicines Patent Pool today, they announced an agreement with Gilead Sciences, which makes them the first pharmaceutical company to join the MPP. Gilead also announced that they had already established license agreements with 4 India based drug manufacturers – Hetero Drugs Ltd., Matrix Laboratories Ltd., Ranbaxy Laboratories Ltd. and Strides Arcolab Ltd
Patent Pools work on the basis of allowing contributing participants to use other patented products that have been made available to the Pool through a series of cross licenses. This current agreement allows for generic copies of 4 products by Gilead for HIV treatment – tenofovir, emtricitabine, cobicistat and elvitegravir, as well as a combination pill known as ‘Quad’. Tenofovir is also used in treatment of Hepatitis B. Notably, cobicistat and elvitegravir as well as ‘quad’, are still in clinical development. This would mean that potentially several years of delay of access to these advanced drugs can be prevented by this agreement. Further, data exclusivity periods, where they exist, are waived.
MPP and Unitaid have also said that the licenses will be made available online for all stakeholders to examine. This move towards transparency is a very welcome one indeed.
However, as KEI has pointed out, while this certainly has many potential benefits, there is room for improvement in the license terms.
Depending on the product, between 99 to 111 countries will be included in the scope of the license. This however is still a good number short of the roughly 150-170 developing economies. The license then, does not permit Indian production to serve these countries unless there is a compulsory license issued.
While the royalties under the license that Gilead is to receive are 3-5% of generic sales, and waived altogether for new paediatric formulations, the royalties are still applicable even in countries where the patent does not exist.
However, the very fact that this kind of criticism has already arisen is due to the welcome move of allowing all stakeholders to see the terms of the license online. Hopefully, this will lead to improvements and better conditions in future agreements.
I certainly have been skeptical of this model of drug innovation before, but it seems more promising than ever right now. Though US’ NIH had joined the MPP last year, it requires the presence of some of their own to induce Big Pharma to join this and increase the MPP’s portfolio. It’s recent recognition by the G8 and the UN High Level meeting on AIDS is probably helping its cause as well. While it still remains true that patent pools cannot definitively address the problems inherent to pharmaceutical patents, (which can account for a good portion of why developing country diseases are neglected in the first place, amongst other problems), they can certainly remove some of the deadweight loss due to overpriced drugs.
Finally, I remain curious about the funding mechanism for Gilead Sciences, and other future participants. So long as there is even half a truth to the massive drug development cost estimates, a 3-5% royalty on the generic sales doesn’t seem like it would generate anywhere near the required revenue to cover those costs. Is this being considered as ‘made up for’ by the positive PR which this would generate? Maybe this is to balance out the negative PR which ironically happened when KEI filed an antitrust complaint against them for controlling the supply of AIDS drugs (including tenofovir) to 45 countries. Are they simply massive enough to absorb the costs through other products? It remains a mystery to me. In any case, there is no doubting that this will help patients around the world receive more affordable treatment. Let’s hope that all the potential benefits of this patent pool can be realised as well.