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We had earlier mentioned that the Medicines Patent Pool had gotten into an agreement with it’s first pharmaceutical company. However, it appears that there are certain problems with the licensing agreement, the interpretation and understanding of which is under dispute by two traditional heavyweights in this field.
I-Mak released a briefing paper on the Implications of the MPP and Gilead licenses on Access to Treatment which addressed certain concerns that they had with the license; and Knowledge Ecology International (KEI) put forward a response expressing their disagreement with parts of I-Mak’s paper. The main issue seems to surround the question of what these licenses do for ‘new use’ patents. I’ll explore this question in this post, along with a few other smaller issues with the licenses.
Aside from their direct impact, these issues are important because this being the first agreement with a pharmaceutical, will act as a template for future licenses as well; and its very possible that other pharmaceuticals may treat this as a ceiling limit as far as terms go.
1) New Use of Known Products:
The deal struck between Gilead and MPP included 4 products for HIV treatment – tenofovir disoproxil fumarate (TDF), emtricitabine (FTC), elvitegravir (EVG), cobisitat (COBI) and a combination pill comprising all four drugs known as the ‘Quad’. The license allows the patented products to be used in a field of use as defined in the license. For products using TDF as the sole ingredient, the field of use is HIV and Hepatitis B. However, the problematic part arises with EVG and COBI, where the field of use covers these products for any use that is consistent with use approved by the FDA or other applicable foreign regulatory authority. Thus if a new use of one of these known products is discovered (let us say hypothetically a treatment for TB), then the licensee will be required to pay royalty for this new treatment as well. It also means that in order to sell this TB treatment, the licensee will be locked into the restrictions provided by this current license.
However, countries like India do not allow new use patents. This means that absent this extended field of use provision, generics would’ve otherwise been able to produce this treatment without needing to pay a royalty to Gilead. However, the presence of this ‘any use’ clause, has the same effect as a new use patent being granted, even in countries which do not allow it. This does not encourage new use patents per se, but for all purposes of the generic company, it effectively grants one.
While a generic can choose to terminate a license on a product, it cannot choose to opt out of only the ‘new use’ of the product. Thus, it doesn’t present a realistic choice for a generic company which is producing the product for its original use already, since it is unlikely that it would make business sense to stop a product that is already selling to start producing another one.
2) Forming a global patent system?:
I-Mak has pointed out that the TDF patent has only been granted in Indonesia, and yet royalties need to be paid for it in all territories – with a change in the royalty rate from 3% -> 5% if the patent is granted.
Also, the license cannot be severed based on territory. It’s already clear that a royalty would be charged even in countries in which the product is not patented. Adding this ‘new use’ product to the equation, royalty will have to be paid in countries which do not allow ‘new use’ patents too. Thus even if a product is not patented in India in the first place, it’s ‘new use’ will now be protected under this license and royalties will have to be paid on it, effectively granting ‘new use patent’-like privileges over the product in all territories covered by the license, as well as the other restrictions brought on by the license
Other notable factors:
a) The terms of the license hold good up even in the case of a controversial patent as long as the status of the patent is under dispute. In a country like India, by pushing the case through various levels of adjudication, this could take up enough years of royalty generation so as to not actually make much of a difference whether the patent is eventually granted or not.
b) The production of the Active Pharmaceutical Ingredient (API) for the licensed drug is restricted to Indian generic companies located in India. This removes countries like Brazil, China and Thailand from the equation, as well as Indian companies with manufacturing sites outside India.
While the MPP is no doubt well intentioned with this ambitious project, it is important that they take into account these licensing issues so as to ensure that the current negotiations with other pharmaceutical companies can at least take these into consideration – though practically, it will be very hard to press for a more access friendly deal now that the MPP/Gilead licenses are already in place. I-Mak has suggested a set of recommendations which could help towards this cause. They can be viewed at the end of the document here.