[Ip-health] TWN Info: Gilead grants license to medicines pool, devil is in details

Sangeeta ssangeeta at myjaring.net
Fri Jul 22 04:43:31 PDT 2011



On 12 July 2011, MPP and Unitaid announced a voluntary license agreement
between MPP and Gilead Sciences for the production of tenofovir,
emtricitabine, cobicistat and elvitegravir, as well as a combination of
these products called "Quad" for the treatment of HIV/AIDS. Tenofovir is
also licensed for use to treat Hepatitis B, common among the poor in many
developing countries. 

Please find below an analysis of the terms and conditions of the licenses. 

The analysis below is an updated version of a news report published by SUNS
on 21 July 2011.

Regards
Sangeeta Shashikant
Third World Network

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TWN Info Service on Intellectual Property Issues
22 July 2011
Third World Network
www.twnside.org.sg <http://www.twnside.org.sg>
 
Gilead grants license to medicines pool, devil is in details
Published in SUNS #7195 Thursday 21 July 2011
 
London/New Delhi, 20 Jul (Sangeeta Shashikant and K. M. Gopakumar) -- There
are mixed reactions to the first licensing agreement between Gilead
Sciences, one of the world's largest pharmaceutical companies, and the
Medicines Patent Pool (MPP), a Swiss foundation, for the production of some
HIV/AIDS medicines.
 
The Medicines Patent Pool and UNITAID (an international drug purchasing
facility to provide medicines to the poor for HIV/AIDS, malaria and
tuberculosis) announced on 12 July, a voluntary license agreement between
MPP and Gilead Sciences for the production of tenofovir, emtricitabine,
cobicistat and elvitegravir, as well as a combination of these products
called "Quad" for the treatment of HIV/AIDS. Tenofovir is also licensed for
use to treat Hepatitis B, common among the poor in many developing
countries. 
 
Ellen t'Hoen, Executive Director of the Medicines Patent Pool, marked the
agreement as a "milestone in managing patents for public health", while
Stephen O'Brien, Minister of International Development for the United
Kingdom, welcomed the agreement and noted that the UK would continue to
support the Pool as an important contribution to ensuring that the largest
number of people living with HIV get access to the treatments they need.
 
However, concerns were also voiced by others involved in seeking better
access to affordable medicines, as they pointed to the shortcomings of the
agreement reached. Medecins sans Frontieres (MSF) noted in its press release
that "the agreement falls significantly short of what is needed to fully
meet the public health needs for HIV/AIDS".
 
The MPP is an independent Swiss foundation based in Geneva and funded by
UNITAID under a five-year Memorandum of Understanding. It focuses on
negotiating with patent holders to interest them in licensing their
intellectual property to other producers to facilitate the production of
generic medicines initially for the treatment of HIV/AIDS.
 
[In 2006, Brazil, Chile, France, Norway and the United Kingdom decided to
create UNITAID, an international drug purchasing facility financed with
resources that would be both sustainable and predictable. A tax on airline
tickets was chosen as the most appropriate means of providing sustainable
funding. There are 29 countries supporting UNITAID today and the three
diseases covered are HIV/AIDS, malaria and tuberculosis.]
 
In July 2008, the UNITAID board decided to explore the possibility of
establishing a voluntary patent pool for medicines, and in December 2009,
agreed to create the MPP as a separate entity, which would focus on
increasing access to HIV medicines in developing countries.
 
Unsurprisingly, many developed countries have trumpeted their support for
the MPP, as it advocates the use of voluntary measures to facilitate access
to medicines.
 
[Developed countries such as the US and the EU have a long history of
criticizing and threatening retaliatory measures against developing
countries that use compulsory licenses to make treatments available to their
local populations.]
 
The approach taken by the MPP has given rise to concerns that while "Big
Pharma" gains publicity by participating in the pool, such a "voluntary"
mechanism is likely to further undermine the use of flexibilities (e. g.
compulsory licence) under the WTO agreement on intellectual property rights
to facilitate access to medicines. There are also concerns that the MPP may
undermine support and resources for patent oppositions in India, legitimize
"evergreening" practices, as well as segment developing-country markets.
 
["Evergreening" is a strategy often used by patent holders to lengthen the
period of monopoly that they have over a particular product. For example,
new patents for another 20 years are obtained for changes to a product whose
patent term is expiring, and such changes are subject to a low standard of
"inventiveness" to justify a new patent, thus extending the product's
monopoly in the market. Many of the legal and technical steps taken to do
this have been widely criticized by public health advocates over the past
two decades. For example, patents are granted over fixed dose combinations
as well as over new uses or formulation of known products.]
 
Several of these concerns appear to be justified in view of the terms and
conditions contained in the licenses agreed to by MPP and Gilead, leading
certain non-governmental groups to question whether "voluntary measures"
work to promote access to medicines.
 
Health Gap, in its press statement, noted that the patent pool licenses are
"demonstrating the inherent limitations of voluntary measures to address the
needs of affordable medicines".
 
The licenses agreed to between MPP and Gilead Sciences are in three
documents. The first is the primary licensing agreement signed by the Pool
and Gilead, the second is an "amended and restated" sub-license agreement
for existing Gilead sub-licensees, while the third document is a sub-license
agreement for new sub-licensees. This third license agreement is a
tripartite agreement among Gilead Sciences, MPP and the potential licensee
(in this case, Indian generic companies).
 
The licenses cover tenofovir (TDF), cobicistat (COBI), elvitegravir (EVG)
and the Quad (a fixed-dose combination of TDF-COBI-EVG-emtricitabine).
 
[TDF is a medicine used in combination with other antiretroviral (ARV)
medicines in first and second line regimens for treating HIV, as well as for
Hepatitis B. TDF is recommended by the WHO to replace stavudine, a widely
used HIV treatment in the developing world that is less preferred due to the
adverse side effects. Emtricitabine is an ARV medicine used in first and
second line treatment for adults. COBI and EVG are medical products that are
in development and yet to be approved for use in HIV treatment.]
 
In its press release, the MPP highlighted the key features of the licenses.
These include: licensing of products still in clinical development that
ensure speedier availability of such medicines in developing countries; key
flexibilities in intellectual property have been preserved; payment of
royalties between 3-5% of generic sales with royalties waived for any new
pediatric formulations; an increase in the geographical scope of the
licenses.
 
The licenses allow for the supply of TDF and emtricitabine in 111 countries,
for cobicistat in 102 countries and for EVG and the Quad in 99 countries;
contain agreement to make publicly available the text of the licenses; and
termination clauses that allow the licensees to terminate the license for
one medicine, while retaining the license to produce the others.
 
Despite these claims in the press release, the actual terms and conditions
of the licenses raise a variety of issues and concerns.
 
A major critique of the licenses is that products produced under the
licenses are only for supply to a specific list of countries (listed in
Appendices to the licenses) and as such exclude from the scope of the
licenses many developing countries, including countries with significant
populations of people living with HIV. Hence, the licensee (i. e. Indian
generic companies) cannot supply many developing countries that are excluded
from the scope of the license. For example, except for Bolivia, Cuba,
Ecuador and El Salvador, no other South and Central American countries are
included in the licenses.
 
Act-Up Paris, another organization, in its press release, noted: "In total 5
million people living with HIV will be excluded from the Patent Pool.
Moreover, the agreement will exclude countries with important generic
manufacturing capacity, and limit the production of medicines to Indian
generic firms, thus restricting competition that lower the price of drugs.
Gilead has placed limits in excess of WTO rules to prohibit local production
in poor countries".
 
"The exclusion of all these countries in the first deal between a drug
company and the Patent Pool constitutes a dangerous precedent that risks
limiting the scope of the programme," it stressed.
 
As a result, the MPP/Gilead licenses segment developing-country markets
between those that can be supplied under the licenses and those that are not
covered by the licenses.
 
[The list of countries excluded from the Patent Pool/Gilead deal for
Gilead's drugs already on the market -- in Asia: Malaysia, North Korea,
China, and the Philippines; in Latin America: Argentina, Brazil, Chile,
Colombia, Paraguay, Peru, Uruguay, and Venezuela; in Central America: Costa
Rica, Mexico, and Panama; in Middle East: Iran, Iraq, Lebanon, and Jordan;
in Eastern Europe and the Baltics: Albania, Azerbaijan, Belarus, Bulgaria,
Croatia, Czech Rep, Estonia, Hungary, Latvia, Lithuania, Montenegro, Poland,
Republic of Kosovo, Republic of Macedonia, Romania, Russia, Serbia, Slovak
Rep, Turkey, and Ukraine; in Africa: Algeria, Egypt, Morocco, Tunisia, and
Libya; in Island Nations: Marshall Islands, and Micronesia. -- Source:
Act-Up Paris news release dated 18 July 2011.]
 
[The list of countries excluded from the Patent Pool for Gilead drugs still
in trials
-- in Asia: Malaysia, North Korea, China, the Philippines, Kazakhstan, Sri
Lanka, Thailand, Turkmenistan, and Indonesia; in Latin America: Argentina,
Brazil, Chile, Colombia, Paraguay, Peru, Uruguay, Venezuela, Ecuador, and El
Salvador; in Central America: Costa Rica, Mexico, and Panama; in Middle
East: Iran, Iraq, Lebanon, and Jordan; in Eastern Europe and Baltics:
Albania, Azerbaijan, Belarus, Bulgaria, Croatia, Czech Rep, Estonia,
Hungary, Latvia, Lithuania, Montenegro, Poland, Republic of Kosovo, Republic
of Macedonia, Romania, Russia, Serbia, Slovak Rep, Turkey, and Ukraine; in
Africa: Algeria, Egypt, Morocco, Tunisia, Libya, Botswana, and Namibia; in
Island Nations: Marshall Islands, and Micronesia. -- Source: Act-Up Paris
news release dated 18 July 2011.]
 
It could be argued that Section 10.3(d) of the licenses could reduce the
adverse effect of not being included in the scope of the license, as it
allows export to countries (outside the scope of the license) that have
issued compulsory license (CL) over the products concerned. However, that
flexibility is subject to several restrictions, in particular that the
licensee and Gilead Science must be in agreement with regard to the
existence, scope and content of such CL issued in the importing country
(with Gilead not unreasonably withholding its agreement) and/or the
government of India has issued a CL for the export of the product to a
country (outside the scope of the license), but the importing country must
have also issued a CL if a valid patent exists in its territory.
 
Section 10.3(d) seems to suggest that even if there is no valid patent in a
country (outside the scope of the license), such a country cannot be
supplied under the voluntary licence granted unless India issues a
compulsory license to supply that country. This would then require
operationalising Section 92A of the Indian Patents Act which pertains to
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".
 
Section 92A was incorporated to implement the 30 August 2003 WTO General
Council decision (that has been criticized for containing cumbersome
procedures) to facilitate exportation of patented medicines produced under a
compulsory license. The requirement of compulsory license would act as a
disincentive for generic companies to supply individual countries excluded
from the license.
 
Further, the licenses are limited to Indian generic manufacturers. Other
generic manufacturers from developing countries that have capacity to
produce, such as in Thailand and in Brazil, have been excluded from the
scope of the license.
  
The MPP/Gilead licenses also require that the active pharmaceutical
ingredients (API) for the products licensed are to be supplied only by those
licensed by Gilead to produce those API or are produced by the licensee
under the license. 
 
In addition, one of the licence features highlighted is that the termination
clauses allow the licensees to terminate the license for one medicine, while
retaining the license to produce the others. However it should be noted that
termination clauses are linked to restrictions.
 
Even though the license provides the option to terminate any of the license
for API such termination would also result in the termination of the license
to produce the product using the terminated API. For instance, the license
states that ³ any termination by Licensee of its license to TDF pursuant to
this Section 10.5 shall in turn terminate the license and rights granted to
licensee hereunder with respect TDF product and TDF Combination product, and
any other product containing TDF².
 
This suggest that the API license is bundled with the product and as such a
generic manufacturer would be unable to produce a TDF product under the
license using API produced by entities not licensed by Gilead.
 
Further, the licenses impose restrictive conditions on the supply of APIs
and products to a country outside the scope of the licenses. Section 10.3 (
c) suggests that even when patents containing a valid claim have been held
invalid beyond the possibility of any further appeal in India and in the
country outside the scope of the licences, the licensee is only able to
supply such API or products after the licensee reaches agreement with Gilead
that no valid patents exist and that the licensee has been able to obtain
applicable regulatory approval in such country.
 
This suggests that supply to countries outside the scope of the license by
the licensee even after the patents are held to be invalid would need to be
agreeable to Gilead Sciences.
 
[According to the definition section, reference to "Patents" includes not
only patents listed in the Appendix of the licenses but also to any other
patents and patent applications (and resulting patents therefrom) owned by
Gilead or exclusively licensed by Gilead from Japan Tobacco Agreement
covering APIs of products mentioned in the license. This broad definition of
"Patents" thus covers any patent or patent application (existing and future
applications) containing the APIs of TDF, FTC, EVF, and COBI within the
scope of license]. 
 
As such, the final disposal of patents in the license means the disposal of
not only the patents listed but also any other patents or patent
applications pertaining to the licensed molecules. This provision can easily
be used to evergreen the license agreement.
 
Another important issue is with regard to TDF's inclusion in the scope of
the license. Presently, there is no product patent protection for TDF in
India. The patent application filed by Gilead Sciences was successfully
opposed in 2009 by generic companies such as Cipla and civil society
organisations working on access to HIV/AIDS medicines using the pre-grant
opposition system in India. Gilead has filed an appeal against that decision
but the appeal has yet to be heard.
 
Appendix 2 to the licenses lists eight patent applications in India related
to TDF products and processes. Of these applications, at least three
applications, which include a product patent application, have been rejected
at the pre-grant opposition stage, while three more such applications are
facing patent opposition before the Indian patent office.
 
As such, it appears that the license granted is not for patents that have
been granted but on patent applications with questionable patent claims,
which are likely to be rejected during the opposition proceedings.
 
Moreover, apart from India and Indonesia, Appendix 2 of the license
agreement does not cite any other foreign patent application with regard to
TDF. This suggests that there is no valid patent or pending patent
applications in the other countries listed in Appendix 2 and as such, Gilead
is seeking royalty from Indian generic companies for supplying to countries
that have no patent for TDF.
 
On the issue of royalty, according to the terms of the licenses (Section
4.9), royalties will have to be paid until the expiration or the date of
expiration of the last to expire ³Patent containing a valid claim covering
the manufacture, use, import, offer for sale or sale of API or the Product
in India².
 
In addition the section adds that royalties do not have to be paid if ³all
Patents containing a valid claim² are "held invalid or unenforceable beyond
the possibility of any further appeal" in India and in the importing
country.
 
According to the definition section, reference to "Patents" includes not
only patents listed in the Appendix of the licenses but also to any other
patents and patent applications (and resulting patents therefrom) owned by
Gilead or exclusively licensed by Gilead from Japan Tobacco Agreement
covering APIs of products mentioned in the license. This broad definition of
"Patents" thus covers any patent or patent application (existing and future
applications) containing the APIs of TDF, FTC, EVF, and COBI within the
scope of license. 
 
As such, the final disposal of patents in the license means the disposal of
not only the patents listed but also any other patents or patent
applications (that have been filed or have yet to be filed) pertaining to
the licensed molecules.
 
This means that royalties will have to be paid until expiration or
determination of validity on all patents and patent applications containing
a valid claim covering the manufacture, use, import, offer for sale of the
API or the Product. This could take many years and during these years Gilead
will be allowed to claim royalties over questionable patent claims. 


It also suggests that royalties would be paid while a patent application is
pending examination as well as in the interim period (i. e. after the
decision of the pre-grant opposition) before the final appeal is heard,
which could also take many years. Usually, during these periods, generic
manufacturers are free to produce generic versions without payment of any
royalties.
 
[Cipla's opposition to the TDF patent application in India succeeded in 2009
and although pending appeal, Cipla continues to produce generic versions
without any payment of royalties. Other major generic manufacturers produce
TDF under a voluntary license from Gilead Sciences.]
 
Another concern with regard to the licenses is that it extends to fixed-dose
combinations, pediatric formulations, as well as new uses such as the use of
TDF for treatment of hepatitis B, thus implicitly legitimizing the practice
of "evergreening". The licenses also encourage such practice with its
provision for mandatory grant back by the licensee (i. e. the generic
manufacturer) to Gilead Sciences of improvements made on the licensed
products.
 
India enacted a specific provision in its patent law, commonly referred to
as "Section 3(d)", to combat such a practice. Section 3(d), in combination
with provisions on pre-grant opposition in the Indian patent law has been
used on numerous occasions by generic companies as well as civil society
organisations to challenge and nullify patent applications that claim such
bad patents. As a result, many key medicines such as imatinib mesylate,
tenofovir, and nevirapine hemihydrate are currently not covered by patents
in India, giving Indian manufacturers the freedom to manufacture the generic
versions of such products.
 
In some cases, a pre-grant opposition challenge has resulted either in
withdrawals of applications such as the one for Lamivudine/zidovudine
combination or changes in patent claims.
 
Following the success in India, groups in Thailand and Brazil have also
pursued a similar strategy to safeguard their access to generic medicines.
 
However, the patent pool licenses could undermine the use of patent
oppositions, as it is likely to lead to much fewer such legal challenges to
bad patenting practices, particularly as Indian generic manufacturers may
simply opt for a voluntary license instead of engaging in an opposition
against multinational pharmaceutical companies such as Gilead Sciences. This
is likely to result not only in bad patents continuing to remain valid, but
also even more aggressive use of "evergreening" practices by pharmaceutical
manufacturers.
 
Several conditions in the licenses would restrict use of critical TRIPS
flexibilities, such as parallel importation.
 
[Parallel import is the import and resale in a country without the consent
of the patent holder of a patented product when that product has been
legitimately put in the market of the exporting country under a parallel
patent.]
 
The licenses explicitly require the licensee to guarantee that there will be
no diversion of API or other chemical entities generated during the process
of manufacturing of API or the products outside of India except as expressly
permitted by Gilead Sciences.
 
Further, third party resellers would also need to enter into agreement with
the licensee to ensure that the terms of the licenses (signed between the
licensee and Gilead) are also abided by such resellers. The agreement
between the licensee and the resellers would have to be notified to Gilead
in writing, with copies provided to Gilead for its review. Gilead has the
right to terminate the right of the licensee to sell to such reseller.
 
Effectively, the terms of the licenses are quite stringent, presumably to
ensure that flexibilities such as parallel importation are not used by
countries to import products that are produced under the license.
 
The terms of the licenses also require that the licensee produces API and
products consistently with applicable Indian manufacturing standards,
standards of the importing country and additional standards either set by
the WHO pre-qualification or European Medicines Agency or the US Food and
Drug Administration. This requirement effectively is likely to limit the use
of the licenses to more advanced Indian generic companies, while excluding
the small and medium sized industry that produce quality generic medicines.
 
THREATS TO ACCESS TO MEDICINES CONTINUE
 
In June 2011, at a UN meeting in New York, the international community
committed that at latest 15 million people will be on antiretroviral
therapies by 2015.
 
However, it is difficult to hope that this target would be achieved, as the
war against generics continues and actions of multinational pharmaceutical
companies continue to deny treatment to large segments of populations living
with HIV.
 
Act-Up Paris noted in its press release of 18 July that: "... the European
Commission ... have been pushing trade policies (including free trade and
so-called anti-counterfeiting agreements) that aim to block the fabrication
and the export of generic drugs. Without low-cost medicine, global
commitments to achieve Universal Access to treatment will not be reachable".
It further noted that Gilead's announcement cannot hide the war against
generic medicines, pointing out that the MPP/Gilead agreement excludes many
countries.
 
MSF, in a press release on its report on HIV drug pricing (on 18 July),
noted: "Several pharmaceutical companies have abandoned HIV drug discount
programmes in middle-income countries".
 
It further said that "Tibotec/Johnson & Johnson exclude all countries
classified as Œmiddle-income' from their price reductions; Abbott excludes
low-income and lower middle-income countries from discounts for one of its
drugs; and ViiV (Pfizer and GlaxoSmithKline) no longer offers reduced prices
to middle-income countries, even when programmes are fully funded by the
Global Fund to Fight AIDS, TB and Malaria or the US government's PEPFAR
programme."
 
MSF also noted Merck's announcement that it will no longer issue price
discounts for 49 middle-income countries for its new drug raltegravir.
Today, Brazil is paying $5,870 per patient per year (ppy) for just this one
HIV drug; in least-developed countries, Merck charges $675 ppy for the drug,
which is already four times the price of the recommended triple first-line
combination (TDF/3TC/EFV).
 
"This development comes on the heels of a number of developing countries
being excluded from (the July) agreement between drug company Gilead and
MPP," MSF added. +









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