[Ip-health] Stat News: Sanofi rejects US Army request for ‘fair’ pricing for a Zika vaccine

Zack Struver zack.struver at keionline.org
Wed May 17 07:49:16 PDT 2017


Sanofi rejects US Army request for ‘fair’ pricing for a Zika vaccine

By ED SILVERMAN @Pharmalot MAY 17, 2017

As the US Army proceeds with plans to issue a license to Sanofi Pasteur to
develop a vaccine for the Zika virus, the company last month rejected a
request to maintain affordable pricing for Americans, according to an Army
timeline of events that we have reviewed.

The rejection prompted anger from Senator Bernie Sanders, who has pushed
the US Army to negotiate a more favorable agreement with Sanofi, which is
one of the world’s largest vaccine makers and has received a $43 million US
research grant. The deal, which could provide the company with another $130
million in government funds, has sparked debate about pricing for products
that are discovered with US taxpayer dollars.

“It is unacceptable that Sanofi has rejected the Army’s request for fair
pricing” in the US that is comparable to what other countries may be
charged, Sanders told us in a statement. “American taxpayers have already
spent more than $1 billion on Zika research and prevention efforts,
including millions to develop this vaccine. Americans should not be forced
to pay the highest prices in the world for a critical vaccine we paid to
help develop.”

There is speculation that the market for such a vaccine could become
lucrative, depending upon how extensively the virus travels. So the
prospect of giving Sanofi an exclusive license to sell a potential
blockbuster — assuming Zika does spread widely — has upset lawmakers and
advocacy groups. For this reason, they want the Army to find a way to
address the pricing.

Meanwhile, the Army said it is still weighing whether to grant the company
an exclusive license, despite previous assertions. In a May 4 letter to
Sanders, Acting Secretary of the US Army Robert Speer wrote that “the
decision to grant an exclusive license to Sanofi Pasteur is not final” and
is “still several months away.” Such a license may be issued this summer,
according to the same Army timeline.​

Speer was responding to concerns the company will be given a monopoly and,
consequently, may charge more for any forthcoming vaccine than many
Americans can afford. The Army last June signed a research agreement with
Sanofi to develop a Zika vaccine, and an Army spokeswoman maintained that
an exclusive license must be offered to the company.

Speer, however, appears to contradict what an official in the Army’s
medical technology transfer office last month wrote to Knowledge Ecology
International, an advocacy group that has criticized exclusive licensing
for the vaccine. In an April 24 letter, the official maintained the
military intended to proceed with plans to award Sanofi an exclusive
license to a pair of government patents.

The shifting Army timetable, however, may reflect a bid to forestall
further negative publicity.

For several months, the topic was on a low boil as Sanders and other
lawmakers, as well as patient advocacy groups such as Doctors Without
Borders, pressed the Army. They have tried to persuade the Army to issue a
non-exclusive license or impose requirements allowing the federal
government to intervene if the company sets a price that would make the
vaccine inaccessible to many Americans.

But in March, Sanders drew national attention to the issue in an op-ed in
The New York Times in which he scolded the Army for a “bad deal” that may
subject Americans to price gouging. He noted that Sanofi was awarded a $43
million grant from the US Biomedical Advanced Research and Development
Authority, and the company has previously indicated it expects to ask BARDA
for more funding.

​Last week, meanwhile, Louisiana Governor John Edwards also wrote Speer to
express “serious concern” about an exclusive license, since Louisiana may
be “one of the Gulf states most likely to be affected” if the virus
spreads. He also warned that monopoly pricing, “without constraints, could
cripple state budgets and threaten public health.”

For its part, the Army has maintained that it is trying to help solve a
public health problem. There was mounting alarm last year over the spread
of Zika, a mosquito-borne virus that can cause birth defects. And Speer
wrote to Sanders that the Army struck a deal with Sanofi because the
military lacks “sufficient” research and production capabilities to develop
and manufacture a Zika vaccine.

And in that April 24 letter, the other Army official wrote the military is
not in a position to enforce “affordable prices.” But one advocate, Jamie
Love of Knowledge Ecology International, countered that federal law
requires an exclusive license to cover an invention that has a practical
application, which is defined as being made “available to the public on
reasonable terms” and should be “substantially” made in the US.

Moreover, Arti Rai, the co-director of the Duke University Law School
Center for Innovation Policy, believes the Army has leverage for another
reason. One of two provisional patent applications was filed before the
Army and Sanofi signed their deal, which is known as a CRADA, or
cooperative research and development agreement. And the CRADA excluded the
first provisional patent application.

As a result, the Army may not be required to offer an exclusive license, at
least for that particular patent application. “My reading of the (federal
statute) is that if the invention was created and federally owned before a
CRADA was signed, then the Army is not obligated to give a license” to
Sanofi, she explained.

But the Army may not be pushing Sanofi harder over the terms of the
agreement due to concerns the company will walk away. It was only after an
April 14 conversation between Sanders and Speer that the Army broached the
pricing issue, according to Sanders’ office. Four days later, Sanofi
rejected the notion. In his May 4 letter, Speer noted Sanofi is the “only
known pharmaceutical company willing to license” the patents from the Army.​

​Such concerns prompted the National Institutes of Health in 1995 to
remove“reasonable pricing” clauses from CRADA agreements. At the time,
former NIH director Dr. Harold Varmus described such clauses as a
“restraint” on new product development.

As for Sanofi, Elias Zerhouni, who heads global R&D, responded to the
recent Sanders op-ed that the company will make “significant milestone and
royalty payments” to the Army, which will allow the US government to
“recoup its investment.” Those details have not been publicly released. A
Sanofi spokeswoman told us “we can’t determine the price of a vaccine that
we haven’t even made yet.”

It is worth noting that, just last week, Sanofi vowed to limit price hikes
to a level at or below the medical rate of inflation in the US. The move
comes not only as the company faces questions over the license for the Zika
vaccine, but also pressure from lawmakers, including Sanders, who want
federal authorities to investigate the company and two rivals for alleged
price collusion over insulin products. Separately, some consumers filed a

Meanwhile, another Sanofi spokeswoman wrote us that “it’s important to note
that our discussions with the US Army are ongoing and any terms of a
licensing agreement are still being negotiated. Further discussions are

Similarly, a US Army spokeswoman sent us a note saying “any license
agreement will not be signed unless the terms of the license application
and agreement satisfy relevant law and regulations, and the government
determines that the terms are in the best interest of the government and
the public. The government and Sanofi Pasteur are engaged in continuing
negotiation of the terms of the license agreement, so a final decision has
not been made.”​

Zack Struver, Communications and Research Associate
Knowledge Ecology International
zack.struver at keionline.org
Twitter: @zstruver <https://twitter.com/zstruver>
Office: +1 (202) 332-2670 Cell: +1 (914) 582-1428

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