[Ip-health] ViiV Licenses vs. the Patent Pool: Unanswered Questions and Unwarranted

Baker, Brook b.baker at neu.edu
Mon Aug 2 10:40:08 PDT 2010

ViiV Licenses vs. the Patent Pool:  Unanswered Questions and Unwarranted Antipathy
Brook K. Baker, Health GAP
August 2, 2010

ViiV Healthcare, a joint venture of GlaxoSmithKline and Pfizer and their partner Shionogu of Japan, announced on July 16, 2010 that it was unilaterally adopting a no-royalty voluntary licensing policy for its entire portfolio and pipeline of antiretroviral medicines.  Pursuant to the announced policy, generic manufacturers could supply generic versions of ViiV medicines to all least developed countries, all low-income countries and all sub-Saharan African countries as defined by the World Bank.  This collective territory would cover 80% of people-living-with-HIV in the developing world and the proposed license would cover not only existing medicines but pipeline ARVs as well such as the integrase inhibitor currently under development.  Finally, according to the press release, the licenses would be limited to “generic manufacturers in these countries.”

Substantial ambiguities exist about the impact of this voluntary licensing policy and its eventual licensing terms.  There is also uncertainty about ViiV’s intentions towards the UNITAID-initiated Medicines Patent Pool Foundation, especially given CEO Dominique Limet’s broadside attack on the Patent Pool in a July 21, 2010 Financial Times article (Andrew Jack, Pharmaceutical groups set up generics initiative).

 1.  Patent status:  The true impact of the ViiV Voluntary Licensing Policy is highly uncertain since ViiV has not revealed the patent status of its ARV portfolio in the 69 licensed countries.  The patent landscape is complex and uncertain because:  (i) the companies have filed multiple patents on successive dates on the relevant medicines (related to the basic molecule, manufacturing processes, the formulation/dosage, new uses, combinations, etc.)  in the U.S. and may have done so in many licensed countries as well; (2) the companies have failed to disclose which patents they have filed in which countries and whether those patents have been granted and properly maintained; and (3) even if filed, the patents may be of dubious validity because of differing standards concerning patentability in different jurisdictions.  Some of Viiv’s medicines, for example zidovudine (AZT), are clearly off-patent, and others are not patented (or patentable) in countries without patent regimes and countries like India because the first relevant patent on the active pharmaceutical ingredient was filed before 1994/1995 when the WHO TRIPS Agreement came into effect.  Likewise, GSK and Pfizer may have decided not to file patent applications on their ARVs in many of the covered territories because it was considered unnecessary or uneconomical to do so, especially in smaller and poorer markets.  Conversely, GSK and Pfizer may well have filed patent claims in countries like S. Africa with larger markets and/or domestic manufacturing capacity.  It is also likely that the companies have filed patents on their more recent medicines, such as Lamivudine (Epivir), Abacavir (Ziagen), Fosamprenavir (Lexiva), and Maraviroc (Selzentry), in more territories.  Until ViiV makes complete disclosure of its ARV patent portfolio in the 69 licensed countries, it is impossible to assess whether it has significantly expanded generic access or whether it is reaping publicity benefits for giving licenses in countries where it has few if any enforceable patents.
 2.  Patent challenges:  A related concern is whether ViiV will try to extract a licensing term that prohibits licensees from challenging patents in any of the 69 countries.  Gilead included such provisions in its original licenses but later withdrew them when convinced that they probably violated antitrust rules in the U.S.
 3.  Registration status:  The impact of ViiV’s Voluntary Licensing Policy is also uncertain without knowing the registration status of its ARVs in the 69 countries and whether it will rapidly complete registration where needed.  Licensed generic companies will find it virtually impossible to registered generic equivalents if the original product has not been registered so as to permit drug regulatory authorities to rely upon or reference the originator’s registration data.  Admittedly, registration for generic equivalents in particular countries might be achieved based on WHO prequalification or on prior registration by a stringent regulatory authority, but such possibilities do not attain in all of the licensed countries.  Accordingly, ViiV should promptly disclose registration status and its plans to complete registered where need.
 4.  Country of manufacture:  The original press statement seemed to suggest that manufacturers will only be licensed if they manufacture in the 69 affected countries.  In a subsequent statement, a ViiV representative unofficially stated that Indian producers would be permitted to manufacture and export to the 69 licensed countries because ViiV didn’t have any patents on ARVs in India.  On its face, this reassurance is false, at least with respect to its grounds, because Maraviroc has been patented in India and there is a pending patent application for Fosamprenavir as well.  However, it is unclear why ViiV should seek to limit licensees to manufacturers from particular countries.  Clearly, inclusion of Indian manufacturers is important since most of the WHO-prequalified generic producers are Indian.  However, it is unclear why a company like Apotec of Canada, which has used the cumbersome August 30 system one time to supply Rwanda, should not be permitted to produce ARVs for export to the licensed countries.  If ViiV maintains its position that patent status in the country of manufacture will affect the right of export to the licensed countries, then its Voluntary Licensing Policy will be quite weak as only a handful of companies in the licensed countries are GMP certified, e.g., Aspen Pharmacare in S. Africa and Quality Chemicals in Uganda.
 5.  Selection of manufacturers:  ViiV’s press release seems to suggest that the licenses will be open to all qualified manufacturers (subject perhaps to country-of-origin as discussed in 4 above), but it is unclear whether ViiV will exercise any independent control over the selection of licensees.  Undoubtedly it will use the same quality of product standard as the Patent Pool itself is using – evidence of WHO prequalification or registration by a stringent drug regulatory authority.  However, voluntary licensing agreements often include inspection clauses and/or additional quality control measures that are highly intrusive with respect to the operations of generic manufacturers.  Patent pool licenses are not expected to have provisions allowing innovator licensors to select or inspect patent pool licensees.  Company control in this area could lead to discrimination against certain manufacturers and deter generic participation because of intrusive inspection rights that might reveal there own trade secrets.
 6.  Combination products:  The ViiV press release is entirely silent about whether the policy will permit co-formulation and under what conditions.  In contrasts, the Patent Pool is being specifically designed to incentivize the creation of rational fixed-dose combinations that are not being developed at present by innovator companies which have historically been reluctant to cross-license and co-produce/market with competitor innovators (the Gilead/Merck/BMS license for Atripla is an exception in this regard).  To the extent that ViiV doesn’t allow such co-formulation or imposes additional “quality assurance” requirement beyond WHO-prequalification or registration by a stringent regulatory authority, it will have offered a policy which is decidedly inferior to the Patent Pool.
 7.  Research/innovation rights:  ViiV has not disclosed its intentions with respect to allowing commercial research and follow-on/piggy-back innovation with respect to its licensed products. Fixed-dose combinations is an obvious example, but the Patent Pool is also attempting to incentivize R&D and marketing of improved formulations, including pediatric formulations, heat-stable formulations, and delayed release formulations and to incentivize more efficient manufacturing processes.  ViiV’s silence in this regard – with or without limited grantback rights – is troubling.

Pfizer has been silent about its intentions vis a vis the Patent Pool, and GSK has historically been coy, stating irrationally that the access-related Patent Pool is not necessary because there are research-related incentives for continuing innovation for AIDS medicines.  How the existence of research incentives undermines the need for access to lower-cost generic equivalents has never been explained.

However, recent comments from the CEO of ViiV, Dominique Limet, are downright hostile.  In a July 21 Financial Times article, he is quoted as wanting to “move quickly to accelerate access rather than sign up to the pool.”  Mr. Limet criticized the pool as follows:  “The pool’s key focus has been political in getting access to IP without explaining how it will work.  It’s about the will and money to invest in new drugs, and ensuring there is enough demand and infrastructure to ensure access.  The euro 4.7m they will spend could save thousands of lives [by buying drugs.]”

Contrary to Mr. Limet’s slander, UNITAID has been transparent about the proposed purpose, policies, and processes of the Patent Pool having made multiple public and private presentations on the topic and having published many relevant documents, including the Executive Summary of an Implementation Plan.  Admittedly, proponents of the Patent Pool have engaged in a political process of obtaining rights to IP because companies like GSK, Pfizer, and now ViiV have been unwilling to politically commit to the patent pool and have instead engaged instead in a concerted public relations campaign with respect to their unilateral initiations such as GSK neglected disease patent pool, its collaborative ND research facility, and its pediatric R&D fund and pediatric action programs.

The ViiV CEO brings out the old tropes that the real issue is investment in new drug research and that the real problem in access to medicines is health infrastructure.  Research into new medicines is important and so is rehabilitating tattered health systems in developing countries.  However, that does not mean that access and drug pricing issues are trivial or that specialized facilities, such as the Patent Pool, should not be set up to address them.

Mr. Limet complains that the Patent Pool needs a budget to operate and that the budgeted money could be spent on buying drugs instead.  The Patent Pool needs a budget as it is trying to amass multiple patents and related rights from multiple patent holders in order to simplify the process of promoting robust generic competition for improved generic medicines produced at efficient economies of scale.  One wonders how many ARVs  Mr. Limet’s undisclosed salary would buy or how many drugs could be purchased with the budget of ViiV’s PR department which has been seeking positive publicity on a massive scale ever since ViiV opened shop.

For unexplained reasons, ViiV has seen fit to offer a unilateralist and, as currently defined, ambiguous and inferior Voluntary Licensing Policy instead of joining a rational multilateral Patent Pool alternative.  Presumably it has done so to signal its displeasure at the publicity campaign that has been launched in support of the Patent Pool, to secure greater control of licensing terms (at a potential cost of access and competition), and to signal its intention to let no outsiders deign to touch its sacrosanct IP.   Despite its stated indifference or even antipathy to the Patent Pool, ViiV should jump into the pool with both feet.  In doing so, it should expand the list of eligible countries, it should cooperate more explicitly in the creation of fixed-dose combination medicines, and it should even collect a minor royalty for its shareholders.  Alternatively, even if ViiV thinks that there is corporate benefit to unilateralism, it should ensure that its voluntary licensing policy is every bit as good as the Patent Pool’s licensing policy so that generic companies can draw both from ViiV’s licenses and from the Patent Pool to make more affordable and better ARV formulations available to needy patients in all developing countries.

Professor Brook K. Baker
Health GAP (Global Access Project)
Northeastern U. School of Law
Program on Human Rights and the Global Economy
400 Huntington Ave.
Boston, MA 02115 USA
Honorary Research Fellow, University of KwaZula Natal, Law Faculty, Durban, S. Africa
(w) 617-373-3217
(cell) 617-259-0760
(fax) 617-373-5056
b.baker at neu.edu

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