[Ip-health] Urgent-Concerns about MPPF Licence

Prathibha Sivasubramanian prathibha.siva at gmail.com
Wed Dec 14 22:32:18 PST 2011

Below please find the letter sent by Lawyers Collective HIV/AIDS Unit,
India, to UNITAID Exectuive Board expressing its concerns about the licence
negotiated by Medicines Patent Pool Foundation.

-----Original Message-----
From: prathibha.siva at lawyerscollective.org
[mailto:prathibha.siva at lawyerscollective.org]
Sent: Tuesday, December 13, 2011 12:10 AM
To: unitaid at who.int; delissandrin at who.int
Cc: brasil2 at delbrasgva.org; mission.brazil at delbrasgen.org;
misionchile at misginchile.org; patrice.debre at diplomatie.gouv.fr;
sidsel.bleken at mfa.no; Simon.bland at fco.gov.uk;
mission.mauritius at ties.itu.int; kimn at africanservices.org;
esther.tallah at gmail.com
Subject: Urgent-Concerns about MPPF Licence

10 December 2011

The Chairperson
UNITAID Executive Board

Dear Dr Philippe Douste-Blazy,

Greetings from Lawyers Collective HIV/AIDS Unit, India!

We write to you again on World Human Rights Day, two years after our earlier
letter on the then proposed patent pool. [Copy of Letter dated 10 December
2009 attached]

You may recall that on 10 December 2009, on the eve of the meeting of the
UNITAID Executive Board, we had written to you expressing our concerns about
UNITAID's proposal to establish a patent pool based on the model of the 2006
voluntary licences issued by Gilead Sciences, Inc (Gilead) for tenofovir. We
had highlighted the inherent problems of the voluntary licensing model of
Gilead's 2006 licences on tenofovir and urged that the UNITAID Executive
Board ensure that the Patent Pool Implementation Plan does not in any manner
compromise the manner in which countries are able to utilise TRIPS
flexibilities, including that of stricter patentability criteria,
oppositions and compulsory licences.

As you meet again this year to consider the Business Plan of Medicines
Patent Pool Foundation (MPPF) for the next four years, we are compelled to
draw your attention to a few facts.

It is with great disappointment that we note that the first voluntary
licence with a pharmaceutical company announced by the MPPF is almost
identical to the 2006 Gilead voluntary licence that we had warned against.
The MPPF-Gilead licence claims to be an improvement over the "status quo"
by including newer medicines that are yet to be approved for marketing
(elvitegravir, cobicistat and its combinations), newer countries for the
medicines (112 countries for tenofovir, 102 countries for cobicistat and 99
countries for elvitegravir and QUAD), allowing generic licensees to unbundle
the medicines (or terminate the licence for any of the active pharmaceutical
ingredients (APIs)) and allowing generic licensees to supply to excluded
countries if they issue a compulsory licence.

The 2006 Gilead voluntary licences bore the marks of a purely commercial
licence with the exclusion of countries and market segmentation, controlled
competition by controlling API supply and product distribution, and
restriction of the use of flexibilities available to countries under the
TRIPS Agreement such as patent oppositions and compulsory licences.

After close analysis, we find that the MPPF licence closely resembles the
2006 Gilead voluntary licences. Amongst the several areas of concern, the
MPPF-Gilead licence too excludes countries, controls competition through the
control of APIs and restricts the use of TRIPS flexibilities.

I. MPPF-Gilead licence is in violation of MPPF's mandate  The MPPF-Gilead
licence, in fact, is contrary to the Statutes of MPPF of June 2010 as well
as the Memorandum of Understanding signed between UNITAID and MPPF
(UNITAID-MPPF MoU) in September 2010.  The points below (which are by no
means exhaustive as there are several other concerns with the
licence) illustrate this.

.       The UNITAID-MPPF MoU requires all developing countries to be
included in
the scope of the Pool.  However, the MPPF-Gilead licence excludes several
developing countries, including those in conflict, those negotiating free
trade agreements and countries in Eastern Europe facing rising HIV
epidemics. Not even Africa was non-negotiable for MPPF as all of North
Africa is excluded (Egypt, Libya, Morocco, Algeria and Tunisia). For the
newer medicines, even sub-Saharan Africa is not sacrosanct with the
exclusion of Botswana and Namibia.

.       The MPPF Statutes and the UNITAID-MPPF MoU require that MPPF make
available the sub-licenses to all interested parties. However, under the
MPPF-Gilead licence, only generic companies based in India can be
sub-licensees. This excludes government producers in developing countries
such as Brazil and Thailand and other developing countries with domestic
manufacturing capacity.

.       The UNITAID-MPPF MoU requires MPPF to enhance competition. However,
allowing Gilead to control the production and supply of API and restricting
sub-licences to Indian companies only, the MPPF-Gilead licence actually
impedes competition, and is anti-competitive.

.       The MPPF Statutes and the UNITAID-MPPF MoU require MPPF to
newer fixed dose combinations and paediatric formulations.  However, the
MPPF-Gilead licence restricts the development of fixed dose combinations
only to the specifically licensed medicines and places limitations on the
development of fixed dose combinations of other medicines over which other
companies may hold intellectual property.  Further, it places restrictions
on the development of paediatric formulations by specifying that the
sub-licensee may only develop liquid or dispersible tablets formulations.

.       The UNITAID-MPPF MoU requires MPPF to use all reasonable measures to
develop standard terms and conditions. However, the first MPPF licence was
negotiated without any such standard terms and conditions.  Till date, MPPF
has not released the standard terms and conditions that would set out its
non-negotiable position nor has it given any indication that it intends to
draft and make public its standard terms and conditions.

.       The MPPF Statutes specifically gives MPPF the power to enforce
It also requires MPPF to assist in dispute resolution between licensors and
licensees and requires the alternative dispute resolution mechanism to be
actionable by all signatories to the licence agreements. However, MPPF has
waived all rights to its standing in case of a dispute between Gilead and a
sub-licensee. The licence is actionable by MPPF only when Gilead refuses to
sign a sub-licence with an Indian generic manufacturer or to enforce the
payment of five percent of the royalties by Gilead to MPPF as the MPPF's fee
or to enforce the MPPF's indemnity under the licences. There has been
absolutely no explanation as to why this right was waived by MPPF. The
argument that generic companies will look after their own interests does not
answer at all the question of who will look after the public interest in
case of a dispute between Gilead and the sub-licensee over this agreement
which has been negotiated with public money and advocacy.

All these show that MPPF has clearly acted in violation of its mandate.

II. Legitimisation of "evergreening" and abusive patenting practices
Pertinently, the MPPF-Gilead licence legitimises weak patents and
"evergreening"-the practice of pharmaceutical companies to establish or
maintain monopolies by seeking patents with claims that cover minor
improvements of known medicines, combinations of known medicines and new
uses of known medicines. For instance, on tenofovir (a pre-1995 medicine),
it legitimises Gilead's claim to royalties for patents on new forms of
tenofovir (tenofovir disoproxil and tenofovir fumarate). In India, its
patent applications for tenofovir disoproxil and tenofovir disoproxil
fumarate having been rejected, Gilead only owns a weak process patent on
tenofovir. Yet, the MPPF-licence allows Gilead to charge royalties on the
basis of this weak process patent. Further, if Gilead filed a patent
application or obtained a patent on new use of tenofovir to treat Hepatitis
B, royalty would be payable to Gilead even after the patent with claims on
the basic molecule expired.

Similarly, the list of patents or patent applications on elvitegravir
demonstrates how Gilead would continue to obtain royalties beyond the patent
term of the basic patent on elvitegravir by filing staggered patent
applications for new forms and processes.

Finally, one of the so-called products that is part of the licence is
nothing more than a combination product of the other four medicines included
in the licence. QUAD is a combination of tenofovir, emtricitabine,
elvitegravir and cobicistat (TDF+FTC+EVG+COBI). It is unclear why this is
mentioned as a separate medicine in the licence as the licence on all the
other products allows for them to be made in combination anyway. The patents
on QUAD are simply patents on a combination of known medicines.

It may be argued that the sub-licensee could terminate the licence once the
blocking patent expires or is revoked. However, the reality of commercial
interests that may be at work for the medicines under development, if they
do secure marketing approval, would likely deter a sub-licensee from
terminating its strategic alliance with its multinational business partner
until all such "evergreening" patents expire.

Faced with multiple patents and patent applications on each medicine,
patients' groups in India, Brazil and other developing countries are
opposing blocking patent applications or patents so as to ensure that
generic competition is not compromised. However, if the sub-licencee is to
supply generic medicines to an excluded country, the MPPF-Gilead licence
would require that patients' groups now oppose every single patent
application and every patent to ensure that no patent with a valid claim in
the importing or exporting country -whether process or product, whether for
use or combination, whether it blocks production or not-is granted or
subsists before supply can take place. In addition, Gilead must be allowed
to exhaust every avenue of appeal under the laws of both countries before
supply is allowed.

The MPPF-Gilead licence also allows royalties to be claimed by Gilead even
when it has not been granted a patent i.e. during the pendency of a patent
application . The definition of "Patents" in the MPPF-Gilead licence
includes patent applications allowing Gilead to collect royalties just for
filing applications. In India and Brazil, for instance, Gilead has filed
multiple patent applications and divisional patent applications relating to
tenofovir. This provides an incentive to Gilead to pursue abusive patenting
practices such as multiple and divisional patent applications, even if these
have no chance of succeeding.

III. Compromises use of compulsory licences While the MPPF-Gilead licence
claims that it has a safeguard that would allow sub-licensees to supply the
medicines on issuance of a compulsory licence, even this clause compromises
the ability of countries to use the TRIPS flexibility of compulsory
licences.  In the first version of this clause on compulsory licencing,
Gilead's agreement was required before supply under a compulsory licence
would be possible. A recent amendment removes this additional hurdle but
still contains restrictions that are of concern.
.       Firstly, this safeguard is available only to countries that are
and is not available to included countries who might want to issue a
compulsory licence despite the existence of the present voluntary licence
if, for instance the countries within the "territory" would like to obtain
supply of the API for their own local production.
.       Secondly, if there is no blocking patent in an excluded country that
wants to import the generic medicines under the MPPF licence, but there are
other patents related to the medicine that would not otherwise block import,
under normal circumstances, only India would have to issue the compulsory
licence for export (if there were a blocking patent). However, under the
MPPF-Gilead licence, even if there is a single patent with a valid claim,
whether it is blocking or not, the importing country would be forced to
issue a compulsory licence to meet the requirements of the
provisions of the MPPF-Gilead licence.
.       Thirdly, the sub-licensees are still tied in by the MPPF-Gilead
even while a patent application is pending though a patent may not have been
issued.  It is not possible to issue a compulsory licence on a patent
.       Fourthly, the MPPF-Gilead licence does not clarify that the action
of a
sub-licensee in filing an application for a compulsory licence in India or
the excluded territory would not constitute a ground on which Gilead would
terminate the licence or raise a dispute.

It should be noted that Gilead does not covenant that it will not oppose an
application for compulsory licence if it is filed or a compulsory licence
that may be issued.  This is particularly of concern given the evidence in
India of multinational pharmaceutical companies opposing compulsory licence
applications of anti-cancer medicines, including compulsory licence for
export to countries with little or no manufacturing capacity (under section
92A of the Indian patent law which incorporates para 6 of Doha Declaration).
These concerns hold true even for the amended clause.

IV. Unbundling
In an earlier civil society letter of October 2011 to which we were a
signatory, we had raised the concern about the unbundling clause which has
been touted as one of the improvements on "status quo".  Firstly, we still
fail to understand why the MPPF-Gilead licence bundles all the medicines
together in a single licence and then leaves it to the sub-licensee to
terminate it on a medicine-by-medicine basis.  Secondly, we are still
concerned about the implications of a sub-licensee terminating the licence
for tenofovir. Pursuant to the letter of October 2011, MPPF announced an
amendment to the MPPF-Gilead licence and clarified that if a sub-licensee
were to terminate the licence for tenofovir, Gilead would not sue the
sub-licensee if it were to manufacture and sell the combinations of
tenofovir and emtricitabine in the licensed territories.  However, there is
still no clarity whether the sub-licensee who terminates the tenofovir
licence would not be able to make other fixed dose combinations containing
emtricitabine. Thirdly, it is also unclear why the clarification sought
through the amendment is limited only to the unbundling of tenofovir and
does not extend to the other medicines.

V. Conflict of interest
Under the MPPF-Gilead licence, MPPF is entitled to five percent of the
royalties obtained by Gilead up to a maximum amount of USD 1,000,000 per
year. MPPF's acceptance of a fee from Gilead gives rise to a conflict of
interest.  MPPF has acknowledged that it would raise this issue with the
UNITAID Executive Board.  We hope that the Executive Board would consider
this issue. Given that the licence negotiated is not a good licence, either
from the point of view of access or ensuring competition, the presence of an
avoidable conflict of interest only complicates issues further.

VI. Imprimatur on bad licensing
Effectively, Gilead's 2006 voluntary licence now bears the imprimatur of
MPPF even as Gilead exhibited bad faith by signing secret side agreements
with four major Indian generic companies at the same time as they signed the
MPPF licence thereby taking away MPPF's potential sub-licensees. We
understand that these 2011 Gilead voluntary licences not only cover the same
medicines but also grant monopolies to these Indian licensees in the
12 countries that left have been left out by the MPPF-licence for
elvitegravir, cobicistat and QUAD in return for royalty rates of 10-15
percent.  The manipulation of public relations announcements to time the
press releases of the announcement of both the MPPF-Gilead licence and the
Gilead-Indian generic companies 2011 voluntary licences on the same day (12
July 2011) allowed Gilead to walk away with applause for its act of taking
away potential MPPF sub-licensees. Yet, neither MPPF nor UNITAID has made
any public statement against this exhibition of bad faith.  Of further
concern is the presence of the President of the United States-India Business
Council (USIBC) celebrating the announcement of Gilead's 2011 voluntary
licences.  As you may be aware, the USIBC actively advocates against the use
of TRIPS flexibilities by India such as section 3(d) of its patent law to
prevent evergreening and compulsory licences.

VII. Process and governance
We also have concerns about the process and governance of MPPF. We
understand that MPPF constituted an ad-hoc Expert Advisory Group (EAG) to
advise it on its first voluntary licence. We further understand that the
said ad-hoc EAG did not meet in person even once. It remains unclear whether
they even had joint tele-conferences to discuss concerns in depth.
We had specifically asked about the views of the ad-hoc EAG members and
whether they had been followed or ignored but were informed that the views
of the ad-hoc EAG are confidential and cannot be shared with the public.
While the composition may have left something to be desired, it is alarming
that a shroud of confidentiality has been thrown over the views of the
members of the ad-hoc EAG and whether the MPPF acted in accordance with or
contrary to the views of the members of the ad-hoc EAG. Since the licence is
now public, this refusal, to make public the deliberations (if any) or
individual advice and inputs of the ad-hoc advisory group, is not only
baffling, it can only fuel greater distrust of the process followed in the
negotiation of this licence. We believe it is vital that all information and
documents related to the ad-hoc EAG be made public immediately.

VIII. Conclusion
A voluntary patent pool suffers from some inherent weaknesses. Primarily, it
lacks negotiating power when negotiating as a not-for-profit entity with
multinational pharmaceutical companies, the very same companies whose
profit-motivated actions were the cause of extended ill-health and death of
thousands of persons living with HIV in the earlier years of the treatment
access movement. Given the vast resources of some NGOs and community groups
that have gone into advocacy on the Patent Pool and the resultant licence
still leaving out hundreds of thousands presently in need of treatment, this
weakness has not been resolved. It is unclear what the premise is for
further calls for community groups already struggling to survive to put in
more time, money and energy advocating for the Patent Pool and how this
pressure will have a different outcome the next time around. We reiterate
that geographical scope is only one of the problems with this licence. An
improved geographical scope with the same restriction and control of
competition will be extremely detrimental for the future of generic
production and for those countries who continue to be excluded from the
Patent Pool.

We would request the UNITAID Executive Board to consider closely the
implications if all future licences of MPPF follow more or less the content
of the MPPF-Gilead licence and if all companies are given the green light to
tie up key generic producers in side deals, thereby offering MPPF an even
more limited scope of operation. While community groups will have to
determine for themselves whether their priorities will focus on ensuring
government action to increase access or advocating with companies instead,
we would ask the UNITAID Executive Board to realistically analyse the
limited negotiating power of the MPPF and compare this with its far greater
(and demonstrated) ability at generating positive public relations outcomes
for companies negotiating with it. This alone seems to give companies a
public relations boost that money cannot buy while they, in fact, continue
with most, if not all, of their bad licensing practices. We highlight the
fact that the public relations boost is being funded by public money
collected (or to be collected) through taxes by the various UNITAID
Executive Board members including developing country Board members some of
whom find themselves excluded from the Pool as well.

With MPPF insisting that geographical scope and the restriction to Indian
generic companies are the only key concerns with the MPPF-Gilead licence and
the repeated denials of the licence undermining TRIPS flexibilities, MPPF is
effectively providing its imprimatur on these bad licencing practices. To be
clear, the critiques do not state that the MPPF-Gilead licence changes
country laws. Obviously it does not. However, the MPPF-Gilead licence works
in a way that either undermines or makes useless the use of these TRIPS
flexibilities. The impact of the agreement on compulsory licencing, patent
oppositions and evergreening discussed above are clear examples of this. As
is the case of parallel imports where Gilead's ability to directly cancel
distribution agreements means that, for countries excluded from the licence
whose laws would allow the parallel imports of these generics, the
MPPF-Gilead licence essentially removes any chance of using these laws. Of
course, these may be demands made by companies but glossing over these
demands or refusing to acknowledge that they undermine the use of
flexibilities is creating an extremely fraught situation between groups
working on operationalising TRIPS flexibilities and MPPF.

Time and again, we have decried the attempts of pharmaceutical companies to
obtain and establish and maintain monopolies over what they term
"incremental innovation" and what we term as "evergreening" because they
deny access to medicines and compromise the right to health.  In the same
spirit, we decry the imprimatur of MPPF and ostensibly that of UNITAID over
the MPPF-Gilead licence that offers minor "improvements in status quo" over
existing commercial licences that enable a few pharmaceutical companies to
deny access to medicines for people living with HIV, establish and maintain
oligopolies, and threaten "real competition" amongst generic players from
several countries and the development of local production. After closely
examining the MPPF Statutes and the UNITAID-MPPF MoU, it is unclear to us as
to when "improvement in status quo" became the standard for MPPF to meet
rather than the clear parameters within which it was to deliver a licence.
The long-term harm of allowing companies to collude in this manner under the
cover of a public health oriented institution must be a matter of serious
discussion. The implications for the future of treatment not just for HIV
but for all treatment are grave. Already, MPPF has waded into the world of
Hepatitis B through the MPPF-Gilead licence and, by all accounts, has done
little due diligence to understand the scope, nature and extent of Hepatitis
B or the countries where generic treatment for Hepatitis B may be required
the most.

Therefore, we call upon you:
1.      To ask MPPF to terminate the MPPF-Gilead licence, including any
potential or pending agreements with sub-licensees, given Gilead's bad faith
and the controversial terms of the MPPF-Gilead licence;
2.      To ask MPPF to institute an immediate moratorium on negotiations of
new licence , including any new or pending agreements with Indian generic
producers (potential sub-licensees to the MPPF-Gilead licence) or with other
multinational pharmaceutical companies (potential new licensors) until such
time as standard terms and conditions or a model agreement is agreed to;
3.      To re-evaluate the current structure of  MPPF, including its
and administration, goals and mission, and implement comprehensive reforms
designed to enhance its transparency, accountability and adherence to core
principles of health equity.
4.      To defer the consideration of the Business Plan of MPPF until such
as may be appropriate. The work of many groups like ours in ensuring access
to medicines is being impacted in a negative manner by such bad licencing
practices and the approval of the four year business plan of MPPF cannot be
regarded as a mere project proposal.

As we had asked two years ago, we ask again on Human Rights Day that the
UNITAID Executive Board examine and hold consultations on MPPF and the
voluntary licence it has produced from the critical perspective of human
rights. Lawyers Collective HIV/AIDS Unit is dedicated to the spirit of the
late Indian HIV activist Dominic D'souza, who said, "I live in the hope of a
world that will be, if not free of disease, free of fear and
discrimination." Access to anti-HIV medicines has been instrumental in
reducing the fear and discrimination around HIV and in enabling persons
living with HIV to living lives with dignity.  We firmly believe that the
right to health and to access medicines must be enjoyed by all persons in
all developing countries without exclusion or discrimination.

In solidarity,
Lawyers Collective HIV/AIDS Unit

mail2web.com - MicrosoftR Exchange solutions from a leading provider -

Prathibha Sivasubramanian

More information about the Ip-health mailing list