[Ip-health] text of KEI statement on the Gilead/Medicines Patent Pool agreement

Jamie Love james.love at keionline.org
Tue Jul 12 03:42:30 PDT 2011

As I had a chance to learn more about the agreement, I have amended
our statement a few times.  This is the current version, which does
not reflect a close reading of the legal documents.  Jamie


KEI comment on the Medicines Patent Pool license with Gilead
July 12, 2011

FYI: James Love (Tuesday: +44.785.543.6510, james.love at keionline.org
[1]). Thiru Balasubramaniam (thiru at keionline.org [2]) or Krista Cox
(krista.cox at keionline.org [3], +1.202.332.2670).

Today the Medicines Patent Pool (MPP) and Gilead announced an
agreement [4] to license patents for the FDA approved antiretroviral
drugs tenofovir (TDF) and emtricitabine, as well as elvitegravir,
cobicistat and a four drug combination of
elvitegravir/FTC/TDF/cobicistat -- potentially important products in
Gilead's research and development pipeline for HIV/AIDS treatments.

It will take some time to review the text of the agreements, which
were just released. These initial comments are based primarily upon
oral briefings.

KEI welcomes the new agreement, which is the first between the MPP and
an important private sector patent holder, subject to the reservations
and comments presented below. With today's announcement, the pool has
widened the door for generic competition and lower prices for AIDS
drugs in developing countries. Gilead is the first, and should not be
the last, to recognize the importance of embracing the pool to
formally share its technology to address this public health crisis.
The licenses are not perfect, and there will be justifiable criticism
of the geographic scope and several of the terms in the agreement.
That said, the agreement seems to be an important step forward.

The MPP/Gilead agreement covers multiple products, each with a
different geographic scope. The most expansive license covers 111
countries. According to some reports, in addition to AIDS, the
licenses permit the sale of products to treat hepatitis B.

>From the Medicines Patent Pool web page:

Per the Medicines Patent Pool Transparency agreement, the full text of
the licences are posted below.

The licences are in three documents. The first is the primary
licensing agreement signed by the Pool and Gilead. This agreement
dictates that the Pool use the following two forms in its
sub-licensing to generic companies. The first sub-licence document is
a form "amended and restated" sub-licence agreement for existing
Gilead sublicensees. The second is a form sub-licence agreement for
new sublicensees.

The main licensing agreement between the Medicines Patent Pool and
Gilead is available here [5].

The amended and restated form is available here [6].

The form sublicensee agreement is available here [7].
------end quote---------

The license follows in many respects the approach taken in an earlier
voluntary license for TDF and emtricitabine, which was the subject to
an antitrust complaint by KEI to the Federal Trade Commission (FTC)
[8]. The new agreement between Gilead and the MPP contains some of the
shortcomings of the earlier license, but not all of them. Most
important, while the new licensing agreement excludes many countries
in Asia and Latin America, it does not prevent licensees from serving
these markets through production from countries outside of India, or
from India when countries outside of the voluntary license issue a
compulsory license. The licenses explicitly state that exports of
medicines from India to other countries under compulsory licenses do
not constitute a breach of the license.

For further clarity, and nothwithstanding anything to the contrary in
this Agreement, it shall not be deemed to be a breach of the Agreement
for Licensee to supply an API or Product outside the Territory into a
country where (i) the government of such country has issued a
compulsory license relating to such API or Product allowing for the
importation of such API or Product into such country, provided that
Gilead and Licensee are in agreement (with such agreement not to be
unreasonably withheld) regarding the existence, scope and content of
such compulsory license, and/or (ii) the Government of India has
issued a compulsory license allowing for the export of an API or
Product from India and into such country, provided that (Y) there are
no Patents containing a valid claim covering the use, import, offer
for sale or sale of such API or such Product in such country or a
compulsory license has also been issued by the relevant authorities of
such country and (Z) Licensee and Gilead are in agreement (with such
agreement not to be unreasonably withheld) regarding the existence,
scope and content of such compulsory license.
------end quote---------

This provision will work in combination with Section 92A of the India
Patents Act. (See appendix below)

The new agreement, like the older license, would require the payment
of royalties in countries where no patent exists. However, unlike the
older agreement, it is possible to license some products and not
others. CIPLA, for example, could use the licenses for the pipeline
products, but continue to operate outside of the license for the TDF
market, a product that is thinly patented within the geographic area
covered by the license.

The new agreement is not a model agreement. For example, according to
briefings, it requires active ingredient production be sourced from
India (or a Gilead supplier), requires payment of royalties in
countries without patents, and has limited developing country
geographic coverage. That said, the terms of the license are an
improvement over the previous agreement, more countries are covered,
and the new pipeline products are considered quite promising. The
license is also the first between the Medicines Patent Pool and a
private sector patent holder and will allow civil society, donors, and
developing country governments to put considerable pressure on other
patent holders.

We are pleased that the licenses and key correspondence between the
parties are public and will be available from the MPP web page. This
sets a welcome precedent for transparency in the management of
intellectual property policy.

Under Ellen 't Hoen's leadership, and with the support, patience and
leadership of the UNITAID board and staff (including the President,
Philippe Douste-Blazy, and the Executive Secretary, Jorge Bermudez),
the pool has rapidly positioned itself as a dynamic and ambitious
international actor, focused on the public health aspects of
controversial and complex intellectual property issues. Today's
announcement demonstrates the benefits of the collective licensing
approach, and sets the stage for the next round of negotiations with
other companies controlling key HIV treatment patents.

Civil society has long played a key role in the promotion and
operation of the pool. These groups include the many who participate
in the UNITAID civil society forums, as well as others, including NGOs
in India, Brazil, Thailand and elsewhere that have long pressed the
pool to protect consumer interests.

KEI and MSF played an early role in asking UNITAID to invest in the
pool. Oxfam, Paris Act Up, Coalition PLUS, the UK Stop AIDS campaign,
the Cameroon Coalition Against Malaria, the National Empowerment
Network for People Living with HIV/AIDS in Kenya, and the African
Services Committee have effectively monitored the UNITAID board

The Obama White House and the NIH decision to license patents it owned
to the pool, and the support of DFID, and more recently a string of
high profile endorsements from the G8 [9], the WHO and the UN's high
level forum [10] on AIDS have demonstrated broad political support for
the pool - achievements that required considerable diplomatic and
policy skills, and which will be quite important to the pool as it
pursues voluntary licenses.

As noted above, the terms of the Gilead/MPP agreement are
disappointing in several areas. This is largely a reflection of the
relative bargaining power of the parties at this stage in the
negotiations. It is an important step forward, but there is much more
to do.

As the MPP moves forward, it will face many challenges in obtaining
new licenses, expanded geographic coverage, and better terms. For the
MPP to succeed in this next stage, it will be important to build upon
the current levels of political support, and also to explore new
incentives to induce licenses, such as the Donor Prize Fund proposal,
and to increase engagement by developing country governments to
persuade companies to license to the pool, and to expand geographic
coverage. This includes by granting compulsory licenses on patents for
products not licensed to the pool, for their countries. The United
States government can also use its rights to other federally funded
patents, including patents on ritonavir, lopinavir and other AIDS
drugs invented with funding from the federal government, as leverage
to get patents into the pool.

Without disparaging the many effective and determined civil society
advocacy efforts that are associated with the pool, including our own,
it is nevertheless true that it is difficult to maintain civil society
and the general public attention on intellectual property issue for
sustained periods of time. Thus, the existence of the MPP with a
professional staff is helpful.

Finally, despite our reservations about some aspects of the Gilead
license agreement, we note that Gilead and senior leadership deserves
considerable credit for being the first company to license to the MPP,
particularly given pressure from some quarters to avoid legitimization
of the pool.

KEI believes it is very important that the pool succeed, and to
broaden the geographic and product coverage and improve the terms of
the licenses. The stakes are very high -- and involve the lives of
millions of persons living with HIV in developing countries.


Section 92A of the Patents Act is a 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." It reads as follows:

------ quote---------
(1) Compulsory licence shall be available for manufacture and export
of patented pharmaceutical products to any country having insufficient
or no manufacturing capacity in the pharmaceutical sector for the
concerned product to address public health problems, provided
compulsory licence has been granted by such country or such country
has, by notification or otherwise, allowed importation of the patented
pharmaceutical products from India.
(2) The Controller shall, on receipt of an application in the
prescribed manner, grant a compulsory licence solely for manufacture
and export of the concerned pharmaceutical product to such country
under such terms and conditions as may be specified and published by

(3) The provisions of sub-sections (1) and (2) shall be without
prejudice to the extent to which pharmaceutical products produced
under a compulsory licence can be exported under any other provision
of this Act. Explanation.- For the purposes of this section,
“pharmaceutical products” means any patented product, or product
manufactured through a patented process, of the pharmaceutical sector
needed to address public health problems and shall be inclusive of
ingredients necessary for their manufacture and diagnostic kits
required for their use.
------end quote---------

This means that when an importing countries simply writes a letter
authorizing the import of a patented drug, stating that they have
insufficient manufacturing capacity and need to import the product
from India to address a public health problem, the India Patent
Controller MUST grant a compulsory license for export.

Press coverage of the license announcement

July 12, 2011 Press Release from the pool: The Medicines Patent Pool
Announces First Licensing Agreement with a Pharmaceutical Company [4]

July 12, 2011. Reporting by Ben Hirschler; Editing by David Hulmes,
Reuters. Gilead kickstarts patent pool for AIDS drugs [11].

July 12, 2011. William New. IP-Watch. Medicines Patent Pool Boosts HIV
Drug Prospects With First Licence [12].

July 12, 2011. Sara Bosley. The Guardian. Patent pool agreement to
allow poor countries to get cheap modern Aids drugs [13].

July 12, 2011. Charles Mead, Bloomberg, Gilead Agrees to Generic
HIV-Drug Sales in Developing Countries [14]

July 12, 2011. Sten Stovall, Dow Jones Newswires. Gilead First To
Enter Patent Pool For Aids Drugs [15]. (+44 207 842 9292;
sten.stovall@ dowjones.com)

July 12, 2011. The Economic Times. Ranbaxy inks pact with Gilead for
three generic HIV/AIDS drugs [16].

July 12, 2011. MSF Press Release. Gilead licence expands access, but
several countries left out. Excluded countries should be ready to
issue compulsory licences to access needed drugs. [17]

July 12, 2011. Donald G. McNeil Jr. in the New York Times. Company
Agrees to Share AIDS and Hepatitis Drugs With Patent Pool [18].

July 12, 2011. Pharma Times. Kevin Grogan. Gilead is first pharma firm
to dive into HIV patent pool [19]

Source URL: http://keionline.org/node/1184

[1] mailto:james.love at keionline.org
[2] mailto:thiru at keionline.org
[3] mailto:krista.cox at keionline.org
[4] http://www.medicinespatentpool.org/LICENSING/Current-Licences/Medicines-Patent-Pool-and-Gilead-Licence-Agreement
[5] http://www.medicinespatentpool.org/content/download/480/2847/version/1/file/Gilead-MPPF
Non-Excl License Agmt (FINAL) 08JUL11[2].pdf
[6] http://www.medicinespatentpool.org/content/download/481/2851/version/1/file/Form
3-way Amend and Rest Generic License (FINAL) 08JUL11.pdf
[7] http://www.medicinespatentpool.org/content/download/482/2855/version/1/file/Form
3-way Generic License (FINAL) 08JUL11.pdf
[8] http://keionline.org/content/view/23/1
[9] http://www.medicinespatentpool.org/NEWS-ROOM/News-from-the-Pool/G8-Communique
[10] http://www.medicinespatentpool.org/NEWS-ROOM/News-from-the-Pool/UN-High-Level-Meeting
[11] http://www.reuters.com/article/2011/07/12/us-aids-patents-idUSTRE76B0YW20110712
[12] http://www.ip-watch.org/weblog/2011/07/12/medicines-patent-pool-boosts-hiv-drug-prospects-with-first-licence/
[13] http://www.guardian.co.uk/society/sarah-boseley-global-health/2011/jul/12/aids-pharmaceuticals-industry
[14] http://www.bloomberg.com/news/2011-07-12/gilead-agrees-to-generic-hiv-drug-sales-in-developing-countries.html
[15] http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201107120448dowjonesdjonline000085&title=gilead-first-to-enter-patent-pool-for-aids-drugs

[17] http://msf.org/msf/articles/2011/07/gilead-licence-expands-access-but-several-countries-left-out.cfm
[18] http://www.nytimes.com/2011/07/12/health/12global.html
[19] http://www.pharmatimes.com/Article/11-07-12/Gilead_is_first_pharma_firm_to_dive_into_HIV_patent_pool.aspx
James Love.  Knowledge Ecology International
http://www.keionline.org, +1.202.332.2670, US Mobile: +1.202.361.3040,
Geneva Mobile: +41.76.413.6584, efax: +1.888.245.3140.

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