[Ip-health] China revokes Viread Patent

Baker, Brook b.baker at neu.edu
Mon Aug 5 09:46:58 PDT 2013

China Revokes Viread Patent; Pricing Was at Issue

By Shannon Ellis
Staff Writer

SHANGHAI – A year after China introduced an amended patent law, authorities have revoked the patent on Gilead Science Inc.'s HIV/AIDS and hepatitis B drug Viread (tenofovir disoproxil fumarate).

That particular drug has been at the heart of China's push to get drug companies to be more flexible with their pricing. China's State Intellectual Property Office (SIPO) revoked the patent after a challenge by Aurisco, the largest manufacturer of active pharmaceutical ingredients in China.

Authorities revoked Viread's patent – as opposed to issuing a compulsory license – saying that the drug lacked novelty and was not entitled to protection, said China health analyst Robert McTiernan, of IHS Healthcare.

When issuing a compulsory license, authorities give a particular domestic company the right to make a drug for the remainder of the time left on the patent. That can happen in cases of national need or when the drug is not made available by the patent holder. In this case, because the patent was successfully challenged by a company rather than made available by compulsory license, the entire market will be able to manufacture generic versions of Viread.

The decision gives China a stronger position in ongoing negotiations with drug companies.

"It is a fairly groundbreaking decision," McTiernan said. "The big trend is that they want pharma companies to be more flexible on pricing. They will likely be able to use this decision to negotiate lower prices on more drugs.

"This is not a compulsory license. . . . This is not directly related to the amendment last year," he noted.

While the Viread decision attracted plenty of attention, it will be difficult for China to do the same with other drugs. Viread is somewhat unique and more vulnerable than other products.

The active ingredient, tenofovir, was invented in 1985 in Czechoslovakia. Gilead went to court in the U.S. in 2008 and 2010 to protect its patent, partly because the main ingredient was invented a long time ago and is now in the public domain. Tenofovir's patent has been declared invalid in courts in Brazil and India.

At the same time, while the drug is also useful against HIV/AIDS and hepatitis B, it is also very expensive. The maximum retail price set by the National Development and Reform Commission (NDRC) for a 30-pack of 300-mg strength Viread was ¥1,470 (US$240). That has put the drug beyond the reach of most patients in China, who still have to pay about half of their medical expenses out of pocket. UNAIDS said China had almost 93,000 reported cases of HIV/AIDS in 2011 and the numbers were rising yearly. There may be as many as 130 million hepatitis B carriers and 30 million chronic infections. From 2013, the Geneva-based Global Fund to Fight AIDS, Tuberculosis and Malaria will no longer give China grants to fight HIV.

"There is a really serious [problem] in the country," McTiernan said.

In this case, the benefits of having generic versions of tenofovir likely outweigh concerns over IP protection for the government. McTiernan said the price of the drug could drop by as much as half once generic versions appear on the market, while some Chinese media have said the price could drop to as little as one-20th.

The decision likely will disappoint Glaxosmithkline plc, which has a 2009 agreement with Gilead to market and sell Viread in Asia, including China. It is believed the decision to revoke Viread's patent is not connected to GSK's recent investigation by the Chinese authorities for corrupt sales practices. (SeeBioWorld Today, July 16, 2013.)

Aurisco is one of several domestic manufacturers looking to make generic versions of the nucleotide analogue reverse transcriptase inhibitor both for domestic consumption and for export to countries where it is not patented.

The Chinese government announced changes to the country's patent law to allow for compulsory licensing of patented drugs and the manufacture of cheaper generic versions. Revised Measures for the Compulsory Licensing for Patent Implementation took effect May 1, 2012. It was reported at the time that Viread was a target as China struggled to deal with large numbers of HIV/AIDS and hepatitis B patients.

The announcement generated a fair amount of controversy, even if patents fell within the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Even before amending the patent law, China had the ability to issue compulsory license, but the amendment was an added warning to drug companies.

After China introduced its amended patent law, it was reported that Gilead made a number of concessions, including giving the country a large donation of Viread as long as the country purchased a similar amount. The revocation of the patent this week highlights the conflicting priorities that authorities in China have to deal with. On the one hand, they want to spur innovation through stronger intellectual property protection. On the other, affordable health care is a key goal.

The revocation of Viread's patent in China is a blow for Foster City, Calif.-based Gilead. Both India and Brazil already rejected patent protection, while Indonesia has issued a compulsory license. Those moves came despite the company's efforts to make the drug widely available in developing markets through the Medicines Patent Pool, which allowed generics makers to manufacture the drug for a very small royalty. China was excluded from the pool.

Countries are entitled to issue compulsory licenses when life-saving treatments are unaffordable or in cases of emergency. A number of developing countries have used compulsory licenses.

India has been a frequent user of provisions to override patents. Just this week, that country's Health Ministry made a request to revoke the patent for Herceptin (trastuzumab, Roche AG), a drug used to treat breast cancer, even after the Department of Industrial Policy Promotion turned down an application for a compulsory license. Last year, India granted compulsory licenses for Bayer AG's cancer drug Nexavar (sorafenib).

In January, the Supreme Court of India ended a protracted legal battle by rejecting an application by Novartis AG to patent its leukemia drug Glivec (imatinib). The court said the drug was not innovative enough.

Malaysia, Indonesia and Thailand also have issued compulsory licenses.

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

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