[Ip-health] Detailed Analysis of the Medicines Patent Pool-ViiV Pediatric ARV License and Memorandum of Understanding

Baker, Brook b.baker at neu.edu
Thu Feb 28 12:12:11 PST 2013

Detailed Analysis of the Medicines Patent Pool-ViiV Pediatric ARV License and Memorandum of Understanding
Professor Brook K. Baker
Feb. 28, 2013


On February 27, the Medicines Patent Pool (MPP) and ViiV Healthcare UK Limited (ViiV) announced their License Agreement on an older antiretroviral (ARV), abacavir (ABC), for pediatric treatment only, in 118 countries where 98.7% of child living with HIV live.  They also entered into a separate, non-binding Memorandum of Agreement (MoU), which promises collaboration on pediatric licensing of pipeline ARVs, development of novel combination pediatric formulations, and availability of novel pediatric formulations outside of the licensed territory.

Abacavir, which is widely protected by a range of primary and secondary patents in dozens of low- and middle-income countries, is a WHO preferred medicine for 1st and 2nd-line pediatric use.  This License Agreement and its subsidiary Sublicense Agreement will be a presumptive template for pediatric access to all of ViiV's current pipeline ARVs once they are approved by for use by the US Food and Drug Administration (FDA) or by the European Medicines Authority (EMA).

Although there are important improvements in this License Agreement over the status quo and although gaining licensed access to an important pediatric ARV is vitally important to the development of pediatric fixed-dose combinations and to the treatment of pediatric AIDS, the precedential value of this license will be tested by ViiV's future agreements with respect to adult formulations for dolutegravir (DTG) an extremely important pipeline medicine, whose approval is currently pending at the FDA with a decision expected in August of 2013.  These future agreements will determine whether ViiV is truly committed to meaningful access to affordable generic access to its proprietary ARVs throughout the developing world – in all low- and middle-income countries.

Field of use – ABC for pediatric antiretroviral therapy only, direct but veiled permission for co-formulation:

ABC is not widely used for adults, but it is a WHO recommended 1st and 2nd line regimen for pediatric ART.  It is also a prime candidate for co-formulation with lamivudine (3TC), which is widely available generically but which is also a patent-protected combination in some countries.  In this regard, it is regrettable that ViiV and the MPP did not directly grant a license to all ABC, 3TC, and AZT combinations, since all three are subject to ViiV ownership and control.

ABC/3TC is also a desirable candidate for co-formulation with lopinavir/ritonavir (LPN/r), a proprietary product owned by AbbVie, an ARV spinoff from Abbott Laboratories.  The development of a pediatric co-formulation of these products is the subject matter of a memorandum of understanding between Drugs for Neglected Diseases (DNDi) and Cipla, and thus there is added pressure on AbbVie/Abbott to now also join the MPP.

ABC has no known additional field of use beyond the treatment of HIV/AIDS, though another use might eventually be discovered.  At this point in time, however, the Agreement only covers antiretroviral therapy (ART).  The licensed patent rights are explicitly limited to "pediatric use" via the definition of "products" in the Sub-License Agreement, paragraph 1.12; paragraph 1.12, also directly permits co-formulation through the definition of "products" ( "products shall mean pharmaceutical combinations and compositions for pediatric use produced under this Agreement … which contain the compound (ABC)").  A desirable feature of the MoU, is that ViiV will collaborate with the MPP and others to use Catalytic Interventions – formulation development and transfers of manufacturing technologies; access to regulatory data; and partnership to develop fixed–dose combinations, including approaches to other IP rightholders (paragraph 1(c)) - to develop pediatric formulations that might not otherwise be developed.

Although the MoU is non-binding, paragraph 1(a) and (b) refers to ViiV's intention to grant pediatric licenses to the MPP for current pipeline ARVs upon approval by the FDA or EMA. The MoU is undesirably imprecise on whether the FDA or EMA approval must include direct approval for pediatric as well as adult use.

This Agreement will undoubtedly be of benefit in the treatment of pediatric HIV/AIDS, where treatment coverage is currently only 50% of adult coverage.  It could also help lead to the development of improved fixed-dose pediatric formulations that can be dosed according to size/weight.  However, it is important to realize that the pediatric market for ARVs in low- and middle-income is not commercially sensitive for ViiV.  These are not high mark-up markets and the pediatric market in rich countries is quite small because of success in using ART and ARV prophylaxis to prevent vertical transmission to infants during pregnancy, birthing, and/or feeding.

No royalties:

The License Agreement and Sublicense Agreement are completely royalty free.  This obviously maximizes the cost-savings inherent in the licenses, meaning that more children can receive treatment for the same amount of money. It also means that there are no royalties due based on any form of patent status – granted, pending, inactive, etc.  On the other hand, the MPP is trying to set an alternative commercially viable model to secure participation by IP rightholders in the MPP.

Access to ViiV and sublicensee regulatory data:

ViiV agrees to provide any sublicensee with new chemical entity exclusivity or other regulatory exclusivity waivers to the extent needed to obtain regulatory approval for manufacturing or for sale in the licensed territory.  ViiV further agrees to provide needed consents so that sublicensees can further their obligations to obtain regulatory approvals and/or WHO prequalification (License Agreement, paragraph 5.7).  The Sublicense Agreement further requires that no sublicensee may seek regulatory (data) exclusivity in the licensed territory in relation to any data relating to ABC containing products (paragraph 4.1).  These terms should greatly facilitate the fast-track registration of generic equivalents.

Licensed territory:

The licensed territory in the Agreement covers 118 countries where 98.7% of children living with HIV and AIDS reside.  This is good, but not good enough.  The commitment of the MPP and of the civil society organizations that have supported its efforts is full coverage for all low- and middle-income countries.  It is disappointing that ViiV has insisted, apparently as a matter of principle, about maintaining exclusivity in upper-middle income countries, by refusing to license access to the remaining middle-income countries where 1.3% of children living with HIV and AIDS live, 44,200 kids.

Moreover, this reserved market will be too small for ViiV to serve efficiently.  In the MoU, ViiV has committed to collaborating concerning access to improved pediatric formulations in non-territories (License Agreement paragraph 1(e)).  In all likelihood, it will sub-contract manufacturing of existing pediatric formulations and improved formulations for which it will have grantback rights to qualified generic companies.  Whether it would seek supra-competitive profits on those sales or not is unclear.

Publicity to date emphasizes that the licensed territory is expanded over any previous license, and this is true.  In particular, the following countries are covered that weren't covered in the Gilead license for tenofovir:  Algeria, Argentina, Azerbaijan, Chile, Colombia, Costa Rica, Korea DPR, Egypt , Federated States of Micronesia, Iraq, Iran, Kosovo, Lebanon, Libya, Marshall Islands, Malaysia, Morocco, Panama, Paraguay, Philippines, Tunisia, West Bank and Gaza. In this regard, it is important to remember that ViiV had an existing license with Mylan, which was reported to cover 115 countries.  Thus, the MPP expansion is modest, though having multiple potential generic licensees is certainly preferable to having only one.

Sales in non-territories, including where compulsory licenses are issued:

The License and Sublicense Agreements contains express provisions allowing sales to countries outside the licensed territories when such sales would not infringe any Non-Territory patents (License Agreement, paragraph 2.4; Sublicense Agreement, paragraph 2.3).  In other words, if there is not an enforceable, granted patent in the country of sale, a licensed generic can supply that market.  Likewise, both Agreements directly allows sales in countries outside the licensed territory if and when a compulsory license is granted (License Agreement, paragraph 2.4; Sublicense Agreement 2.3).

Product differentiation and anti-diversion:

Sublicensees are required to differentiate their products from ViiV products with respect to "trade or service mark, trade dress, symbol or device" and are further required to seek prior written approval from ViiV with respect to the sublicensee's proposed trade or service marks, trade dress, symbol or device (Sublicense Agreement, paragraph 9.2 and 9.3).  Although the need not to violate trademark is clear, it would be undesirable to differentiate medicines so much as to create patient confusion that might lead to non-adherence.

Sublicensees are explicitly prohibited from selling outside the territory (Sublicense Agreement, paragraph 7.1), except as allowed in non-territories where no non-territory patent would be violated or where a compulsory license has been granted.  Sublicensees are further required to notify buyers that diversion outside of permitted territories is not authorized and sublicensees are further obligated to use their best endeavors to ensure that third parties do not divert ABC containing products to non-permitted territories (Ibid, paragraph 7.2).  Verification of the congruence between raw ingredients and ABC containing products manufactured and sold by a sublicensee must routinely and regularly be made available to persons selected by ViiV and the MPP (Ibid., paragraph 10).  Such information must include units and value sales on a product-by-product, country-by-country, and purchaser-by-purchaser basis (Ibid., paragraph 10.2).  The provision of such information is presumably required so as to assess the risk and occurrence of product diversion outside permitted territories.

Generic licensees, place of manufacture, and marketing/regulatory approvals:

ViiV places no limitation or right of review on who the MPP can select as sublicensees, nor is there any restriction on the country of sublicensed manufacture and distribution (see License Agreement, paragraph 2.1; Sublicense Agreement, paragraph 2.2).  This means that any company in any country can be sublicensed to manufacture, sell, and distribute to licensed territories even if there would otherwise be a blocking patent in the country of manufacture and export.  This also means that such countries can import and export ABC APIs and export ABC-containing formulations without restrictions to licensed territories and that such companies do not have to pay a royalty simply because of patent rights in the country of manufacture.  In comparison, Gilead's license was much more problematic in this regard; Gilead cynically limited generic licensees to Indian companies, thwarting efforts to build pharmaceutical capacity in other developing country regions.  It did so, primarily because of one weak patent claim in India that would justify its collection of royalties on sales made in 109 countries where it had no patents on tenofovir.

Despite the above, the MPP is obligated to select only sublicensees that have demonstrated willingness and capacity (1) to manufacture raw materials (including APIs) and/or ABC formulated products consistent with the standards of the WHO Prequalification Programme, any stringent regulatory authority, or a WHO Expert Review Panel and (2) to make ABC formulated products widely available at prices that will facilitate access to such products in the licensed territories (License Agreement (1)(k).  Sublicensees are separately obligated to seek regulatory approvals in the licensed territory and to keep the MPP informed of product development and regulatory status (Sublicense Agreement, paragraphs 3.3 and 3.5).  Sales without marketing authorization are considered breaches of the Sublicense Agreement leading to immediate termination (paragraph 3.4).

Patent challenges:

Patent challenges are not directly addressed in either Agreement.  However, in the absence of the Agreements attempting to limit or restrict patent challenges (pre-grant, post-grant, or revocation), there is implied permission to do so, especially since competition policy in multiple jurisdictions specifically prevents license restrictions on such challenges.


This Agreement contains no restrictions on the sourcing of APIs which left entirely to the discretion of the licensee.  This is a significant improvement over the comparable provision in the Gilead license, which anti-competitively restricted API suppliers to Gilead's own suppliers or too its Indian licensees.

Right of enforcement:

The License Agreement places enforcement responsibilities with respect to sublicensees on the MPP (paragraph 3.2).  In fact, it is a breach of the License Agreement for the MPP not enforce terms against breaching sublicensees.  Enforcement by the MPP is an improvement over the license with Gilead, which reverted all of the enforcement rights to Gilead, but it is important to note that the MPP has no explicit enforcement rights against ViiV pursuant to the terms of the License Agreement.

Grantback rights:

ViiV and the MPP are to receive a "perpetual, irrevocable, worldwide, and royalty free, non-exclusive licence to use any [product or process] Improvement, Improvement Patent and related know-how" from any sublicensee (Sublicense Agreement, paragraph 8.2).  Sublicensees are also required to provide confidential information concerning such matters directly to ViiV and the MPP along with all available information concerning the mode of working and using the same (Ibid., paragraph 8.1).  ViiV has the right to commercialize such Improvements directly and can do so with no compensation to the generic licensor.  Although it too gets the a grantback license, the MPP has no right to sublicense the Improvement to other generic sublicensees in the absence of a separate agreement to be negotiated in good faith with the generic licensor (Ibid, paragraph 8.2).

The MPP certainly has an interest in licensing improved technologies to other generic sublicensees so as to promote competition with respect to improved products or important processes.  At the same time, there needs to be incentives to generic sublicensees to invest in improvements or to otherwise recoup those investments.  Recouping investments could be managed by short periods of exclusivity, royalty payments, or innovation prizes.  Apparently, the MPP has not yet determined how to best approach innovation incentives nor how to make certain that the innovation cycle continues, especially with respect to product and process improvements that improve therapeutic safety and efficacy and/or reduce cost.

Confidentiality and Disclosure:

Certain proprietary information provided by sub-licensees with respect to product development, regulatory approvals, sales data, improvements and other issues is to be treated confidentially and should not be disclosed (see Sublicense Agreement, paragraph 5). Otherwise, as before the MPP licensing provisions set a new standard for disclosure of relevant information concerning its licensing agreements by publicly posting unredacted forms thereof.

Future licenses and the question of DTG:

ViiV has take the firm position that it will not license pipeline ARVs until it has received regulatory approvals from the FDA or EMA.  Moreover, in the MoU, it has merely stated its intentions to provide comparable pediatric ART licenses to the MPP following any such approval.  This position leaves the key question of the future adult availability of DTG and other pipeline ARVs up in the air.  DTG is an important ARV both because it is a therapeutically effective integrase inhibitor with reduced side effects compared to some other therapies and because DTG requires low dosages which might contribute to future lower costs.

ViiV currently has a non-exclusive license with Mylan to supply DTG once approved to low-income and sub-Saharan African countries only.  This extremely narrow geographic scope is totally unacceptable.  Both ViiV and the MPP need to understand that adult DTG licenses on such narrow terms would be considered highly undesirable by civil society and excluded governments.  The consistent civil society demand has been that territorial coverage must be provided in all low- and middle-income countries.  Although higher royalties or other creative tools might be used with respect to sales in  certain middle income countries, the appropriate coverage goal is all developing countries.


ViiV and its corporate parents, GSK, Pfizer, and Shionogi, are earning favorable publicity for this significant pediatric initiative that will provide royalty free coverage for at least 98.7% of children living with HIV for both abacavir and future approved pipeline ARVs.  At its best, this and future MPP pediatric licenses will cover merely 10% of all people living with HIV because it is limited to children only.  For the other 90% of people affected, namely adults – the parents and caretakers of children, the critical question will be the conditions and territorial scope of a future DTG license.  It is fervently hoped that ViiV and its owners (and other IP rightholder companies) can be convinced by the MPP, developing country governments, global health initiatives, multilateral organizations, and people living with HIV and AIDS and their supporters that there should be licensed access in all low- and middle-income countries.  Absent broad coverage, which would acknowledge that adult lives are equally important as children's, the ViiV-MPP agreements will be judged harshly against the gold standard of universal access to affordable medicines.

(Please note that this analysis is offered in my individual capacity and does not reflect the position of Health GAP.)

Professor Brook K. Baker

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 KwaZulu Natal, Durban, S. Africa
(w) 617-373-3217
(cell) 617-259-0760
(fax) 617-373-5056
b.baker at neu.edu

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