[Ip-health] The Gilead HCV license: Glass half empty, or half full?

Thiru Balasubramaniam thiru at keionline.org
Tue Sep 16 06:16:38 PDT 2014

http://keionline.org/node/2083The Gilead HCV license: Glass half empty, or
half full?

Submitted by James Love <http://keionline.org/user/4> on 16. September 2014
- 14:46

On Monday, September 15, 2014, Gilead announced licensing agreements with 7
generic drug manufacturers, for two of the HCV drugs, including sofosbuvir,
which is currently the most important HCV drug, and the basis for Gilead’s
value to shareholders. KEI's statement from Monday, and links to other NGO
comments are here:http://www.keionline.org/node/2082.

Health groups, including KEI, wanted a larger territory covered under the
Gilead voluntary license -- since the benefits of being in the license are
expected to be huge -- access to very inexpensive drugs, including an all
oral combination of SOF+LDV, and probably SOF+GS-5816 when additional
clinical trials are completed. This could lead to combination drug costs,
for a cure, of less than $100 -- not right now, but within a year or two,
after the generic drug manufacturers begin to register and scale production
of the new drugs.The primary impact of unduly pessimistic or restrictive
interpretations of the licenses by NGOs will be to discourage countries now
outside of the license from taking steps to receive imports, and remove
pressure from government officials from those countries to act.

The basic math about who is in and who is excluded is as follows. Gilead
included in the license 91 countries with about 3.3 billion persons, or
about 46 percent of the world population. This works out to 73 percent of
everyone not living in China or a country deemed high income by the World
Bank, and about 54 percent of all persons living with HCV.

While I can understand people wanting Gilead to have done more, and we
think they could have easily added more Latin America, North Africa and
Asian countries, it is not as if the licenses were unimportant. Gilead was
asked by KEI and other NGOs to create a voluntary licensing territory that
was big enough to induce entry by several generic companies, and they did
that. Gilead was also asked to provide a path for countries left out of the
license to receive imports from the generic producers, and they did that --
by providing language in the license that allows producers to supply other
countries under compulsory licenses, or in countries with no patents.

Sofosbuvir and the other HCV drugs are not just part of Gilead’s drug
portfolio, they are the basis for the increase in the company’s share value
from $30 to $157 billion, since 2011. Gilead is an HCV company right now,
and they have taken the best products and created a highly competitive
alternative supply, from seven companies that will pay a royalty of 7
percent, of the low generic price. That may not impress some people, but it
impressed KEI.

The risks of diversion for the new HCV drugs are an order of magnitude
higher than is the case for HIV drugs. In a fixed dose combination, a cure
will be available in three bottles of drugs, that one may carry in a
backpack, purse or coat pocket. Gilead recognizes the implications of the
voluntary license, in terms of creating well regarded suppliers of the
generic products, and in terms of creating a pathway for compulsory
licenses for countries outside of the license, and they did the license
anyway. They could have offered one or two easily controllable India
companies a license for SOF that did not allow for exports, withheld know
how, and used test data rights around the world to block entry. They could
have omitted the language allowing supply under a compulsory license, to
countries without patents. They could have kept the licensing terms secret,
as Merck, J&J, the WHO, DNDI, all PDPs, the NIH and most drug companies do.
Or, they could have done what BMS, Roche, Merck, J&J, Abbott, Novartis and
other companies have done with the HCV patents, and that is nothing.

At this point, the focus for HCV should be on expanding access to HCV
patents for diagnosis, including lower cost technologies that work in
resource poor settings, other non-Gilead products, and countries outside of
the license area, as well as overcoming registration barriers, and
addressing financing needs. Here the MPP could pay a useful role, if they
expand their mandate.

One could also try to get companies selling expensive drugs for cancer and
other illnesses to do something other than nothing, as regards licensing

For countries like Thailand, now out of the license, the reaction by the
patient groups (Link here
is understandable.

It does not help, however, to downplay or discourage Thailand and other
governments from taking advantage of the provisions in the voluntary
license that would give them access to the generic HCV drugs. Thailand was
left out of the Gilead license. The Thailand government can ask to be
included, and it can also import under one of two mechanisms in the
voluntary license, for countries in Thailand’s situation, including through
the granting of a compulsory license. In our opinion the notion that these
options are not available is false, and there is nothing to be gained by
misrepresenting the options. These provisions for supplying to a country
outside of the license area, under a compulsory license, were introduced by
the MPP in connection with Gilead’s earlier HIV licenses, including the
most recent license for TAF. Not all HIV suppliers have agreed to this
language, but Gilead has, and they included it in the new HCV license, and
that is quite significant.

MSF has expressed concern that the license will allow Gilead to block
exports to some countries that have not granted compulsory licenses, where
patents that have been filed but not granted, and the patents in the
importing country have an uncertain status. We think that is a pessimistic
view of a provision in the license that was created to expand access to
more countries, and for language that is not under the sole discretion of
Gilead to interpret, down the road.

The primary impact of unduly pessimistic or restrictive interpretations of
the licenses by NGOs will be to discourage countries now outside of the
licensed territory from taking steps to receive imports, and remove
pressure from government officials from those countries to act.

More generally, if people want patent holders to license patents, they
should reflect on how the patent holders are treated when they do so,
compared to the treatment of all of the companies that are doing nothing.

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