[Ip-health] Eight Takeaways from the Army/Sanofi/Zika License Fiasco

Claire Cassedy claire.cassedy at keionline.org
Mon Jun 5 10:16:52 PDT 2017


Eight Takeaways from the Army/Sanofi/Zika License Fiasco

James Love - 4 June 2017

For those of you following the efforts by the US Army to license a patent
on a vaccine for the Zika vaccine, to Sanofi, the French drug and vaccine
manufacturer, here is a quick summary of the facts, and a few takeaways.
The facts.

   1. The US Army invented in the vaccine in the spring of 2016, applied
   for a patent, and shortly thereafter, proposed licensing the patent on an
   exclusive basis to Sanofi, a giant French drug company.
   2. The US government is financing and conducting a Phase 1 clinical
   trial, right now.
   3. The US government is paying Sanofi $43 million to conduct a Phase 2
   trial of the vaccine.
   4. The US government will pay Sanofi another $130 million pay for the
   Phase 3 trial.
   5. Sanofi describes its contribution as a willingness to do the Phase 2
   and 3 trials (at US government expense) instead of having its workers do
   something even more profitable, as if Sanofi can only work on one vaccine
   at a time.
   6. The US Army has rejected the suggestion they wait to license the
   patents until data from the any of the Army/NIH/BARDA financed Phase 1–3
   trials are in, even though that would only make the government’s leverage
   stronger, if the results are positive.
   7. Sanofi has been cited four times since 2009 for cheating Medicaid,
   veterans and US consumers, and faces criminal charges in France and Germany
   for kickbacks and fraud. The most recent US case was April 3, 2017, and
   involved a $20 million fine for overcharging the U.S. Department of
   Veterans Affairs (
   here: http://keionline.org/sanofi-fines)
   8. Sanofi has a history of charging US residents more. For example, the
   price for its multiple sclerosis drug Aubagio (teriflunomide) is more than
   $6,000 *per month *in the United States ($5,276 for Medicare in 2015),
   and about $750 per month in France. (more here:
   9. According to MSF, Sanofi has a track record of charging high prices
   for vaccines in developing countries.
   10. The largest share of U.S. cases of the Zika virus are in Puerto
   Rico, where many of the persons who need to be vaccinated are on Medicaid.
   11. The US Army asked Sanofi if they were willing to make a binding
   commitment to not charge US residents more than the price charged in other
   high income industrialized countries. Sanofi said — no. Sanofi wants the
   freedom to charge whatever they want in the US market. (Who can blame
   Sanofi, at least they at least know what’s best for their shareholders.)

The takeaways

   1. The notion that you can solve drug pricing problems by subsidizing
   clinical trials (a “new idea” floated every couple of years) is flawed, if
   you don’t connect the public sector investments to the product pricing.
   2. Complaining about high prices is more popular with politicians than
   doing something about it.
   3. The Army’s unwillingness to deal with what is obviously a bad deal
   for the US taxpayers and consumers is largely a resistance to creating a
   precedent. The Army, like the NIH, does not want to ever be asked to
   consider the costs of the monopoly on the public, or negotiate shorter
   monopoly terms and/or conditions on pricing. The Zika license is a threat
   to this tranquillity.
   4. Agencies that end up paying for drugs and vaccines don’t weigh-in on
   licensing decisions. This is surprising, given how much money exclusive
   licenses end up costing Medicare, Medicaid, the Department of Veterans
   Affairs and federal employees.
   5. OMB does not reflect on the future budget impact of exclusive
   6. Lately, the only members of Congress who have shown an interest in
   the absurdity of paying for the R&D, without getting any conditions on
   pricing, are democrats, a partisan split which makes the reforms quite
   7. The smart move here is for the Army to at least delay signing a bad
   contract, until the government has results from the Phase 2 trial, it has
   ALREADY FUNDED. Doing nothing for now does not preclude an exclusive
   license later, but even that is hard to accomplish.
   8. Sanofi and the Army both have managed to tell Congress and the public
   the minimum about the proposed license, even when the details are fairly
   routine. Why? Because a bad deal is more defensible when the Army can
   dismiss its critics as uninformed.

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