[Ip-health] Malaysia . March 14, 2018 Letter to USTR re Malaysia Special 301

James Love james.love at keionline.org
Wed Mar 14 21:19:23 PDT 2018


March 14, 2018

The Honorable Robert Lighthizer
United States Trade Representative
Executive Office of the President
600 – 17th Street, NW
Washington DC 20508

RE: Malaysia / Special 301

Dear Ambassador Lighthizer:

One of the countries that PhRMA, NAM and others have singled out to be
placed in the Special 301 list is Malaysia, as a retaliation for the
granting of a compulsory license on hepatitis C patents in September 2017.
KEI would like to offer a few comments on this case, and explain why it
does not merit sanctions by the U.S. government.

1. The Malaysia compulsory license and the Gilead voluntary licenses both
permit generic production of sofosbuvir.

The Malaysia HCV compulsory license is unusual in the sense that it was
issued after Gilead, a U.S. company that holds several patents on
sofosbuvir based HCV treatment regimes, had announced that it would expand
the geographic area for its voluntary license to include Malaysia. Gilead
made that announcement on August 23, 2017 via twitter and in a blog posted
to linkedin in late August.

Officials from the Ministry of Health have told several persons that they
were never provided with any official notice of the voluntary license at
the time.  A copy of the voluntary license is now available on the Gilead
web page (see attached PDF file), and appears to have been published
November 20, 2017.

In between the August 23, 2017 announcement on twitter and the November 20,
2017 revised agreement, the Malaysia government issued a compulsory
license. A press statement from the Minister of Health issued on the
September 20, 2017 described the action as an authorization to acquire
generic versions of sofosubuvir for “use in government facilities only (MOH
and Armed Forces Hospitals), whereby at initial phase it will only be
offered at 12 MOH Hospitals.”   (See attachment).

What the Malaysia MoH described is a narrower authorization than what
Gilead has authorized in its November 20, 2017 revised voluntary license.
For example, the Gilead license covers several additional drugs which are
used in combination with Sofosbuvir.

According to Fifa Rahman, writing in IP-Watch, the Malaysia government had
been considering a compulsory license since the first quarter of 2017,
after having failed to negotiate more favorable prices or inclusion in the
Gilead HCV voluntary license in 2016.  Gilead no doubt was aware of the
progress on the compulsory licensing proposal, and this probably motivated
the announcement in August that Malaysia would be included in the voluntary

Gilead was sufficiently distracted by its other business interests that it
did not provide any significant details immediately. KEI received a letter
from Gilead dated September 12, 2017, outlining some of the terms, but also
explaining that some important details, such as measures on diversion,
needed to be worked out.

It would be odd for the USTR to sanction Malaysia for authorizing the
procurement of generic versions of sofosbuvir when this is exactly what
Gilead is also authorizing.  It’s a no harm, no foul situation, with some
trade associations worked up because a tweet from Gilead in August wasn’t
sufficient to delay the compulsory licensing announcement.  In the big
scheme of things, it is surprising that USTR has interrogated Malaysian
diplomats over the details.  Don’t your staff have more pressing matters to
worry about?

2. Everyone has been up in arms over the Gilead pricing of sofosbuvir.

>From the moment that Gilead announced its initial price of $1,000 per pill
for sofosbuvir, a huge debate has ensured over the price of sofosbuvir
itself, and drug prices in general. The U.S. Senate has conducted an
investigation into the sofosbuvir pricing, as have several leading news
organizations. A Google search with the terms “sovaldi excessive price”
yields 400,000 hits.

Many governments have acted or considered taking actions to address the
price of sofosbuvir.  Switzerland announced it would liberalize the rules
on personal importation of generic versions.  Italy used the threat of a
compulsory license to obtain price concessions.  Colombia and Chile are
considering issuing compulsory licenses. 18 members of the U.S House of
Representatives have called upon Secretary Azar to use 28 USC 1498 to
obtain affordable generic versions of the drug.  A Senate Committee is
considering proposals for changes in 28 USC 1498 to make it easier for the
Department of Veterans Affairs use compulsory licenses in the United
States.  The Governors of Louisiana and New York have investigated the
possibilities of compulsory licensing, as have officials in the federal
prison system.  Some academics have proposed the United States buy all of
the shares in Gilead, in order to obtain more affordable versions of the
drug.  What Malaysia has done is what a lot of governments are considering

3. Sofosbuvir prices are excessive.

Sofosbuvir is an effective drug, but the overall returns are excessive.
>From 2014 to 2017, Gilead earned $55.5 billion from sofosbuvir based HCV
drugs, including $19 billion in 2015.  It is appropriate to curb the
monopoly pricing of this drug, which has created financial stress for
health systems around the world, including the United States.

4. Sofosbuvir was invented on a government grant.

The invention of sofosbuvir was partly funded by the U.S. government, a
fact that was concealed by the inventors.  Attached is a March 14, 2018
letter to Secretary of the Department of Health and Human Services (DHHS)
Alex Azar, asking for an investigation into a failure to report NIH funding
on US patent 7,964,580. This is the first patent in the FDA Orange Book for
all Gilead sofosbuvir based drugs for HCV.  KEI is asking the federal
government to either take title to the patent, or to use a royalty free
right in the patent to make compulsory licensing of sofosbuvir combination
treatments more feasible under existing U.S. law.  Unless that happens, the
United States will not be able to make the treatment available to everyone
who is infected with HCV.

5. Malaysia should be issuing more compulsory licenses, to address
disparities in access to new drugs for cancer and other illnesses.

Pressuring Malaysia over the sofosbuvir compulsory licenses is probably
more about stopping Malaysia granting compulsory licenses on overpriced
drugs for cancer and rare diseases than it is about protecting Gilead.  But
the consequence of such pressure is a morally repugnant endorsement of
unequal access to life saving drugs and needless suffering and premature
deaths.  The United States needs to elevate this discussion, and not pander
to drug company lobbies.

1. Press Statement Minister of Health 20th September 2017 – Implementation
of the Rights of Government for Sofosbuvir Tablet to Increase Access for
Hepatitis C Treatment in Malaysia.

2. Malaysia Inclusion In Gilead Voluntary Licence – A Product Of Compulsory
Licence Pressure, August 24, 2017. IP-Watch


James Love
Knowledge Ecology International


James Love.  Knowledge Ecology International
KEI DC tel: +1.202.332.2670, US Mobile: +1.202.361.3040, Geneva Mobile:
+41.76.413.6584, twitter.com/jamie_love

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