Gilead Monopoly Prevails Over Non-Discriminatory Access As Debated Hepatitis C Deal Sets Off

By Daniele Dionisio

Summary: Gilead on 15 September struck voluntary licence deals with seven India-based generic manufacturers to expand access to its hepatitis C innovative drugs in developing countries. With a limited territory covered, this yet deserving pact raises doubts about the coherence of Indian counterparts at a time when there are no relevant patents in India, several pre-grant oppositions have been filed and unrestrained competition by compulsory licences could have been pursued.

As an effect of the widening pressure (including patent oppositions) against the extortionate prices of lifesaving new medicines for hepatitis C, big pharma has begun negotiating bilateral agreements and voluntary licence (VL) deals with country governments and generic manufacturers, aimed at saving their patent rights.

Gilead on 15 September came to non-exclusive VL deals with seven India-based generic manufacturers – Zydus Cadila, Cipla, Hetero Labs, Mylan Laboratories, Ranbaxy, Sequent Scientific and Strides Arcolab –to broaden access in developing countries to hepatitis C innovative medicines sofosbuvir (Sovaldi ®)and ledipasvir (not yet approved by the US Food and Drug Administration, FDA).

Licensees are free to fix their own prices for their versions against a 7% royalty payment on low generic sales to Gilead [licensing terms here].

The deals entitle the licensees to full technology transfer of the Gilead manufacturing process to enable them to boost production. The launch of generic versions is expected by the second or third quarter of 2015.

Gilead’s licences to the seven generic firms also allow to roll out sofosbuvir or ledipasvir in combination with other hepatitis C medicines. The FDA and the European Medicines Agency are currently scrutinising Gilead’s applications for a ledipasvir/sofosbuvir single tablet regimen.

Under the licensing pact, the seven licensees can roll out sofosbuvir and the investigational single tablet regimen of ledipasvir/sofosbuvir for delivery in 91 developing countries that are home to around 100 million people living with hepatitis C, or 54% of the total global infected population.

As such, the overall agreement seems to be a significant but insufficient step forward since hepatitis C affects at least 185 million people worldwide, 85% of whom live in middle (72%) and low (13%) income countries. Around 15% of Egypt’s population, for example, is infected – the world’s highest prevalence – while it is estimated that 12 million people in India have hepatitis C.

In these countries, nearly 350,000 people are killed by hepatitis C yearly, where preventive vaccines are lacking.

Relevantly, Médecins Sans Frontières (MSF) just highlighted that “…Gilead’s licensing terms fall far short of ensuring widespread affordable access to these new drugs in middle-income countries, where over 70 % of people with hepatitis C live today.

Gilead’s deal excludes many middle-income countries considered by industry to be profitable emerging markets, even though people living with chronic hepatitis C in these countries often come from poor and marginalized communities with little ability to pay for expensive medicines.

We welcome the interest of generic companies to scale up production of new direct-acting antivirals and Gilead’s decision to make the final agreement public; however, a highly restrictive voluntary licence that blocks millions of people with Hepatitis C from affordable prices is not acceptable. MSF hopes that excluded governments will take all relevant measures available under global trade rules and national patent laws to secure low-cost generic versions of these medicines….”

Among key markets, China, Brazil, Ukraine, Mexico, Romania, Thailand, Russia and Malaysia are examples of middle-income economies that are excluded from the pact.

Hence, while critics argue that Gilead should have added more countries from Latin America, North Africa and Asian areas, others commend Gilead for creating a VL Territory that was big enough to induce entry by several companies, and for providing language in the licence that allows, among other things, generic producers to supply countries outside the Territory under compulsory licences (CLs).

However, while VLs, as part of the flexibilities laid down in the World Trade Organization TRIPS (Trade-Related Aspects of Intellectual Property Rights) Agreement, include permission for export, this is also the case for an allowance for export agreed upon through a 2003 WTO waiver (the “August 30th Decision”) that enables more exports under CLs to countries unable to manufacture key medicines themselves.

As such, Gilead’s commendable transparency in the licence language would represent no more than a mandatory alignment with WTO overarching rules for equity.

This is without prejudice to the awareness that a number of constraints basically limit the VL model because the originators actually hold control over the whole chain of steps: an unbalanced mechanism.

Médecins Sans Frontières (MSF) had, a day ahead of the Gilead licensing deal, referred to how “…VL agreements often provide generics firms with access only to those markets which a multinational company does not want to or cannot exploit through ”monopolistic” marketing, distribution and sales….”

Gilead’s licensing pact comes even as Gilead does not have any patent on the two drugs in India and its patent application for sofosbuvir has already been challenged in India and elsewhere. Earlier this year, civil society organisations like the Delhi Network of Positive People and the US-based non-profit group, Initiative for Medicines, Access and Knowledge (I-MAK) filed pre-grant oppositions challenging the validity of a patent application for sofosbuvir. Some generic companies like Natco and the Indian Pharmaceutical Alliance, which represents 18 major generic producers, also opposed the patent.

The organisations disputed the genuine novelty, inventive step and efficacy of the product.

And this occurs at a time when cheap generic versions of state-of-the-art hepatitis C drugs seem to be within reach. Published data this year argue that generic-drug makers would be able to roll out these medicines at $100–250 for a 12-week course.

As such, the struck deals look like they would be an unaligned, hurried move where a decision by the Indian patent office against Gilead might have earned companies unrestrained competition by CLs and allowed them to sell affordable versions without any limitation by the innovator firm.

A flexibility provision in TRIPS, CLs are indeed a highly reliable mechanism for maximizing the affordability by allowing “…someone else to produce the patented product or use the patented process without the consent of the patent holder.”

On these grounds, CLs would be up to making equitable access and public interest overcome monopolistic pharma companies’ business strategies.

Bearing these considerations in mind, one could reasonably wonder whether the seven Indian firms involved in the agreements were more keen to ally with patent owners than keep coherence with India’s bold moves so far to ensure non-discriminatory access.

Some incoherence seemingly appears indeed if, as reported, a Cipla manager just said that “…Cipla considers, in general and also as a deep philosophy, that a monopoly drawn by a patent is bad for public health. So, we are trying to accommodate the system as best as possible….”

Admittedly, this comes as no surprise since the just-signed pact is expected to bring significant revenues to the domestic manufacturers.

Not to mention that, in political terms, this pact would likely help the Indian government iron out the frictions with the US administration as regards the effects of the 2005 Indian Patent Law.

Conversely, the overall deal may be seen as a strategic move by Gilead to leverage its relevant drugs’ potential and save its patent protection.

Now that Gilead’s sofosbuvir is facing pre-grant oppositions, this pact could pave the way for cooling them in India and abroad.

Additionally, the signed deals would serve as a means to forestall and “wrong-foot” brand competitors’ moves.

Daniele Dionisio is a member of the European Parliament Working Group on Innovation, Access to Medicines and Poverty-Related Diseases. He is an advisor for “Medicines for the Developing Countries” for the Italian Society for Infectious and Tropical Diseases (SIMIT), and former director of the Infectious Disease Division at the Pistoia City Hospital (Italy). Starting February 2012, Dionisio is Head of the research project Geopolitics, Public Health and Access to Medicines (GESPAM). He may be reached at d.dionisio@tiscali.ithttps://twitter.com/DanieleDionisio