Unbiased HIV Patent Pool — A Free-Market, Middle-Income Countries Open Model

By Daniele Dionisio

Brand name pharmaceutical companies’ concerns about profit losses deemed to follow the enforcement of the UNITAID patent pool might undermine scaled up access to newer and appropriate HIV medicine formulations in resource-limited settings. A universally agreed strategy to supplement UNITAID plan is therefore needed.

Untangling a Conflicting Matter

The UNITAID* plan for HIV medicines (antiretrovirals-ARVs) includes that patent holders offer the intellectual property (IP) related to their inventions to an autonomous patent pool licensing entity. Any company that wants to use the IP to produce or develop medicines can seek a license from the pool against the payment of royalties, and may then produce the medicines for use in developing countries (conditional upon meeting agreed quality standards) [1,2].

On 5 February 2010, UNITAID Executive Board failed to agree on specific aspects of the licensing agency that will run the pool and let negotiations with patent holders begin. Approval of this entity is expected by next June [3].

The UNITAID plan has put the originator pharmaceutical companies into concern, wherein they fear patent pooling could result in slashed profits of brand name industry in the under-served markets, in illegal flows of generic new FDC ARVs into the wealthy markets, and in unbalanced boosting of innovation, development and research activities by middle-income country (India, China, Brazil, South Africa, Thailand) manufacturers. The originator companies also suspect that patent pooling could result in lost opportunities for voluntary licence agreements, or in a threat to their research and development (R&D) leadership [4]. Brand name pharmaceutical companies’ concerns likely take into account the balances on the world chessboard, where China’s and India’s trade/business paces look fast [4]. Issues also involve the geographical scope of the licences, particularly who will have access to the middle-income country markets; the anti-diversion measures to prevent licensed products from entering high-income markets; the boosts for patent-owners (such as regulatory incentives, funding sources, or alternate methods of calculating royalties) to include many of the middle-income countries in the pool licences [1]. Reportedly, western companies would possibly agree to be paid a royalty on their patents, but relinquish control over manufacturing, distribution and pricing in the countries to which the pool applies, limiting their revenues [5]. In a word, originators would fear brand market erosion deemed to follow the mere giving up of patent rights to the generic industry advantage.

The insights above look understandable now that South industries with high-level skills in innovation, manufacturing and marketing are increasingly involved in South-South partnerships and in North-South R&D outsourcing ventures [6]. Multinational drug companies are currently striking deals with Chinese and Indian drug researchers to outsource testing for drug candidates and fill drug development pipelines, while accelerating, thanks to the efficiency of Eastern laboratories, a development process and economizing billions of dollars in costs (in India, five PhD chemists can be employed for the cost of one in the West). Concurrently, Eastern researchers are taking advantage of profit shares and IP rights, while being aware that these collaborations will spur new breakthroughs in medical research and develop a local industry originally built on generics [6-8]. Taken together, these realities mean that peer trade competition between wealthy and middle-income countries is around the corner.

These realities rely on circumstances that recommend the originator companies improve their policies to avoid their opportunities being put in jeopardy. They include:

• Weakening US appeal in Southeast Asia, South America and Africa due to China, India, and Russia competitors [4].
• Unprecedented openings to Indian ARVs by the US President’s Emergency Plan for AIDS Relief (PEPFAR) [9].
• Backing of the UNITAID patent pool by some Democrat US government representatives (as by the House Energy and Commerce Committee chairman in a 11 December 2009 letter to US Secretary of State and US Global AIDS Coordinator) [10]
• Rising EU member governments’ alignment in patent issues. Examples include: the EU pharmaceutical sector inquiry on anticompetitive brand industry IP use to delay generic medicines entry into market; the declaration in support of the UNITAID patent pool recently signed by 195 EU parliament members; the establishment of a new Parliament group to monitor EU trade pacts’ impact on poor’s medicines access [11-13].
• Mounting evidence of middle-income country governments’ enforced compulsory licences (CLs) against brand ARVs [6].
• Resistance of middle-income countries’ Patent Offices to evergreening drug patent applications by brand multinationals [4, 6].
• Increasingly cost-saving ARVs bulk purchasing agreements pulled off by Clinton HIV/AIDS Initiative-UNITAID/Global Fund coalitions with generic manufacturers [4, 6, 14, 15].

Additionally, originator companies are aware that WTO TRIPS (Trade-Related Aspects of Intellectual Property Rights agreement) rules do not obstruct the UNITAID patent pool [4], while there is pro-pooling overpressure by public opinion, mass media, NGOs, United Nations agencies, and governments/firms in the developing countries. Taken together, these realities could result, if the brand multinationals did refuse to enter the pool, in CLs charged with constraining royalty clauses and tighter room for negotiations.

Feelings above could partly be offset by the protectionist policies still pursued by the US and EU with the developing countries in terms of

• Free trade agreements (FTAs): as an example, TRIPS-plus clauses involving data exclusivity, extended patent terms and border measures are feared they are going to be approved inside the EU-India still under negotiation FTA [16].
• IP enforcement agendas: the recently released US 2010 trade agenda shows an intention to strengthen the global trade system and enforce obligations and US IP rights [17]. Accordingly, the Pharmaceutical Research and Manufacturers of America (PhRMA) advocates, in its 2010 Special 301 submission, several countries to implement data exclusivity provisions that go far beyond their TRIPS obligations [18].
• Pressures to refrain from using TRIPS flexibilities: questioned US moves include the USPTO (United States Patent and Trademark Office)-Pfizer joint program (“to fund and manage seminars in India on misconceptions of evergreening and the importance of regulatory data protection and patent linkage”), and the George Washington University Law School-associated “India Project”. Reportedly, with backing by a number of major corporations with extensive patent and copyright interests, the India Project “targets high level Indian government officials and judges, who are invited to participate in a number of seminar and trips, to receive training and advice in how to increase the level of patent and copyright protection in India, featuring one-sided presentations from a selective group of experts” [19, 20].

Free-Market, Middle-Income Countries Open Model

Conflicting matters above might undermine long-term success of the UNITAID plan to secure the resource-limited populations scaled up access to newer and appropriate HIV medicine formulations. These matters may explain why a universally agreed strategy to supplement the UNITAID plan should not be delayed if we maintain that sustainable results can only be achieved through lastingly harmonising the interests of key actors, including resource-limited populations, manufacturers from middle-income countries and multinationals.

Current trends in trade rules and policy directions by governments are enough to advise that merging the UNITAID plan with a free market model open to the middle-income countries would be fruitful to satisfy the needs of all concerned parties.

This model would urge partnerships between originator companies first, to make second/third line FDC ARVs “immediately” available and allow patent pool agreements, as per UNITAID terms, to be negotiated straight afterwards.

It appears that these directions, though at their beginning, have been set in motion: deals between originator companies have already been struck, or are working, as far as joint manufacturing and rolling out of second/third-line brand FDC ARVs are concerned (as examples, the GlaxoSmithKline-Pfizer tie-up to merge HIV/AIDS businesses into the new company ViiV Healthcare; and the Bristol-Myers Squibb & Gilead Sciences’ venture for efavirenz, emtricitabine, and tenofovir FDC ATRIPLA®) [6, 21]. These ventures would pull off even more deals now that both the European Medicines Agency (EMEA) and the US Food and Drug Administration have approved the long-awaited heat-stable 100 mg tablet version of Abbott ritonavir (which is the only sanctioned booster protease inhibitor-PI drug to be taken in conjunction with other PIs to enhance effectiveness) [22].

The model should reject clauses that exclude middle-income countries (World Bank defined) from participating in the UNITAID patent pool, as well as clauses that forbid patent pool-originated generic ARVs to be sold in the high-income country markets. Instead, aligning the prices of these generic formulations with the corresponding brand ones on wealthy markets should be enough to safeguard unbiased competition. Likewise, brand name manufacturers selling ARVs to the developing countries should align their prices with those applied by Clinton HIV/AIDS Initiative-UNITAID/Global Fund coalitions for corresponding generics.

This model would be up to attaining a free and equitably driven world market. Indeed, while securing the generic producers opportunities and equipment to make and roll out second and third-line FDC ARVs, it would not prevent the generic and brand counterparts from negotiating mutually profitable voluntary licences. To the same extent, this model would be up to allowing the originator firms to hold competitiveness as far as bulk purchasing agreements for new FDC ARVs with Clinton HIV/AIDS Initiative-UNITAID/Global Fund coalitions are concerned.

Again, this model would scale up long-term access to appropriate and affordable new FDC ARVs, with no discrimination between end-users in wealthy and resource-limited countries.

The envisaged strategy would be equipped to tackle the evolutionary directions from emerging markets, while bringing opportunities to all concerned parties. Aside from support to domestic employment, market increase and effective response to HIV resistance mutations in the low-income countries, it would boost and improve:

• for-equity dynamics in drug trading policies facing brand and generic competitors. This model would allow the brand name pharmaceutical companies to keep R&D standards and marketing power, while taking advantage of new partnerships, avoiding risks of compulsory licences, and predictably getting around the need for additional incentives to enter the UNITAID patent pool. In the perspective of the generic pharmaceutical industry, instead, this model would streamline innovation, South-South and North-South ventures as a premise to enhanced competitiveness beyond the under-served markets.
• manufacturers’ incentives to supply appropriate streams of reliable drugs [23].
• R&D and international level high-tech plans.
• opportunities for researchers working in the developing countries.
• strengthened capacity to generate, manage and use technology to address domestic health needs in the developing countries.
• setting of high-level, country-owned plants for generic ARVs in Sub-Saharan Africa. This would make a promise now that Ugandan Quality Chemicals industries has just become the first ARVs manufacturing plant in sub-Saharan Africa approved for export by WHO outside South Africa [24].

*UNITAID is an international facility to provide long-term funding to increase access to drugs and diagnostics for HIV/AIDS, malaria and TB.
Patent pools are part of May 2008-adopted World Health Organization-WHO’s Global Strategy on Public Health, Innovation and Intellectual Property to help increase access to medicines [2]. As far as ARVs are concerned, quantified benefits are expected to include, through skyrocketed market competition, substantially lower prices for second and third-line patent pool generated FDC ARVs. UNITAID patent pool will be a voluntary mechanism, meaning its success will depend on the willingness of pharmaceutical companies to participate and commit their IP to the pool.

Selected ARVs for negotiations with brand counterparts, as per November 2009 UNITAID Patent Pool Implementation Plan Executive summary [1]:
Lopinavir (LPV) Abbott, Ritonavir (r) Abbott, Nevirapine (NVP) Boehringer-Ingelheim, Atazanavir (ATV) Bristol Myers Squibb, GS-9350 Gilead, Elvitegravir (EVG) Gilead, Tenofovir (TDF) Gilead, Emtricitabine (FTC) Gilead, Efavirenz (EFV) Merck, Raltegravir (RAL) Merck, Vicriviroc Merck (Schering-Plough), Saquinavir (SQV) Roche, Etravirine (ETR) Tibotec / J&J, Darunavir (DRV) Tibotec / J&J, Rilpivirine Tibotec / J&J, Lamivudine (3TC) Viiv (GSK), Abacavir (ABC) Viiv (GSK), Fosamprenavir (FSV) Viiv (GSK), Maraviroc Viiv (Pfizer)

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Daniele Dionisio Advisor, “Availability of Drugs in the Developing Countries”, SIMIT (Italian Society for Infectious and Tropical Diseases).Member, European Parliament Working Group on Innovation, Access to Medicines and Poverty-Related Diseases.Coordinator, “Access to Drugs: International Policies”, CLIA (Italian Network for International Fight against AIDS).
Former Director, Infectious Disease Division, Pistoia Hospital, Pistoia (Italy).