Knowledge Ecology International, November 23, 2015. Knowledge Ecology International (KEI) notes the successful conclusion of negotiations between Bristol-Myers Squibb (BMS) and the Medicines Patent Pool (MPP) for a royalty-free license and technology transfer agreement on daclatasvir (DCV), an important new medicine for the treatment of the hepatitis C virus (HCV), and offers comments on the agreement.
As a result of this license, at least 112 low- and middle-income countries will have access to a drug that, in combination with sofosbuvir, is pangenotypic, thus bypassing the need for expensive genotype testing, and produces high cure rates in 12-week treatments.
The terms of the license are a bit dense, and may take some time to fully understand. The impact of the license on patients living outside of the licensed territory are the focus of some of our comments. In our preliminary read of the license, the issue of the know-how appears to present barriers to exporting the product outside of the licensed territory. Sales outside of the licensed territory will depend on a generic drug company being able to claim that they developed and made the drug without the know-how provided by the technology transfer agreement.
(The agreements that make up the license are available here: http://www.medicinespatentpool.org/current-licences/)
According to the agreement, BMS only holds patents in two of the licensed countries, India and South Africa. The license allows products to be made and sold within a 112-country area, including 110 countries where there are no patents.
The license also includes a license to the know-how to make daclatasvir. In the BMS license, a license to the know-how seems obligatory, and consequential for countries outside of the license, although there is the possibility of asserting that the product was developed without the know-how provided by BMS.
We note that there would apparently be no breach of the agreement in a scenario where a country inside or outside of the territory manufactures for commercialization outside the territory, provided that the commercialization “does not (i) infringe Licensed Patent Rights and Non-Territory Patent Rights,” but also does not “(ii) rely on the Licensed Manufacturing Know-How provided by BMS.”
Significantly, the license defines “to infringe” as “infringement of a patent in force, or any other activities that are prohibited under applicable laws in relation to Licensed Patent Rights and Non-Territory Patent Rights.” It is not clear what “any other activities . . in relation to the License Patent Rights” might include.
Section 2.8 is a key provision that describes situations in which exports would be allowed under the license:
2.8 Product Diversion
(c) For the avoidance of doubt, it would not be a breach of the Agreement for the MPP or its Sublicensees to, Develop, seek regulatory approval for, manufacture or use the Licensed Compounds and Licensed Product (in or outside of the Territory) for Commercialization of such Licensed Compounds or Licensed Product outside Territory where such Commercialization does not (i) infringe Licensed Patent Rights and Non-Territory Patent Rights; and (ii) rely on the Licensed Manufacturing Know-How provided by BMS. For the purposes of this provision, “to infringe” will mean the infringement of a patent in force, or any other activities that are prohibited under applicable laws in relation to Licensed Patent Rights and Non-Territory Patent Rights.
If a company has to develop know-how twice, there will be an additional expenditure of money and take significant time to develop a generic version for countries outside of the licensed territory. According to MPP, this issue came up in an earlier BMS/MPP license for the HIV drug atazanavir (ATV). In that license, most companies claimed they did not use the BMS provided know-how, and developed their products based upon information in the public domain, or developed separately from BMS. This defense is allowed in this license in Section 10.1(b).
10.1 (b) Exceptions
. . .
The obligations under Section 10.1(a) will not apply with respect to any portion of the Confidential Information that the receiving Party can show by written evidence:
(i) is publicly disclosed by the disclosing Party, either before or after it is disclosed to the receiving Party; or
(ii) was known to the receiving Party or any of its Affiliates, without any obligations to keep it confidential or any restriction on its use, prior to disclosure by the disclosing Party; or
(iii) is subsequently disclosed to the receiving Party or any of its Affiliates by a Third Party lawfully in the possession thereof and without any obligation to keep it confidential or any restriction on its use; or
(iv) is published by a Third Party or otherwise becomes publicly available, either before or after it is disclosed to the receiving Party; or
(v) has been independently developed by employees or contractors of the receiving Party or any of its Affiliates without the aid, application or use of Confidential Information of the disclosing Party.
The MPP/BMS license for DCV does not include mandatory anti-diversion measures, a subject of criticism from Médecins Sans Frontières (MSF) and some other groups regarding the Gilead HCV license.
The generic drug companies who sign the license are not prevented from engaging in patent challenges anywhere in the world.
James Love, Director of Knowledge Ecology International, said of the BMS-MPP license:
“The new BMS/MPP license for daclatasvir will expand access to new treatments for hepatitis C virus (HCV) for millions of people living in low- and middle-income countries. The terms of the royalty-free license appear on balance to be pro-competitive and designed to benefit patients. In several areas, BMS is setting an important precedent, including the extensive transparency of the patent landscape for daclatasvir.
As always, KEI is concerned about the patients living in countries outside of the licensed area, and that includes much of Latin America and the Caribbean, several countries in the Middle East, Eastern Europe and several countries in Asia, as well as all high income countries. We urge generic manufacturers to develop and manufacture the drugs with their own know-how under the flexibilities protected by Section 10.1(b) of the license, to ensure that products manufactured in the licensed territories can be exported to countries with no patents, or where compulsory licenses have been granted.
Countries such as Egypt, Mexico, Chile, Argentina or Thailand that are outside of the licensed territory can and should take measures to enable the importation of generic versions of daclatasvir. In countries outside of the licensed territory where patents have been filed but not granted, governments will have to either resolve the disputes over the patent status, or grant compulsory licenses on patents filed but not granted, a practice used in United States competition cases.”