Canada: The Medicines Patent Pool - Five Years On

Last Updated: April 4 2016
Article by Carmela De Luca and Janice Calzavara

Introduction

The Medicines Patent Pool (MPP) was founded five years ago as a program to improve access to affordable and appropriate human immunodeficiency virus (HIV) medicines in developing countries. During its relatively short existence, the program has negotiated licenses for 12 anti-retroviral (AVR) medications from seven different patent holders, sub-licenced these medications to 15 generic manufacturers, and expanded distribution to 117 countries. According to the MPP, all of this has saved an estimated $119.6 million dollars.

How the MPP Works

The MPP works by first negotiating a licence for a medication from the Intellectual Property (IP) holder. The licence can include a royalty that is to be paid to the IP holder, which to date has been waived for paediatric formulations. These royalties can also be tiered and based on the overall GDP of a country. As such, the MPP can include some middle income countries as well as low income countries, with the ability to have each nation pay based on their ability to afford the medication.

After securing a licence from the IP holder, the MPP sub-licences the IP to generic manufacturers. The entire text of both the licences and the sub-licences are made public on the MPP website. Transparency is a key principle of the MPP: not only does the transparent nature of the program remove secrecy around the royalties paid, it also helps to focus the attention on public health.

Finally, the medication is made available to the purchasers and ultimate users. The actual cost of the medication paid by the purchaser, who may be a government or NGO, is left to market forces. This allows competition between the generic manufacturers, and may potentially lower the ultimate cost of the product.

Benefits

IP Holder

The MPP can eliminate many steps in traditional voluntary licencing as the IP holder need only licence to one entity: the MPP. This may allow the IP holder to participate in access initiatives more cost-effectively, including opening up markets that otherwise would not be profitable without the transactional savings provided by the MPP.

Additionally, compulsory licencing typically removes the IP holders' rights to negotiate on royalty rates or specific terms they find essential, such as which countries may manufacture the generic medications. Participation in the MPP may reduce the likelihood of nations whose laws permit compulsory licensing utilising that option.

Generic Manufacturers:

Generic manufacturers may benefit from this scheme too as they also need to negotiate with only one group: the MPP. Without this patent pool, generic manufactures would need to procure licences from potentially multiple companies in order to manufacture fixed-dose combinations (FDC). FDCs can be vital to ensuring compliance with drug regimes. Without a single source for licencing patents, the complexity of producing FDC's would likely increase, along with the likelihood of failure.

Transparency also benefits the generic manufacturers as it means each generic manufacturer pays the same amount for the licence. This prevents some manufacturers from entering less favourable contracts.

Purchaser/ultimate users:

Competition between generic versions of the same product is permitted under this scheme as the MPP only sets the price for the licence to the IP holder, not the ultimate cost of the medication. Therefore, although the generic manufacturers set their own prices, they have to compete with other generic manufacturers in the same marketplace, which can result in competition-induced cost savings to the purchaser.

Transparency also benefits the purchaser and ultimate user as the public is aware of the royalty paid for the medication. This, for example, allows large purchasers to better negotiate with generic manufacturers, and prevents the generic manufacturer from easily inflating the price of a medication.

Flexibility as to where the generic drug can be manufactured may also be increased. This benefits the purchaser and ultimate user as it allows countries without the infrastructure to produce these medications to still have access to the final products.

There may also be an incentive to study new paediatric formulations. Not only have these not required royalties to be paid to the IP holders under MPP sub-licences, some licences allow manufacturers to research new paediatric formulations. Therefore, the MPP may increase the number of companies working on paediatric formulations, potentially increasing the likelihood of improvements in this area.  

Drawbacks

The MPP, like any system, has faced criticism. Negative press for the IP holder can occur, which may deter involvement in the MPP. For instance, in July 2011, Gilead licenced the IP for tenofovir disoproxil fumarate (TDF), emtricitabine (FTC), cobicistat (COBI), and elvitegravir (EVG) to the MPP. However, Gilead was criticised for not doing more with one group starting a petition against the company. In comparison, had Gilead privately negotiated the licences with the countries directly, the agreements would not have been available for public scrutiny.

There is also criticism that not all countries are covered by the negotiated licences. More specifically, licences such as MSD's raltegravir (Ral) licence precludes the distribution of the medication to places like Argentina, Ecuador, and Uruguay. However, these countries had no patent protection for the drug as of late 2015, and therefore would not need to be listed as a territory within the licence in order to manufacture or make available the medication.

A similar situation occurred with Gilead in 2011, when it was criticised for not licencing TDF to nine countries. However, only two of these nine countries had any patent protection on the individual drug, meaning that seven countries required no licence from Gilead to make, use, or sell TDF. The criticisms may or may not be valid, but do not negate the cost savings and the increased access that the licences may provide in the terrorities under license.

MPP's future expansion

According to the MPP website, the MPP plans to continue expanding and this includes securing licences to more HIV medications. As of December 2015, there were at least 14 HIV medications listed on the US National Institute of Health website, not including derivatives such as extended-release versions of the drugs. Of these 14 medications, the MPP has licenced the IP associated with 79% of these medications for paediatric formulations, and 57% for adults. This means that the MPP still has medications for which it needs to secure licences.

One method to further incentivise licencing IP to the MPP is through tax incentives, such as tax deductions. Tax deductions cannot be offered by the MPP because they do not collect tax: the deductions would need to be offered by countries. The countries offering a tax deduction could extend beyond those benefiting from the licences to include any country where the licensor pays taxes. For instance, a tax deduction can be claimed under certain circumstances in the United States for donating a patent. If this type of deduction were expanded to include the revenue difference by voluntarily licencing to the MPP, more IP holders might be persuaded to participate.

Conclusion

The MPP has grown since 2010, and is still growing. The MPP has secured 60% of its adult ARV medication licences and 69% of their paediatric ARV medication licences since 2013, the approximate current halfway point of the program. This growth goes beyond just new medications, with supply of medications to additional countries being added to existing licences as well. However, this expansion may not continue without incentives for IP holders. Tax incentives could incentivise an IP holder for licencing their patents to the MPP at either significantly reduced rates or for free. It may be beneficial for industrialised nations to work with the MPP to bring affordable treatment to low- and middle-income countries. HIV is a world-wide problem, so it only makes sense that the solution spans the globe too.

Previously published in Pharmafile - March 2016

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Carmela De Luca
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions