The ongoing coronavirus pandemic highlights a potential conflict between patenting innovations and protecting public health. In my first book, Intellectual Property and Health Technologies, I reviewed this tension in the context of drug development. On the one side, there is a struggle for companies to patent their innovations so that they can benefit from the market exclusivity allotted to them. On the other side, there is a struggle for countries that cannot afford to pay for patented products to get treatments to their people.
We are already seeing this dynamic unfold in the current pandemic. Several U.S. companies have already announced that their research into COVID-19 has resulted in the filling of patent applications covering methods of treating patients infected with the coronavirus. For instance, Texas-based Moleculin Biotech filed a patent application covering the use of inhibitor compound WP1122 to limit coronavirus replication in patients by depriving the host cells of energy.
Similarly, PA-based Premier Biomedical filed a patent application directed to a method of treating COVID-19 infection by using antibodies to target the replication pathways of COVID-19 and cause the disease antigens to bind together, thereby allowing the coronavirus to be removed from the blood.
While many companies will file patent applications to their coronavirus research, many countries will be looking for ways to circumvent patent rights in order to bring treatment options the public. We have already seen this with announcing that AbbVie’s HIV treatment Kaletra® has been approved for importation despite the fact that patent protection for Kaletra® doesn’t expire until 2024 in Israel. This is the first time that Israel has exercised its law to permit approval of a generic version of a patent-protected drug. As a side note, AbbVie has already confirmed its intention to suspend its patent rights to Kaletra® in response to the COVID-19 health crisis.
So what exactly is this law that allows a country to circumvent patent rights and allow an otherwise patented product to be imported for public health purposes? It is known as “compulsory licensing” and it stems from the TRIPS Agreement which is signed by each country that wants to me a member of the World Trade Organization, or WTO. Below is a brief over of compulsory licensing, how it has been used before, and what we can expect moving forward.
Brief History of Compulsory Licensing
One of the agreements that countries must ratify upon joining the WTO is the Agreement on Trade Related Aspects of Intellectual Property Rights, or TRIPS. The TRIPS Agreement was negotiated in 1994 to harmonize intellectual property laws across different countries and establish minimum standards for protecting and enforcing intellectual property rights for all WTO member countries. This is because, prior to the TRIPS Agreement, patent laws varied across countries. In most developed countries, for instance, patents were valid for 15-17 years from date of filing, compared to only 5-7 years in some developing countries. This shortened life span significantly reduced the ability of intellectual property owners to benefit from reduced generic competition.
While the TRIPS Agreement harmonized patent laws in all member states, the TRIPS Agreement also recognized the countervailing need for countries to protect public health. In Article 8 Section 1, the TRIPS Agreement states that “Members may …. adopt measures necessary to protect public health and nutrition, and to promote the public interest in sectors of vital importance to their socio-economic and technological development, provided that such measures are consistent with the provisions of this Agreement.” There are several provisions under TRIPS that allow governments to provide for limitations to intellectual property rights.
One such limitation is compulsory licensing. In Article 31, for instance, TRIPS allows governments to order domestic manufacturers to make a patented product without permission from the patent holder. This practice is known as compulsory licensing. Article 31 permits countries to engage in compulsory licensing if there is a “case of a national emergency or other circumstances of extreme urgency,” or in cases of “public non-commercial use.” Under these circumstances, the country is not required to negotiate with, or seek approval from, the patent holder of the drug, but is instead just permitted to manufacture patented products, such as essential medicines, for its domestic market.
In addition, the “scope and duration” of a compulsory license under Article 31 has to be “limited to the purpose for which it was authorized.” This means that a country that issues a compulsory license to treat COVID-19, for instance, will not be able to use the medicines to treat other conditions or for longer than is required. If we look at Israel, for example, a compulsory license to Kaletra® will only allow Israel to use that license to treat COVID-19 patients during the time of the pandemic, not HIV patients for an unlimited period of time. A compulsory license, therefore, is limited in scope and duration and not a way for countries to receive blanket approval to use the drug for any and all uses it desires.
A major limitation of Article 31 is that it requires that production of the patented product to be “predominantly for supply of domestic market.” This means that if a country wants to benefit from compulsory licensing, then it must also be able to manufacture the product. The problem here is two-fold. Many countries, including both developed and developing ones, do not have the ability to manufacture complex medicines. In reality, depending on the nature of the drug, very few places could just be able to pick up and start manufacturing a drug. In addition, time is a problem. Even if a country is equipped to manufacture a drug, it is unlikely it could do so quickly. Manufacturing even the simplest of compounds without previous experience and know how would likely involve some trial and error which would delay the drug in reaching the public.
To address the problem of being required to manufacture a drug in-house, an amendment was made to the TRIPS Agreement to allow countries with insufficient or no manufacturing capacities to take advantage of the compulsory licensing provision under Article 31. The amendment, known as Article 31bis, allows countries to issue compulsory licenses to its domestic generic pharmaceutical manufacturers, permitting the domestic manufacturers to export medications to other countries. This amendment expands access to generic drugs by eliminating the restriction in Article 31 that requires use of compulsory licenses on pharmaceutical patents for "predominantly for the supply of the domestic market."
Compulsory Licensing Case Studies
Compulsory licensing has been used in varying ways over the years but it started predominantly as a negotiating technique to lower drug costs. In 2001, the Brazilian government threatened to use compulsory licenses to negotiate lower prices of HIV drugs in an effort to curb the growing rate of HIV infections in Brazil. As a result, Brazil was able to reduce the prices for several HIV/AIDS drugs in 2001, including Stocrin® (efavirenz), Crixivan® (indinavir), and Viracept® (nelfinavir) by upwards of 65 percent. After using compulsory licensing as a negotiation technique, Brazil eventually went forward with manufacturing its own HIV drugs.
Following in Brazil’s footsteps, Thailand was also successful in issuing a compulsory license for the HIV drug, Kaletra® (lopinavir/ritonavir), despite already getting favorable drug pricing. Thailand also issued a compulsory license for Sanofi-Aventis’ heart disease drug, Plavix® (clopidogrel), which proved to be controversial because it represented the first time that a compulsory license was issued for a chronic disease, as opposed to an infectious disease. The Thai government justified the license under Article 31(b)’s “public non-commercial use” provision instead of the “national emergency” provision. Since the “public non-commercial use” provision is not defined in the TRIPS Agreement, Thailand’s action illustrates how broadly the “pubic non-commercial” provision can be read to include health conditions that are not infectious diseases.
After Thailand began issuing compulsory licenses for chronic diseases, India granted its first-ever compulsory license in March 2012 when it allowed Natco Pharma to manufacture a generic version of Bayer's drug Nexavar® (sorafenib), a drug used to treat kidney and liver cancer. The compulsory license resulted in a 97% reduction in the price of the drug. Following Nexavar®, India continued to issue compulsory licenses for other drugs used to treat chronic diseases, including compulsory licenses on three cancer drugs, including Roche's Herceptin® (trastuzumab), Bristol-Myers Squibb's Sprycel® (dasatinib) and Ixempra® (ixabepilone).
This is the first time that we are experiencing a global pandemic in recent years and the first time that are seeing how companies and countries react to compulsory licenses on a global scale. I fully expect more countries to follow in Israel’s footsteps and issue compulsory licenses. I also fully expect companies that conduct research into COVID-19 to file patent applications to those ideas.
These concepts do not have to be mutually exclusive and doing one does not have to be at the detriment of the other. Patent rights are not absolute. There are many restrictions to them, a 20-year term being one of them. Likewise, compulsory licenses are not absolute. They can only be issued in certain circumstances and can only be used for a specific purpose. In a time when restoring global public health is at an all-time high, patent rights and public health rights must work together to not only develop new treatments, but also to use new and existing treatments to eliminate COVID-19.
BioPharma Law Blog posts updates and analyses on IP topics, FDA regulatory issues, emerging legal developments, and other news in the constantly evolving world of biotech, pharma, and medical devices.