PATENT POOL Anand Grover United Nations Special Rapporteur on Health East Africa Consultation, September 2010

Problem: Rationale for the Patent Pool Increasing treatments needs 2008: 42% of the 9.5 million PLHIV who require treatment are on treatment 2010: As per revised estimates, 15 million PLHIV require treatment Increase in patenting of ARVs in low, middle income countries (including in India) Rising drug costs Resistance to 1 st line will require 2 nd line 2 nd line costs about 5 times that of 1 st line Decreasing financial resources  Need from USD 7.4 bn (2009) to USD 20 bn (2015)  But GFATM will reduce its commitments by 10% Answer: Patent Pool

Patent Pools: Previous Experience Previous examples – Sewing Machine Combination (1850s): VOLUNTARY pool to avoid litigation  mass production of sewing machines – Aircraft Manufacturers (Post World War I): US government ordered cross-licensing  COMPULSORY pool To break monopolies To enable production Advantages: – Complementarity – Product made Available – No question of reduced prices

UNITAID Patent Pool: Working Strategy Patent holders of ARVs (innovator companies, Universities, Governments or Researchers) “voluntarily” offer patents to the Patent Pool. Patent Pool becomes the licensee of number of patents Other companies wishing to utilise patents from the Patent Pool can seek licence against payment of royalty = sub-licensees of the patent pool Royalty payments are transferred to the patent holders who have licensed their patents to the pool.

Goals of UNITAID Patent Pool Only for selected ARV needed for the next medium term Fixed Dose Combinations Pediatric Formulations Heat stable formulations Increased access to affordable medicines in developing countries Price Reduction (through competition)

Expected Economic Benefits Reduced transaction costs with one stop shop FDC discount (Combination lowers costs) Benefits of competitive production: tiered (more typical) or non-tiered pricing Availability of Paediatric formulations Expanded voluntary licensing All these would lead to savings: 260 mill USD

Benefits to Stake holders: Public New FDCs, pediatric and heat stable formulations Lowering prices through competition and economies of scale Expanded access to newer medicines for PLHWAs (potential) Product quality assurance through licences

Benefits to Stake holders: Innovators Aligning with CSR/Reputational benefits Protection of IPR vide standardized agreements Reserved production capacity for higher margin markets Increased royalty revenues through larger market reach, extended production, distribution Reduced transaction costs

Benefits to Stake holders : Generics Legal certainty and avoidance of liability for patent infringement Voluntary licences on equitable terms Potential access to new markets (product and geographic) Facilitated access to patented technologies which is non-discriminatory Reduced licensing transaction costs

General Info on antiretrovirals Patent Status and availability

#ARV DRUGS Patent Status USSouth AfricaIndia 1Ritonavir Only soft-gel capsule formulation Filed (Other forms) 2Lopinavir + ritonavirGrantedGranted Filed (Formulation) 3NevirapineGrantedGrantedFiled 4AtazanavirGrantedGranted Filed (Other forms) 5TDF No patent Granted (Prodrugs) 6EmtricitabineGranted Filed (Other forms) 7GS ElvitegravirGranted 9EfavirenzGrantedGranted Filed (Other forms) 10RaltegravirGrantedGrantedGranted 11Vicriviroc

#ARV DRUGS Patent Status USSouth AfricaIndia 12SaquinavirGrantedGranted Granted (Formulation) 13DarunavirGrantedGranted Granted (Other forms) 14EtravirineGrantedGrantedGranted 15RilpivirineGrantedGranted 16LamivudineGranted Key patent expired 17AbacavirGrantedGranted Granted (Formulation) 18FosamprenavirGrantedGranted Granted (Prodrugs) 19MaravirocGrantedGranted 20Elvucitabine?????? 21cmx-157?????? 22gsk-572??????

UNITAID Patent Pool: Developments 2006: Proposal to UNITAID to establish Medicines Patent Pool July 2008: UNITAID Executive Board (EB) agreed in principle to establish a voluntary patent pool for HIV medicines. December 2009: UNITAID EB agreed to proceed to next stage and approves setting up of patent pool in 2010 June 2010: UNITAID EB decided to establish the Medicines Patent Pool Foundation (MPPF) MPPF, the host of the pool, is proposed to be established as a Swiss not-for-profit company Immediate goals: 3 drugs out of 20 identified drugs to be taken on licence and sub-licensed

Reasons for Low Prices of Drugs No product patent protection, only process patent No monopoly on pharmaceutical products Many competitive generic players Superior Process Chemistry Vertical Integration – API to formulation

C India’s advantages India is the largest supplier of generics to low and middle income countries Prices low and affordable for “Third World Countries” Vertical integration of APIs and formulations – Availability of APIs – Su perior process chemistry and ability to manufacture formulations and also FDCs Competitive low pricing Large number of quality producers with FDA approval Compared to South Africa, Indian companies have an advantage. It is unlikely that the MPPF can exclude Indian companies.

Problematic issues UNITAID cites Gilead TDF voluntary licences as best example of how pool will work: – Benefit of increase in number of generic producers (including Indian) taken into account – Consequence of restrictive conditions not dealt with – Ultimately, patent application rejected in India

Problematic Issues Purely voluntary – no legal authority that will act as a compelling factor Scope uncertain, especially with respect to middle-income countries – country as well as product Terms and conditions of licences – no indication yet

Problematic Issues Tiered pricing: – Market loyalty will determine who takes the sub- licence – No incentive for Indian generics to enter with lower competitive pricing – In the long run, Indian companies will be excluded from the market

Problematic Issues Evergreening: – MPPF is premised on providing incentives for new formulations and combinations – Well-known that patents on new formulations and combinations provide same incentives as those for really “new” innovator drugs  create market incentives as in US and EU – Danger of promoting “evergreening”

Problematic Issues Other options whittled down – Compulsory licensing will be inhibited in certain countries – Patent oppositions and revocation proceedings will be undermined TRIPS-flexibilities compromised Application of anti-competition laws uncertain

Problematic Issues Dispute resolution Transparency – Structure of MPPF – Principles that will guide its functioning – Negotiations Start of negotiations and end of negotiations Time-bound negotiations Which countries likely to be excluded? – Terms and conditions of licences `

IN CONCLUSION … Will the MPPF succeed?? Patent pool not to be viewed as THE solution We must continue to work towards ensuring that: – Countries have strong public health safeguards in patent law to prevent grant of frivolous and evergreening patents – Countries make use of TRIPS flexibilities – Countries reject TRIPS-plus provisions

NEW DEVELOPMENTS July 2010: ViiV (GSK-Pfizer venture) announced royalty-free voluntary licences on its existing drugs and drugs in the pipeline for around 80 countries. This includes countries where there is a high burden of HIV, including sub-Saharan Africa.