Generic Competition Universities Allied for Essential Medicines November 28, 2006 Adopted from UPenn Nat’l Conference Presentation

Defining the problem Adequate drugs and diagnostics simply do not exist for many neglected diseases Even where drugs and diagnostics do exist, prices in developing countries are often out of reach when the market is not competitive Even where prices are affordable, other barriers to delivery exist (human resources, infrastructure, management capacity)

ARV Price Comparison: 3TC+d4T(40)+NVP October 2003 January 2006 $562 $562 $290 $192 3TC – heptovir NVP – nevirapine d4T – stavudine Branded Best Price Generic List Price Branded Best Price Generic List Price

Effect of generic competition on market prices

Other problems associated with originator market exclusivity Untimely product launch – Heat-stable LPV/r – Tenofovir Unreliability of supply in single-source situations Barriers to innovation Pricing is not the sole concern with respect to patent-protected market exclusivity: do not equate ‘access’ with ‘low prices’

+ + Features of generic competition Economics (cost advantages, competition) Innovation (eg, FDCs, pediatric formulations) Quality + + Generic competition produces superior outcomes

EAL (Equitable Access Licensing)

Equitable Access License (EAL) overview Basic idea: Means of maintaining open door for robust generic competition Deals with three basic hurdles: patent, regulatory/data, and production capacity Major benefits include simplicity and ease of administration, maximum flexibility for generic producers, and wide coverage Leaves relatively little discretion to university or licensee: self-executing rights, covers all LMIs, no eligibility (eg, quality) restrictions on suppliers, etc.

EAL schematic: Cross-license and grant-back Cross License – what are associated rights? These rights must include all of the potentially exclusive rights it holds that could prevent a third party from producing or delivering an eventual end product, including rights in any patents and data possessed by the licensee during the term of the license that are necessary to make, use, sell, import, or export the end product. This right does not reach know-how or any other secret or material property possessed by the licensee. It would, however, cover associated rights that the licensee possessed or developed that do not rely directly upon the university technology but are nonetheless necessary to the production or sale of the end product. Includes data Limited purposes – for freedom to operate in LMI countries No patent misuse

EAL schematic: Notification Notification Fee Production anywhere

Royalties flow to university and licensee EAL schematic: Notifier improvements Notifier improvements – available for other LMI open licensees 4. Royalties flow to university and licensee