Explainer: What makes Gilead issue voluntary licenses for COVID-19 drug to generic companies – Moneycontrol

US drug-maker Gilead Sciences announced that it had signed non-exclusive voluntary licensing agreements with five generic pharmaceutical manufacturers, including three based in India to further expand supply of antiviral drug remdesivir to treat COVID-19. Remdesivir has been issued an Emergency Use Authorization (EUA) by USFDA to treat COVID-19 patients.

Read here, here on more about the drug.

The agreements allow the companies – Cipla, Hetero Labs, Jubilant Lifesciences, Mylan and Pakistan-based Ferozsons Laboratories to manufacture remdesivir for distribution in 127 countries, including India, subject to regulatory approvals . The countries consist of nearly all low-income and lower-middle income countries, as well as several upper-middle- and high-income countries that face significant obstacles to healthcare access.

What are the terms of the deal?

Under the licensing agreements, the companies have a right to receive a technology transfer of the Gilead manufacturing process to manufacture the active pharmaceutical ingredient (API) and finished product at a commercial scale.

The licensees or generic companies will also set their own prices for the generic product they produce. The licenses are royalty-free until the World Health Organization (WHO) declares the end of the Public Health Emergency of International Concern regarding COVID-19, or until a pharmaceutical product other than remdesivir or a vaccine is approved to treat or prevent COVID-19, whichever is earlier.

Is there such a precedent?

Yes, in the past Gilead used voluntary licenses to rope in Indian cos to manufacture and distribute HIV and hepatitis-C medications in low-middle-income countries (LMICs). But the licenses were not royalty-free. The generic drug makers entered into voluntary licenses by agreeing to pay royalties anywhere between 7-12 percent on net sales.

This model helped in expanding the access to innovative life-saving drugs at affordable prices. For instance, at one point of time, its Hepatitis-C drug Sovaldi (sofosbuvir) was sold in the US at list price of $1,000 a pill, the voluntary license helped the generic version to be priced at $13.71 per pill in India.

Sovaldi and its several combinations have helped to cure patients suffering from Hepatitis-C disease. This model kicked off a huge controversy in the US, where patient groups questioned why American public has to pay more. Nevertheless Gilead’s licences were an important victory of public health.

What made Gilead to forego royalties?

It may have been a tough decision for Gilead. But, given the context of COVID-19 pandemic ravaging the world, Gilead is under pressure to be more generous. The company is also concerned about countries invoking compulsory licensing provisions citing “national emergency” to allow themselves or a third party to produce a patented product or process without the consent of the patent owner.

It is one of the flexibilities in the field of patent protection included in the WTO’s agreement on intellectual property rights that can be invoked during national emergencies.

Gilead told Moneycontrol that compulsory licensing is a concern – not because of intellectual property rights but because there is a real risk that it could create chaos in the supply chain for scarce raw materials and other manufacturing inputs that could reduce the amount of remdesivir that could be produced and increase the time it takes to do so. Gilead other problem could be, is that they may not have the capacity to meet the global demand for the drug.

How will Gilead recoup its investments?

Gilead earlier told that remdesivir is a result of a decade of research. The company has indicated earlier that it could invest as much as $1 billion into the development of remdesivir this year alone. Gilead will have to rely on sales in the US and other developed countries to recoup its investment in the near term. But, by issuing a voluntary license Gilead will still be able to retain some control on the drug.

Why only these five companies got licenses?

Cipla, Hetero and Mylan have worked previously with Gilead on Hep-C and anti-HIV drugs. The experience of Hep-C and HIV drugs suggest that Gilead could possibly open voluntary licensing to many more companies.

When will remdesivir launch happen in India?

All the companies said they have been working with the government, ICMR, and DCGI for necessary studies and approvals to bring this product to treat COVID-19 patients in India. India drug regulator is yet to approve the drug. Meanwhile companies say that they can supply both the APIs and formulation, as and when they get approval from the regulator.

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