“Confrontational approaches such as compulsory licensing are time consuming, risky and an ultimately unsustainable way of addressing global health challenges. Voluntary licensing, by contrast, benefits all stakeholders, especially patients.”
When it comes to how to best increase access to medicines in low and middle-income countries (LMICs), compulsory licensing gets most of the attention. Academic articles, non-governmental organization (NGO) campaigns, conferences and United Nations (UN)-endorsed technical symposia assert it is the best approach. Certain World Trade Organization (WTO) members are pushing for COVID-19 treatments and diagnostics to be included in the waiver of intellectual property rights under the Agreement on Trade-Related Aspects of IP Rights (TRIPs waiver), which revolves around compulsory licensing. Brazil has recently amended its IP laws to make compulsory licensing easier.
Despite its high political profile, compulsory licensing has rarely been used (mainly by a handful African countries in the mid 2000s to address the HIV pandemic). Even then, IP-respecting treatments available from global procurement bodies have proven cheaper. No country has yet seen the need for a compulsory license for a COVID vaccine.
Quietly, meanwhile, innovative medicines in crucial therapy areas such as HIV and Hepatitis C have been reaching patients in Low-and Middle-income Countries (LMICs) at unprecedented rates over the last two decades. COVID vaccines and therapeutics have been manufactured at scale, with latest data showing supplies continue to outstrip demand in LMICs. All without the need to override patents and other forms of IP rights (IPRs)s. Any lack of access is mainly down to health systems failures and growing COVID fatigue among procuring governments.
This game-changing story is dominated by voluntary licensing. Innovators license their IP and technology to global partners, who use their manufacturing muscle and local market presence to deliver reliable supplies of quality medicines and vaccines to patients globally.
A voluntary licensing program for Tenofovir, a patented ARV medication included in the World Health Organization’s (WHO’s) list of essential medicines, increased access from 30,000 patients in 2006 to 8.7 million by 2015, with the vast majority receiving the generic version.
Elsewhere, Sofosbuvir, a patented Hepatitis C medicine, is now widely available in LMICs thanks to voluntary licensing agreements with 11 Indian generic companies.
More recently, voluntary licensing has been applied to COVID treatments. Among them, remdesivir and nirmatrelvir/ritonavir have the potential to reach more patients in LMICs thanks to voluntary licenses administered both independently and by the UN-endorsed Medicines Patent Pool.
Voluntary licensing is a better, more sustainable approach to increasing access to medicines. Here are a few reasons why.
Wider Technology Transfer Beyond Patents
Compulsory licensing enables generic competitors to override a patent. But when it comes to making a medicine, a patent by itself is generally insufficient. Modern vaccines and medicines are complex and cannot easily be copied or reverse-engineered with just a patent. Successful licensees require a bundle of technology including, but not limited to, patents – know-how, teaching, skills and other technical assistance.
Most vaccine and biologic medicine production technology is embodied in technical know-how specific to each product, which is not easily transferred. Such information is often known by few people within the innovator organization.
For COVID vaccines, originators entered into voluntary licenses not only for wholesale manufacture but also for discrete parts of the manufacturing process. Both approaches helped drive rapid manufacture at a scale well beyond originators’ capacities.
Licensing within an agreed IP-protected framework is crucial to each of these deals given the amount of proprietary and commercially sensitive information shared.
Each partnership involves huge transfers of data and know-how, with dozens of specialist staff from the innovator spending time with the partner to teach and oversee the safe and accurate transfer of manufacturing knowledge. Such an orderly knowledge transfer can only occur in an environment in which IP rights are protected, to ensure partners (possibly competitors in other areas) do not use the information for their advantage.
By contrast, such close cooperation would be highly unlikely under coercive interventions such as compulsory licensing, forcing the would-be manufacture to develop and devise its own manufacturing processes – a time consuming and costly exercise. Voluntary collaboration should always be preferable.
Another strength of the voluntary licensing approach is the emphasis on quality. This is a real issue considering the various scandals and quality issues that have surrounded certain substandard medicines marketed in low-income countries.
The Medicines Patent Pool (MPP), which administers voluntary licenses for products across HIV, hepatitis C, Covid and others for use in LMICs has strict safeguards to ensure medicine quality.
To be eligible for a license, a MPP licensee must demonstrate its production facilities meet Good Manufacturing Practice. They must also include pharmacovigilance monitoring and reporting requirements by the generic manufacturers; and also to have adverse event reporting systems in place before commercialisation. Licensees also need to show the infrastructure to supply all the markets in the license has passed anti-bribery and anti-corruption assessments, export controls and trade compliance, and have strict health and safety measures in place.
Most bilateral voluntary licenses also include conditions requiring the licensee to follow certain quality standards. These licenses also include a commitment by the originator to maintain pharmacovigilance for the licensed products, as an extra layer of security to patients.
Voluntary licenses (VLs) can be a faster way of making innovative medicines available in LMICs. Most countries (except a handful of exempted poorest countries) have in place minimum standards of IP protection in line with the WTO TRIPS Agreement – they cannot simply override patents and manufacture. By signing a VL agreement, generic manufacturers do not have to wait for patent outcomes, pre-grant patent oppositions or even apply for a compulsory license. This can save considerable time and money.
As mentioned, voluntary licensing also provides a safe platform for sharing of key information between the license holder and licensees, which can accelerate access. Originators who share their own proprietary clinical data with generics manufacturers remove the need for costly and time-consuming clinical trials. The result is speedier manufacturing and lower costs.
Depending on market circumstance, need and objectives, there are a range of voluntary licensing models an innovator can choose from.
One option is bilateral deals, in which an originator licenses to a single or multiple generic manufacturers. This has been widely and successfully used for HIV and Hepatitis C medicines, enabling many countries to make significant inroads against these diseases. When multiple generic partners receive licenses, competition drives prices down further.
There is also a centralized “clearing house” model, in which originators pledge their IP to a third party to out-license on their behalf, according to a pre-agreed set of criteria and standards.
The Medicines Patent Pool is the most notable, which negotiates with patent-holding pharmaceutical companies for public-health-driven licenses agreements and then grants royalty-bearing sub-licenses to qualified generic manufacturers in developing countries that then supply medicines to certain LMICs.
One 2017 study estimates actual cumulative savings generated by MPP licenses between 2010 until 2028 at around US$2.3 billion. MPP operational costs were only US$50 million over the same period.
Finally, for companies manufacturing complex products such as vaccines who want to maintain control of their marketing and supply chains, there is the option to license discrete parts of the manufacturing value chain. This proved its worth in the COVID pandemic, as mentioned.
Benefits to Generic and Innovator
Voluntary licensing provides significant benefits to both licensee generic manufacturers and originator companies. Armed with a license, generic manufacturers do not need to challenge patents or apply for compulsory licenses, both of which are time consuming and expensive. In most cases generic companies would rather cooperate.
For originators, there are many benefits beyond their desire to provide quality products for previously unserved patients. Notably, voluntary licenses offer a low-cost way to gain access to markets where they do not have established supply chains and distributional networks. With the African pharmaceutical market forecast to reach US$60 billion by the end of 2023, the scale of the opportunity is immense.
Cooperation, Not Coercion
The success of voluntary licensing in improving access to medicines where it has been most widely applied – HIV, Hepatitis C and COVID – shows that IP rights protection is vital to stimulate future innovation and can help meet public health objectives.
As the global health debate in Geneva and elsewhere moves beyond COVID and refocuses on how to promote equitable access to all medicines, voluntary approaches will be key. Confrontational approaches such as compulsory licensing are time consuming, risky and an ultimately unsustainable way of addressing global health challenges. Voluntary licensing, by contrast, benefits all stakeholders, especially patients. Cooperation, not coercion should be the guiding principle.
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