Implications of the Patent Pool Licenses With Gilead (Part II)

Press Release 11 Oct 2011

Following on from our last post here, on 2 October 2011,  I-MAK and civil society members from the global south, in particular those from countries that were excluded under this agreement, met with staff and advisors of the Medicines Patent Pool Foundation (MPPF) and UNITAID in Geneva.

At the consultation  civil society members, including I-MAK, presented critiques of the process surrounding the MPPF, (from its foundation to the lack of transparency around its negotiations and approval of the license), the terms of the license, as well as an assessment of whether the MPPF, and in particular the MPPF-Gilead license, adds value to the current status quo on access to anti-retrovirals. The presentations made at the consultation are available for download here:

Additional documents relating to the consultation and the MPPF-Gilead licenses can be found here.

Unfortunately, members from civil society felt the issues raised were not adequately addressed by the MPPF and UNITAID staff. At the end of the consultation, it was demanded that the MPPF and UNITAID should:


  1. Substantially revise or terminate the MPPF-brokered license agreement with Gilead, including any potential or pending agreements with sub-licensees, given Gilead’s bad faith and the controversial terms of the MPPF-Gilead agreement;
  2. Institute an immediate moratorium on negotiations of any new license agreements, including any new or pending agreements with Indian generic producers (potential sub-licensees to the MPPF-Gilead agreement) or with other multinational drug companies (potential new licensors) until such time as standard terms and conditions or a model agreement is agreed to; and
  3. Re-evaluate the current structure of the MPPF, including its governance and administration, goals and mission, and implement comprehensive reforms designed to enhance its transparency, accountability and adherence to core principles of health equity.

Immediately after the consultation, a letter (available here) was prepared noting our concerns. In less than a few days the letter received over 90 signatures of support from community organizations and networks in over 20 countries, including those with access to products through the license.

A summary of the concerns raised in the letter are set out below:

Summary of key concerns with respect to substantive content

1) The reliance on the original Gilead voluntary license (from 2006) as the template for the MPPF-Gilead 2011 agreement. The license agreement instead should have been based on standard terms and conditions for licenses developed in advance by the MPPF with community input. Ideally, these terms and conditions should be non-negotiable when the MPPF is brokering any agreement with a pharmaceutical company.  There has to be a threshold of concessions that the MPPF simply will not cross in negotiations with multi-national pharmaceutical companies;

2) The restricted geographical scope of the license for tenofovir (TDF) that excludes over 500,000 patients in more than 43 countries, and a greater number excluded for the pipeline medicines (e.g., Botswana and Namibia). The acceptance of restrictive terms and the lack of criticism of Gilead by the MPPF and UNITAID for these exclusions are of great concern. Furthermore, the claims made by MPPF of the benefits of the scope of the new license are exaggerated and not based on any empirical assessment. The benefit of the addition of 16 new countries in the TDF licensed territory is overstated. Those countries represent less than a one percent increase in patient coverage, whereas the addition of middle-income countries excluded from the agreement would have represented a 12 percent increase in access, significantly expanding the market;

3) The undermining of the free and full use of TRIPS flexibilities by countries through restrictive provisions in the licences including:

(a) circumventing the 2016 TRIPS deadline for least developing countries (LDCs) by allowing royalties on medicines supplied to them, even though these countries do not have to impose patents on essential medicines until 2016;

(b) the imposition of restrictions on the use of compulsory licenses (CLs) by requiring the prior permission of Gilead, thus affecting both importing and exporting countries (and placing additional barriers on the use of the August 30 Decision);

(c) blocking the ability of excluded countries to parallel import generic medicines, by allowing Gilead to directly intervene and cancel generic companies’ distribution agreements;

(d) undermining patent opposition work by requiring royalties to be paid until all related patents, including undecided applications, go through the entire legal appeals process and are finally rejected, which often takes several years; and

(e) the MPPF’s licensing of poor quality patents legitimizes and endorses weak patentability standards for medicines, which many agree requires reform and contradicts the flexibilities enshrined in the TRIPS agreement;

4) The introduction of royalties on drugs even in countries and regions where patents do not exist, and the payment of royalties and continuing restrictions on generic companies even before patents are granted;

5) Restrictions imposed through the licenses on generic production in any country except India, and through the control over the production and supply of active pharmaceutical ingredients (APIs). These provisions limit local generic production worldwide, which is essential to enhancing competitiveness and self-sufficiency and is one of the few options for countries excluded from the licensing agreement;

6) The MPPF’s inexplicable championing of the “unbundling” provision of the licence, which allows generic companies to opt out of some drug licenses while keeping others. No explanation has been provided to date as to why the MPPF did not negotiate four separate licences;

7) The MPPF’s failure to explain to the public the consequences for generic companies of severing the TDF license. If a generic company severs on TDF, it also loses the ability to produce and supply emtricitabine;

8) The MPPF’s incomprehensible waiver of its legal standing and right to enforce the provisions of the license in any dispute between Gilead and a sub-licensee at a secret arbitration. This neuters the MPPF’s ability to affect much of what occurs after a sub-licensee agreement is signed, including ensuring that the licence is implemented in a manner that increases access to medicines. This refusal to accept legal responsibility is inexplicable and unwarranted, hampering not only the MPPF’s effectiveness but also the influence of civil society groups over the implementation of any and all licenses.

Summary of key concerns with respect to process and MPPF principles

1) An absolute lack of transparency on the terms of reference, roles and responsibilities, selection criteria and selection process of the ad-hoc Expert Advisory Group (ad-hoc EAG), which was consulted during the MPFF’s negotiations with Gilead, and the permanent EAG currently being assembled. Furthermore, we perceive a lack of transparency around the EAG’s process, provision of inputs, and the extent to which these inputs are integrated into decision-making. Also of concern is the lack of involvement of PLHIV, and the under-representation of key organizations working on access to medicines for HIV/AIDS in the global South on the EAG (members of which were noted by the MPPF at the meeting on 2 October 2011).

2) The refusal by MPPF staff to disclose i) the contents of the review by the ad-hoc EAG on the Gilead license agreement prior to its approval, and ii) the contents of the limited (if any) due diligence the MPPF may have conducted;

3) The lack of clarity around the process of determining whether a license negotiated by the MPPF meets the primary purpose for which the MPPF was created: to improve the health of people in low- and middle-income countries;

4) The provision stating that the MPPF is to receive 5 percent of all royalties paid by sub-licensees to Gilead up to the amount of $1 million per annum. We believe this represents poor judgment and a serious conflict of interest. (We note, though, that at the meeting on 2 October 2011, MPPF staff specifically acknowledged that even the appearance of conflict of interest in these agreements is harmful—and will consider the removal of this language in the existing license agreement and any potential future ones);

5) The public relations strategy of the MPPF around this agreement has confused and misled the public. On 12 July 2011, the MPPF-Gilead agreement was announced in London. Simultaneously, Gilead made a public announcement in India extending its partnership with four Indian generic pharmaceutical firms—Ranbaxy, Hetero, Matrix and Strides Arcolab—to produce and market two pipeline HIV drugs (elvitegravir and cobicistat) and a combination product known as the “Quad”. These separate agreements had no relationship to the MPPF and ensured these companies would remain outside the Pool.  These separate agreements with the four Indian companies segmented the market for the drugs in the pipeline, and completely undermined the MPPF-Gilead agreement. It is troubling that the MPPF representatives were aware of these “preferred partner” agreements, and yet did not publicly criticize Gilead for acting in bad faith or draw sufficient attention to the implications of the side deals.

Additionally, these side licenses require the Indian generic companies to pay royalties of between 10 and 15 percent for cobicistat, elvitegravir and the Quad in countries not included in the MPPF license (Botswana, Ecuador, El Salvador, Indonesia, Kazakhstan, Namibia, Sri Lanka, Thailand and Turkmenistan). To date, though, the MPPF and UNITAID have refused to comment on Gilead’s actions. To us, this signals that the
MPPF and UNITAID value their relationship with a for-profit company far more than the principles on which both organizations were established; and

6) The exaggerated claims of actual benefit and potential impact in public relations by the MPPF, and supportive statements of these claims by UNITAID and other stakeholders, about this license and the MPPF’s overall strategy. These actions are both misleading and damaging as they allow originators and decision-makers to be complacent and satisfied with the notion that the MPPF solves most issues regarding access to medicines. Given that the licensing agreement leaves behind half a million patients, both UNITAID and the MPPF should reflect seriously on celebrating these licenses in the press.



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