The Gilead HCV license: Glass half empty, or half full?

On Monday, September 15, 2014, Gilead announced licensing agreements with 7 generic drug manufacturers, for two of its HCV drugs, including sofosbuvir, which is currently the most important HCV drug, and the basis for Gilead’s value to shareholders. KEI’s statement from Monday, and links to other NGO comments are here:

Health groups, including KEI, wanted a larger territory covered under the Gilead voluntary license — since the benefits of being in the license are expected to be huge — access to very inexpensive drugs, including an all oral combination of SOF+LDV, and probably SOF+GS-5816 when additional clinical trials are completed. This could lead to combination drug costs, for a cure, of less than $100 — not right now, but within a year or two, after the generic drug manufacturers begin to register and scale production of the new drugs.

The basic math about who is in and who is excluded is as follows. Gilead included in the license 91 countries with about 3.3 billion persons, or about 46 percent of the world population. This works out to 73 percent of everyone not living in China or a country deemed high income by the World Bank, and about 54 percent of all persons living with HCV.

While I can understand people wanting Gilead to have done more, and we think they could have easily added more Latin America, North Africa and Asian countries, it is not as if the licenses were unimportant. Gilead was asked by KEI and other NGOs to create a voluntary licensing territory that was big enough to induce entry by several generic companies, and they did that. Gilead was also asked to provide a path for countries left out of the license to receive imports from the generic producers, and they did that — by providing language in the license that allows producers to supply other countries under compulsory licenses, or in countries with no patents.

Sofosbuvir and the other HCV drugs are not just part of Gilead’s drug portfolio, they are the basis for the increase in the company’s share value from $30 to $157 billion, since 2011. Gilead is an HCV company right now, and they have taken the best products and created a highly competitive alternative supply, from seven companies that will pay a royalty of 7 percent, of the low generic price. That may not impress some people, but it impressed KEI.

The risks of diversion for the new HCV drugs are an order of magnitude higher than is the case for HIV drugs. In a fixed dose combination, a cure will be available in three bottles of drugs, that one may carry in a backpack, purse or coat pocket. Gilead recognizes the implications of the voluntary license, in terms of creating well regarded suppliers of the generic products, and in terms of creating a pathway for compulsory licenses for countries outside of the license, and they did the license anyway. They could have offered one or two easily controllable India companies a license for SOF that did not allow for exports, withheld know how, and used test data rights around the world to block entry. They could have omitted the language allowing supply under a compulsory license, or to countries without patents. They could have kept the licensing terms secret, as Merck, J&J, the WHO, DNDI, all PDPs, the NIH and most drug companies do. Or, they could have done what BMS, Roche, Merck, J&J, Abbott, Novartis and other companies have done with the HCV patents, and that is nothing.

At this point, the focus for HCV should be on expanding access to HCV patents for diagnosis, including lower cost technologies that work in resource poor settings, other non-Gilead products, and countries outside of the license area, as well as overcoming registration barriers, and addressing financing needs. Here the MPP could pay a useful role, if they expand their mandate.

One could also try to get companies selling expensive drugs for cancer and other illnesses to do something other than nothing, as regards licensing patents.

For countries like Thailand, now out of the license, the reaction by the patient groups (Link here) is understandable.

It does not help, however, to downplay or discourage Thailand and other governments from taking advantage of the provisions in the voluntary license that would give them access to the generic HCV drugs. Thailand was left out of the Gilead license. The Thailand government can ask to be included, and it can also import under one of two mechanisms in the voluntary license, for countries in Thailand’s situation, including through the granting of a compulsory license. In our opinion the notion that these options are not available is false, and there is nothing to be gained by misrepresenting the options. These provisions for supplying to a country outside of the license area, under a compulsory license, were introduced by the MPP in connection with Gilead’s earlier HIV licenses, including the most recent license for TAF. Not all HIV suppliers have agreed to this language, but Gilead has, and they included it in the new HCV license, and that is quite significant.

MSF has expressed concern that the license will allow Gilead to block exports to some countries that have not granted compulsory licenses, where patents that have been filed but not granted, and the patents in the importing country have an uncertain status. We think that is a pessimistic view of a provision in the license that was created to expand access to more countries, and for language that is not under the sole discretion of Gilead to interpret, down the road.

The primary impact of unduly pessimistic or restrictive interpretations of the licenses by NGOs will be to discourage countries now outside of the licensed territory from taking steps to receive imports, and remove pressure from government officials from those countries to act.

More generally, if people want patent holders to license patents, they should reflect on how the patent holders are treated when they do so, compared to the treatment of all of the companies that are doing nothing.