U.S. Army Rejects Pricing Concerns in Grant of Exclusive Patent License to Sanofi on Zika Vaccine

Today, KEI received a letter from the U.S. Army dated April 21, 2017, signed by Barry M. Datlof, in which the Army largely rejected concerns raised in comments submitted by KEI and various other public interest groups related to the proposed grant of an exclusive license to the French drug company Sanofi on a U.S. Army-invented vaccine for Zika virus.

Background

On December 21, 2016, KEI asked the Army to include reasonable pricing terms in the exclusive license, in order to ensure an affordable price on the vaccine for U.S. taxpayers and people in low income countries.

On January 12, 2017, KEI, the American Federation of State, County and Municipal Employees (AFSCME), People of Faith for Access to Medicines (PFAM), Public Citizen, Social Security Works, Universities Allied for Essential Medicines, and Dean Baker of the Center for Economic and Policy Research (CEPR) filed comments noting that an exclusive license to Sanofi was inappropriate, because of the extensive federal support for Sanofi’s Zika research (including agreements with the Army to co-develop the drug and an over $40 million BARDA grant), and because Sanofi would have other benefits, including exclusivity on clinical trial data and a priority review voucher.

On March 10, 2017, KEI filed comments that addressed the obligations in the Bayh-Dole Act to ensure that the vaccines is “available to the public on reasonable terms”, and that this obligation includes most importantly, that the price be reasonable.

On January 23, 2017, Doctors Without Borders filed comments with the Army opposing the exclusive license.

On March 20, 2017, Senator Bernie Sanders published an op-ed in the New York Times on the potential Zika deal.

On February 15, 2017, 11 House Democrats urged the Army to ensure an affordable price.

The Army response

The Army wrote KEI and groups that co-signed the January 12, 2017 comments that it does not have the “means, expertise, and authority to define, implement, and enforce ‘affordable prices’ or to set price controls for a potential vaccine that will require great investment and face high risk of failure,” and made similar argument for not addressing the affordability and access issues for developing countries.

The Army also sent a two page letter to MSF.

The Army provided 30 days to appeal the response by Datlof.

Comments on the initial rejection of opposition to the Sanofi license

James Love, Director, KEI

The Trump Administration is proposing that for a vaccine, invented by the Army and funded by the NIH, a French company can charge whatever it wants in the United States, even if that is twice or three times what other countries pay. The ‘charge whatever you want’ policy is a ‘kick me” sign we will attach to ourselves. This is a good outcome for the French drug company, and a bad outcome for anyone in the US who will want the vaccine or pay for it through taxes and insurance premiums.

We will be filing an appeal to the Datlof letter. Among other things, we will note that the Army certainly has the authority to put conditions on the pricing of the vaccine, and indeed, has a statutory obligation to ensure the product is “available to the public on reasonable terms.” The notion that this is too hard a task is not compelling. Some of the proposals to address pricing concerns were very simple, such as mandating the US residents don’t pay more than other high income industrialized countries. This can be addressed with a single sentence in the license agreement. It is also odd that the Army did not acknowledge that at present, the U.S. government is funding all of the vaccine’s development costs, including the clinical trials, and as far as we know, Sanofi has not promised to pay for any future clinical trials. In fact, on December 22, 2016 Sanofi told Stat “the company expects to ask BARDA for more funding” if the vaccine enters late stage development.

Fran Quigley, People of Faith for Access to Medicines (PFAM)

“We are disappointed the Army is saying it’s too hard to prevent price-gouging against people living both inside and outside of the United States. The vast majority of Americans from all moral and faith traditions agree that it is immoral to leave people at risk of birth defects due to Zika just because they can’t afford the vaccine—especially when taxpayers funded the development of these vaccines.”

More on this license here: /zika

Press coverage

April 25, 2017. Jean-Yves Paillé. Vaccin anti-Zika : aux Etats-Unis, des élus et des ONG se liguent contre Sanofi. La Tribune.

April 25, 2017. Eric Sagonowsky. U.S. Army can’t add a pricing safeguard to Sanofi’s Zika vaccine license, official says. Fierce Pharma.

April 24, 2017. Ed Silverman. Army rejects request to deny Sanofi an exclusive license for a Zika vaccine. Stat+ (paywall).

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