Groups ask Army to reconsider decision that would allow French firm to charge U.S. anything it wants on federally-funded vaccine

23 May 2017

Groups ask Army to reconsider decision that would allow French firm to charge the US anything it wants on a federally funded Zika vaccine

CONTACT: Zack Struver, zack.struver@keionline.org, +1 (914) 582-1428
Andrew Goldman, andrew.goldman@keionline.org
James Love, james.love@keionline.org, +1 (202) 361-3040

Washington, DC — On Friday, May 19, 2017, five public interest groups, a union, and an economist filed an appeal to a decision by the U.S. Army (/node/2757) to reject concerns over the grant of an exclusive patent license on a Zika vaccine to Sanofi Pasteur, a French vaccine manufacturer.

The appeal was signed by Knowledge Ecology International (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 (UAEM), and Dean Baker, a co-founder of the Center for Economic and Policy Research.

A copy of the appeal is available at:

/wp-content/uploads/Zika-Vaccine-Appeal-May-19-2017.pdf

The appeal focused on two issues that had been raised in previous comments filed by the signers of the appeal and KEI.

First, the appeal addressed the fact that there is a statutory requirement [35 U.S.C. § 209(a)(1)] that exclusive licenses for federally-owned patents be used only if exclusive patent rights are a “reasonable and necessary” incentive to bring a product to market. In the case of the Zika vaccine, the federal government conducted both pre-clinical research and the phase 1 clinical trial, and is funding Sanofi’s Phase 2 and 3 trials. Sanofi would also earn a priority review voucher, currently worth $125 million, for registering the vaccine with the FDA, and 12 years of exclusive rights in the test data. The appeal argued that Sanofi does not need an exclusive right to an Army patent as an incentive.

Second, if the Army grants an exclusive patent license Sanofi, a separate provision in the Bayh-Dole Act [35 U.S.C. § 209(a)(2)] requires the Army to limit the scope of rights, to only those that are “reasonable and necessary” for the development, and also to ensure the patent holder has a “commitment to achieve practical application of the invention.” The Bayh-Dole Act defines “practical application” as an obligation to make the benefits of the invention “available to the public on reasonable terms.” To this end, we have asked the Army to consider several different provisions, any of which would be an improvement over nothing on pricing, which is the Army’s preference. One proposal highlighted in the appeal, to illustrate the Army’s has the capacity to address pricing, is this provision:

“The [agency] will normally expect the licensee to make products available to the public in the United States at prices no higher than the median price charged in the seven countries with the largest GDP, that have per capita incomes of at least half that of the United States.”

The Appeal cites a dramatic case where Sanofi charged U.S. residents 4 to 8 times the prices charged in other high income industrialized countries for its MS drug Aubagio, and a case where the government fined Sanofi $20 million for defrauding the Department of Veterans Affairs.

The appeal also pointed out that the Army can defer decisions on the exclusive license until data emerges from the clinical trials that the Army and BARDA are funding, noting that as the vaccine is seen as more likely to be commercially important, government leverage on pricing will be greater.

The appeal also cited an May 10, 2017 letter from John Bel Edwards, the Governor of Louisiana, criticizing the exclusive license and the failure to address pricing issues.

Doctors Without Borders filed a separate appeal, available here .

https://www.doctorswithoutborders.org/sites/usa/files/appeal_dod_zika_vaccine_may_19.pdf

KEI, MSF, and other parties objecting to the exclusive license are asking the Trump Administration to take another look at the license before they give a French company a legal monopoly that will prevent any other firm from manufacturing and selling the vaccine.

Additional information is available at /zika and in chronological order at /zika-timline.

Statement of Andrew Goldman (andrew.goldman@keionline.org), KEI Counsel for Policy and Legal Affairs:

“The Army’s decision to continue onward with the proposed exclusive license without any guarantees regarding reasonable pricing is neither legal nor wise. The law prohibits the grant of an exclusive license for a federally-funded invention where it is not a reasonable and necessary incentive to bring it to market. In this case, both the early and late stage R&D is going to be paid for by U.S. taxpayer dollars, and Sanofi stands to receive a priority review voucher worth more than $100 million by registering the drug for sale.”

Statement of James Love, (james.love@keionline.org), Director of KEI:

“The Zika license is an astounding example of government responding to lobbyists, and a willingness to ignore the public’s concerns about high prices. But the Trump Administration could look at this as an opportunity, to break with the past, and put the U.S. taxpayers and patients first. This appears to be the first chance that President Trump has to deal with pricing of drugs and vaccines, and he needs to set the right tone and show he is more concerned about US residents than a French vaccine manufacturer that is getting paid to put its name on the Army’s vaccine.”

Excerpts from the May 10, 2017 letter from Governor John Bel Edwards

“No one should have to worry about their child being born with microcephaly or other birth defects, and certainly no one should have to face that frightening prospect simply because the vaccine is unaffordable. Louisiana taxpayers have already paid once for this invention, and it is reasonable to expect that the Department of Defense at minimum ensure that our residents pay reasonable prices on the other end.”

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