$1.8 Billion Sanofi Vaccine Contract Contains International Reference Pricing Clause, Preserves Standard IP and Data Rights

The contract awarding Sanofi Pasteur (“Sanofi”) 1.8 billion U.S. taxpayers’ dollars for the development and manufacture of a COVID-19 vaccine was posted in the Department of Health and Human Services (HHS) Electronic Reading Room on November 30, 2020. Overall, the agreement is more favorable to the public in terms of intellectual property (IP) and data than the majority of U.S. government (USG) COVID-19 contracts available for inspection in the public domain. Unlike the majority of those contracts, the Sanofi agreement does not appear to weaken standard, legally prescribed government rights in IP and data. The contract also includes an international referencing pricing clause and provides the government a broad license to access or have a third party access the IP, data, know-how, and FDA approval or regulatory filings needed to manufacture the vaccine in certain instances in which Sanofi fails to ensure adequate supply.

Below is a description of some of the important features of the agreement.

Scope of Work

The scope of work under the contract includes Phase III clinical trials (in adults and pediatric populations), scaling up manufacture, and production of 100 million doses of a recombinant COVID-19 vaccine developed by Sanofi and GlaxoSmithKline (GSK). 

The contract notes that certain “activities [related to the Sanofi-GSK vaccine candidate] are performed under an existing HHS contract [.]” [Page 5]. The “existing HHS contract” appears to be a $30 million agreement entered into in April of 2020 by HHS and Protein Sciences Corporation, a subsidiary of Sanofi, for a Phase 1 clinical trial of the vaccine and related manufacturing activities. 

The fact that the contract covers research and development as well as manufacture adds to the importance of the government’s rights in IP and data.


Section 5.1, Most Favored Nation Clause states that Sanofi will not sell the vaccine to any member of the G7 (Canada, France, Germany, Italy, Japan, and the United Kingdom) or Switzerland at a price lower than what the USG paid in this contract. It further specifies that if Sanofi sells the vaccine to those countries at a lower price, it must offer the lower price to the USG. In that case, Sanofi must also provide the USG a credit toward future payments equal to the amount that the USG overpaid, as compared to the price charged by Sanofi in the G7 countries or Switzerland. 

This clause is similar to a provision that KEI urged the National Institutes of Health (NIH) to include in more than 50 NIH exclusive patent licenses from 2015 to present. It also resembles the standard KEI has advocated for the NIH to use as a benchmark for determining unreasonable pricing with respect to two march-in petitions. Additionally, the Senate Armed Services Committee included similar language as a directive in the Committee Report accompanying S. 1519, the National Defense Authorization Act for Fiscal Year 2018 (S. Rept. 115-125 at page 173). 

Also concerning pricing, the contract states that it is not a “definitized” project agreement, and that if the parties fail to finalize the agreement by certain deadlines, the USG has the unilateral authority to determine a fair and reasonable price for definitization of the contract. 

Intellectual Property 

While the contract does not take advantage of legal options to strengthen the government’s rights in intellectual property developed under the agreement, it generally adheres to the normal allocation of rights in IP between the government and contractors (unlike many OWS contracts). 

As a result of the Bayh-Dole Act, when the government enters into a “funding agreement” to support research and development (R&D), the contractor may retain a monopoly over any invention conceived with government funds, allowing the contractor to exclude others from practicing the invention. Importantly, however, the government retains certain reserved rights, including a royalty-free license in the invention and march-in rights, i.e., the right to end the monopoly, in certain instances prescribed by law. The government may alter this balance and exert greater control over “subject inventions” by issuing a declaration of exceptional circumstances in the funding agreement stating that exceptional circumstances justify the government exerting greater control over IP developed under the contract. 

Agencies such as HHS and the Department of Defense (DOD) also modify the balance of rights under the Bayh-Dole Act by using “Other Transactions Authority”–an authority granted by Congress to 11 federal agencies including HHS and DOD to enter into transactions “other than” standard government contracts. Rather than broadening the government’s rights in IP, however, agencies including HHS and DOD  use Other Transactions Authority to negotiate more commercially friendly IP provisions. 

The Sanofi contract does not make a determination of exceptional circumstances, but it does it not use Other Transactions Authority to weaken standard rights under the Bayh-Dole Act either. Rather, it takes the middle road and tracks the government’s rights under Bayh-Dole. At page 28, Section 7.1, Patent Rights, the contract states that IP terms are governed by OTA No. WI5QKN-16-9-1002, and include, but are not limited to, march-in rights and the government’s license to practice the invention (but the words “royalty-free” do not appear). 

This stands in contrast with the majority of USG COVID-19 contracts available for inspection in the public domain, which weaken or eliminate Bayh-Dole public interest safeguards. The fact that Sanofi (and Moderna) would accept Bayh-Dole Act rights in IP developed under their COVID-19 contracts with the USG strongly calls into question why the USG would accept anything less from contractors such a Pfizer or Regeneron. In fact, with the massive subsidies on the table, contractors would have agreed to develop vaccines and treatments with a declaration of exception circumstances in funding agreements. 

Data Rights

The contract generally appears to preserve standard government rights in data delivered under the agreement. 

Under a standard contract with a civilian agency, the government obtains unlimited rights in data delivered under the agreement, regardless of how their development was funded. Under a contract with DOD, the government obtains unlimited rights in data developed exclusively with government funds. Unlimited rights in data, true to their name, allow the government to do whatever it wants with the data, including authorizing a competitor to use the data for commercial purposes. Regarding COVID-19 contracts, unlimited rights would allow the government to authorize other qualified manufacturers to use the data to manufacture any vaccine or treatment deemed safe and effective and to help ensure widespread and equitable access. Given the complexity of manufacturing COVID-19 vaccine candidates in particular, a lack of data or know-how may stand as the highest barrier to the manufacture of generic versions. 

The majority of the contracts available for inspection in the public domain weaken the government’s rights in data as compared with the rights prescribed by federal regulations. The Sanofi contract, in contrast, appears to preserve a strong set of rights for the government. It states at page 29:

2. Technical Data Rights:  Sanofi Pasteur grants the Government Unlimited Rights, as that term is defined DFARS 227.2013, in all Sanofi Pasteur data (excluding with respect to [redacted] data) that is delivered to the Government under this Project Agreement.

The unlimited rights in “all Sanofi Pasteur data” may be broader than standard government rights in data in DOD contracts, as the government obtains only government purpose or limited rights in data that were not funded exclusively by the government under DFARS § 252.227-7013.  However, with the exception to the government’s unlimited rights redacted, it is impossible to know for certain whether the government’s rights in data are appropriate. 

Page 21, Section 4.0 lists data deliverables, with a column for the classification of data rights obtained by the government. For the majority of deliverables, including “Clinical Trial Activities” and “Manufacturing Development Plan**”, the government obtains unlimited rights. 

Other Safeguards 

Section 8.0 of the contract, “Ensuring Sufficient Supply of the Product” [Page 31], states that the government obtains:

a. a writing evidencing a non-exclusive, nontransferable, irrevocable (except for cause), royalty-free paid-up license to practice or have practiced for or on behalf of the U.S. Government any Sanofi Background Patent, Copyright, other Sanofi Intellectual Property, Sanofi Know-How, Sanofi Technical Data rights necessary to manufacture or have manufactured the vaccine;
b. necessary FDA regulatory filings or authorizations owned or controlled by Sanofi related to this product vaccine and any confirmatory instrument pertaining thereto (excluding with respect to ( b) (4)); and
c. any outstanding Deliverables contemplated or materials purchased under this Project Agreement.

However, the license is limited to narrow circumstances involving purposeful failure to manufacture or sell the vaccine or bankrupcty filings (as opposed to mere inability to manufacture the vaccine as quickly as necessary to meet US or global needs).

While this license should not be encumbered by any limitations whatsoever, we appreciate its broad scope, permitting the government to use, or allow others to use, background IP, know-how, technical data, and FDA regulatory filings or authorizations needed to manufacture the vaccine. 


This contract appears to be less redacted than other USG COVID-19 contracts we have reviewed. By way of an example, most of the contracts reviewed by KEI redact the column listing the government’s rights in data deliverables, but those rights were unredacted in this document. 

Unfortunately, some of the redactions in the contract obscure important terms related to the government’s rights in the vaccine. For example, the exception to the government’s unlimited data rights is redacted. Also, Section 3.5.2, Technology Transfer, is almost entirely redacted, and the contract redacts the value of total costs of milestones such as clinical trials. With the stakes at hand, the need for full confidence in the vaccine, and the public’s massive investment, nothing in the contract should be redacted other than truly sensitive and irrelevant personal information such as social security numbers.