On February 25, 2021, the intellectual property office in Ecuador granted a compulsory license over a patent directed to the raltegravir active ingredient. Raltegravir, commonly marketed under the brand name Isentress, is used to treat HIV infections. The licensed patent is PI-2016-2142, assigned to MSD Italia s.r.l. The compulsory license was granted for non-commercial public use to import the active ingredient from manufacturers in India.
This request was filed on November 5, 2020, by SOULPHARMA. The license extends to the remaining life of the patent, which expires on October 21, 2022. Daniel Díaz Reza, an intellectual property lawyer based in Ecuador, represented SOULPHARMA in this case.
One of the key arguments made by the patent holder is that SOULPHARMA lacked an authorization from the health authorities to market raltegravir in Ecuador. SOULPHARMA argued that the status of the sanitary authorizations is not among the grounds under which a compulsory license request should be decided. The intellectual property office sided with SOULPHARMA, explaining that whether the company had an authorization to market the drug in the country was irrelevant to decide a compulsory license request.
[…] Public agencies are governed by the principle of legality and have to act based on the scope of their jurisdictions. It would not be appropriate if the [health regulatory agency] ARCSA require that an applicant demonstrate ownership or license to use a patent, whether voluntary or compulsory, in order to grant a sanitary authorization; therefore, it is not appropriate for [the intellectual property office] SENADI to require evidence of a granted sanitary authorization in order to issue a compulsory license […]
To determine the reasonable royalties, the intellectual property office took into consideration the price of a raltegravir tablet in Italy, the dollar amount to be paid for a royalty base of 5% over the price of each tablet in Italy, and the average income in Ecuador according to the most recent World Bank GDP per capita indicator. Based on those factors, the intellectual property office determined a reasonable royalty of 0.17 USD per tablet to be paid annually by SOULPHARMA to MSD.
Raltegravir is considered a “priority for public health,” according to exhibits filed during the proceedings. The license allows SOULPHARMA to market this drug in procurement processes carried out by any of the entities of the public health sector in Ecuador.
Commentary from Daniel Díaz Reza, the lawyer that represented SOULPHARMA in this case
“Access to medicines that guarantee the full right to health has been a constant problem in the Republic of Ecuador. This aspect becomes more complex when it comes to people suffering from a catastrophic disease, such as HIV. This resolution of compulsory license over HIV drug is just a minimum tool to get a balance between health right and intellectual property rights. License summary: i) grants the power to import the active principle from the Republic of India, for non-commercial public use and exclusively for supplying the domestic market; ii) the term of the compulsory license is until October 21, 2022; and, iii) this compulsory license will not be exclusive; iv) the economic compensation to the patent holder corresponds to an annual royalty payment corresponding to 0.17 ctvs of the United States Dollar for each tablet.”
Commentary from Hernán Núñez Rocha, former director of the intellectual property office in Ecuador
“This compulsory license illustrates the importance of abandoning the dogma of intellectual property protectionism for a regulation that recognizes rights and exceptions as two sides of the same coin. In fact, an objective understanding of the intellectual property system, without conflicts of interest, could allow Ecuador to overcome the health crisis in which it has been emerged since the appearance of the coronavirus. This can be achieved if the flexibilities of the Código Ingenios, which was conceived as a tool for development, are used in their full extent.”
Note: the Royalty methodology is the WHO/UNDP Tiered Royalty Method. See Section 8.3.4, Remuneration Guidelines for Non-Voluntary Use of a Patent on Medical Technologies, WHO/TCM/2005.1 (link)