Hungarian compulsory license for remdesivir raises a stir with BIO, PhRMA and the US Chamber of Commerce

Whilst TRIPS Council deliberations in 2020 witnessed some lively deliberations on the nature of legislative amendments to Hungary’ special legal order (State of Danger) to enable the provision of a “compulsory licence regime for public health purposes”, Hungary’s recent decision to issue compulsory license for the local manufacture of Gilead’s drug, remdesivir, for the treatment of COVID-19, seems to have escaped the gaze of many trade and public health experts, including at the World Trade Organization (WTO) and at the World Intellectual Property Organization (WIPO).

However, in submissions to the United States Trade Representative’s (USTR) Special 301 Review for 2021, the Biotechnology Innovation Organization (BIO), Pharmaceutical Research and Manufacturers of America (PhRMA) and the US Chamber of Commerce flagged Hungary’s compulsory license as unnecessary and unwarranted.

In its Special 301 submission, BIO expressed the following concerns:

BIO and its members are also extremely concerned about emergency regulations introduced in several countries that call for the unilateral use of compulsory licenses for COVID products or those implemented under vague national security grounds. For instance, the Hungarian government, peremptorily and without consultation with the patentee, used its compulsory licensing mechanism in respect of remdesivir, a treatment for COVID-19, while simultaneously obtaining the medicine via the EU Joint Procurement Agreement negotiated with the patent holder. The Hungarian government at no time indicated that this supply did not meet national needs. This action runs counter to the EC’s IP Action Plan, which also states that CLs can only “be used as a means of last resort and a safety net, when all other efforts to make IP available have failed.”

In the US Chamber’s submission to USTR’s Special 301 Review for 2021, the Chamber wrote:

For instance, the Hungarian government used its compulsory licensing mechanism for remdesivir, a treatment for COVID-19, following a request by a local company. This is despite the fact that Hungary had already been procuring and using the medicine through a Joint Procurement Agreement negotiated between the European Union and the patentee. The Hungarian government did not engage with the patent holder nor indicated that this supply did not meet national needs. This action runs counter to Hungary’s commitments, as well as the European Commission’s position, to use compulsory licenses as a means of last resort and a safety net, when all other efforts to make IP available have failed.

Singing from the same hymn sheet, PhRMA upbraided Hungary for its compulsory license on remdesivir.

In late 2020, the Hungarian Government granted a compulsory license for remdesivir, a COVID-19 treatment conditionally approved by the EMA, citing newly promulgated emergency Law Decrees 283/2020 and 478/2020. This action is unnecessary as Hungary already has full access to Veklury (remdesivir) via the EC’s Joint Procurement Agreement (JPA) with the patent holder, and continues to use it to meet its national needs. Throughout this process, the Hungarian Government did not contact the patentee to suggest that a CL was needed, and the CL was granted with only a day’s notice to the patentee. PhRMA and its members believe that this CL is unnecessary and unwarranted, and runs counter to the EC’s IP Action Plan, which states that CLs can only “be used as a means of last resort and a safety net, when all other efforts to make IP available have failed.

While Hungary’s compulsory license by stealth appears to not have drawn the attention of international media, in October 2020, Reuters did report on the local production of remdesivir (Hungary’s Richter has manufactured Remdesivir for 3,000 COVID-19 patients, 7 October 2020).

Reuters reported the following:

    Beke said the Hungarian government, which owns a 5.25% stake in Richter, approached the company during the first wave of the pandemic to explore whether Remdesivir could be manufactured locally.

    “We have managed to solve the synthesis of the active substance within five months,” Beke said. “The request came from the government and they have also financed the development.”

As the TRIPS Council convenes on 10 March 2021 to 11 March 2021, one can expect European Union trade negotiators to field questions on Hungary’s compulsory license by stealth.