(For more resources, please see our page on molnupiravir.)
The Medicines Patent Pool (MPP) and Merck Sharp & Dohme (“MSD” or “Merck”) have announced a voluntary license for the generic manufacture and sale of molnupiravir. A joint press release from the MPP and Merck is available here: https://medicinespatentpool.org/news-publications-post/mpp-msd-new-licence-announcement-molnupiravir/
The 69-page license is public, without redactions, and expands the number of countries where molnupiravir can be manufactured.
The following is a discussion of key features of the agreement, followed by a KEI statement.
The licensed geographic area covers 105 countries, set out in Exhibit B – Territory. KEI has compiled statistics on the population and incomes of the licensed territory here: https://www.keionline.org/36838. The MPP describes the territory as “all of Sub-Saharan Africa, all low-income countries, most lower-middle income countries and 20 additional upper-middle income countries.”
Among the 105 countries in the territory, only South Africa is limited to public sector sales.
Among developing country regions, the coverage of the license is weakest in Latin America and the Caribbean, where 18 percent of the population is in the licensed area. Some countries, like Brazil however, are in separate negotiations with Merck.
The agreement includes a license to use rights in inventions (patents), regulatory test data and know-how, all limited to the treatment of COVID-19.
One of the more challenging areas in the negotiations concerned the sale of products outside of the licensed area by companies signing a license. How this impacts generic manufacturers will depend on the use of MSD know-how.
Regarding patented inventions, manufacturers can sell anywhere if “such activities would not (1) infringe the Patents and/or any other intellectual property rights; and/or (2) misappropriate MSD Know-How.” (Section 2.7).
Some manufacturers will use MSD know-how, but others will not.
The license for molnupiravir requires generic manufacturers to grant back to MSD and the MPP royalty free sub-licenses to use improvements (Section 4.2 – improvements). The text on improvements includes this text:
(a) MPP shall require Sublicensees to disclose promptly to MSD in English, without charge, any Improvements. As to any such Improvements (including any patents or patent applications that may be filed by Sublicensee relating to such Improvements), MPP shall require that Sublicensees grant to MSD, its Affiliates, and MPP a world-wide, royalty-free, non-exclusive, sublicensable license to any Improvements (“Improvement License”) for any and all purposes in the Field, including the rights to make, have made, use, and/or sell the Substance and/or the Product or any other pharmaceutical product using the Substance. . . .
(b) Further to Section 4.2 (a), MSD or its Affiliates shall have the right to sublicense the Improvement License to a Third Party (“Third-Party Sublicense”) as follows and shall negotiate and agree with Sublicensee in good faith a royalty and development fee to be paid to the Sublicensee . . .
(c) MPP shall further require that Sublicensees grant to MSD and its Affiliates an option and right of first refusal to obtain a sole, sublicensable, world-wide, royalty-bearing license to the Improvements in the Field, for any use outside the Field (“Out-of-Field License”) . . .
The termination clause in the license includes controversial and complex language on terminating the agreement if the MPP challenges or supports patent challenges. However, since the MPP does not do or support patent oppositions, and has stated that it will not terminate licenses to companies that do, the clause does not prevent parties that sign the MPP licenses from doing patent challenges.
Section 6 of the license on term and termination gives MSD the right to terminate the agreement with the MPP if the MPP or any affiliate or sublicensee challenges or supports the challenge of the validity, enforceability, or scope of the licensed patents:
6.2 This Agreement may be terminated by MSD upon written notice to MPP with
immediate effect in the event of any of the following:
(g) if MPP, its subsidiaries, Affiliates or Sublicensee acting at the instance or with the support of MPP or its Affiliates, challenges the validity, enforceability or scope of any claim within the Patent in a court or other governmental agency of competent jurisdiction, including in a reexamination or opposition proceeding, or as a defense to enforcement of
this Agreement or the terms of this Agreement, including applicable payment obligations. The Parties understand that this right of termination is required pursuant to MSD’s upstream contractual obligations. To the extent that this Section 6.2(g) is deemed invalid or unenforceable in any jurisdiction, this Section 6.2(g) is intended to be severable without
affecting the validity of the rest of this Agreement. [emphasis added]
Specifically, Section 6.2 of the agreement permits Merck to terminate the agreement with the MPP if the MPP or its affiliates challenge or support the challenge of patents. In this regard, the MPP has issued a statement that it does not engage in or support challenges to patents or patent applications.
Section 10.3 of the license gives the MPP the right to terminate sublicenses to generic producers if they challenge the patents or the patent applications, but the MPP has issued a statement from the board that they will not exercise that right.
10.3 MPP Right to Terminate. MPP shall have the right to terminate this Agreement, either in whole or in relation to a particular Patent, with immediate effect by notice in writing to Licensee if:
(g) if Licensee, its subsidiaries or Affiliates challenges the validity, enforceability or scope of any claim within the Patent in a court or other governmental agency of competent jurisdiction, including in a re-examination or opposition proceeding, or as a defense to enforcement of this Agreement or the terms of this Agreement, including applicable payment obligations. The Parties understand that this right of termination is required pursuant to MSD’s upstream contractual obligations. To the extent that this Section 10.3(g) is deemed invalid or unenforceable in any jurisdiction, this Section 10.3(g) is intended to be severable without affecting the validity of the rest of this Agreement.
The Medicines Patent Pool Expert Advisory Group (EAG) issued a five page report on the proposed license agreement with MSD on molnupiravir. With respect to the termination for challenge provisions, the EAG report states:
For the first time, an MPP licence includes a termination-for-challenge, which provides
- MSD the right to terminate the head licence in the event that MPP or any of the sublicencees with the support of MPP challenges any of the licensed patents, and
- MPP the right (but not the obligation) to terminate a sublicence in the event that a sublicensee challenges any of the licensed patents.
In principle, the EAG considers termination‐for‐challenge provisions as incompatible with the core MPP principles as mentioned above. However, the way in which the provision was drafted allows the EAG to recommend the agreement for adoption:
First, in the Head licence, MSD is only given the right to terminate if MPP itself challenges any of the licensed patents or actively supports its licensees in challenging the patents – something that MPP does not do.
Second, in the Form Sublicence, MPP has the right, but not the obligation, to terminate the Sublicence in the event that a Sublicensee challenges any of the licensed patents.
The EAG, however, strongly recommends that the MPP Board clearly state the inclusion of termination-for-challenge clauses are not compatible with MPP core principles and that the MPP does not intend to exercise this right. The EAG further understands that this provision was included not at MSD’s insistence, but of MSD”s upstream licensors (DRIVE, a fully-owned subsidiary of Emory University, and Ridgeback). The EAG thus recommends that after execution of the agreement MPP continue to work with MSD and its upstream licensors to delete these provisions.
In addition, the MPP’s Board issued a resolution which addressed the termination-for-challenge clauses:
The Board agrees with the EAG’s assessment that the inclusion of a termination-for-challenge provision runs contrary to MPP’s core principles but agrees with the EAG’s interpretation that MPP has the right, but not the obligation to terminate a sublicence in the event of a challenge. As such, the Board hereby states that the MPP has no intention to exercise this right.
The license requires generic manufacturers to meet WHO Prequalification, stringent regulatory authority (SRA) standards, or emergency use authorizations by an SRA or WHO PQ, and waives any applicable data exclusivity in the Territory and sub-licensees cannot seek such exclusivity either.
Comment of KEI Director James Love on the MPP/Merck license
“The license between the MPP and Merck for the manufacture and sale of molnupiravir is the best agreement any company has made for licensing its intellectual property during the COVID-19 pandemic.
Transparency: The 69-page license agreement is fully transparent, unlike the agreements with CEPI, COVAX, Operation Warp Speed, the Gates Foundation, the Wellcome Trust, other companies or most governments.
Geographic Area: The licensed area is large enough (more than half the world’s population) to induce efficient generic entry and economies of scale. The license makes it possible for any generic manufacturer located anywhere the world to supply molnupiravir in the licensed territory, and provides a pathway for supplying to countries outside the licensed territory, when patents are not in place or subject to compulsory licenses.
Emory and Ridgeback reportedly pushed for language for termination of the agreement if the MPP or its sub-licensees supported patent challenges, but the negotiated text does not require the MPP to terminate licenses and the MPP has never engaged in patent challenges.
The royalty-free nature of the agreement during the emergency was not necessary, since a single digit royalty on generic sales is not a significant access barrier, but does illustrate the good will of Merck and the patent holders.
Given the objectives of scaling up production of molnupiravir at the lowest prices for the lowest income countries, the agreement is an impressive achievement for the Medicines Patent Pool and Merck deserves credit for being the first company to make a deal with the Medicines Patent Pool.”