Saturday, 02 June 2007
The Essential Medical Inventions Licensing Agency
Working Plan, June 1, 2007
Introduction
The 2006 report by the WHO Commission on Intellectual Property Rights, Innovation and Public Health (CIPIH) recommended voluntary and non-voluntary licensing of patents to generic drug manufacturers, in order to ensure that a competitive and more affordable market exists for medical technologies. One instrument to facilitate such licensing is the collective management of intellectual property rights, through the creation of patent pools.
The Essential Medical Inventions Licensing Agency (EMILA) will be established as a nonprofit organization that manages patent pools or licensing programs that increase access to patented medical products and vaccines in developing countries. The fundamental idea behind EMILA is to provide a professional platform to facilitate collective management of intellectual property rights and more efficient, reasonable and non-discriminatory licensing strategies to enable generic competition to supply developing country markets with more affordable medical technologies.
EMILA Mission
The mission of the EMILA is to support the creation of one or more patent pools that facilitate the competitive manufacture and sale of medical products and vaccines.
Each patent pool will negotiate licenses to patents and other intellectual property rights necessary to manufacture, register, sell, import, and export medical technologies in the developing world. This will involve obtaining “in-licenses” from patent holders, and granting “out-licenses” to entities that use the patents and other intellectual property rights to manufacture or sell products.
The pools will:
a) Facilitate professional management of the negotiation and administration of licensing arrangements,
b) Reduce licensing transaction costs, through a one-stop licensing strategy that enables generic manufacturers to acquire essential rights in medical technologies from multiple holders in a single transaction as an alternative to negotiating separate agreements,
c) Establish global norms for licensing that protect individual countries, government agencies and generic manufacturers from external pressures,
d) Develop best practices for licensing, including transparency, adequate remuneration, non-discriminatory open licensing, and requirements that the licensees address concerns regarding product quality and fiscal accountability,
e) Provide a predictable and fair system for remuneration to patent holders, respecting national laws and trade agreements on intellectual property rights,
f) Facilitate technology transfer to developing countries and scale up developing countries manufacturing and distribution capacities,
g) Ensure sufficient economies of scale,
h) Provide for the management of multiple owners and stacking of royalties, clearing blocking patents when patent thicket situations exist, and
i) Provide a platform for collective management of non-patented technology and know-how.
EMILA Description
EMILA will be a nonprofit Swiss organization. It will be funded initially by donations and grants, but will seek to develop a sustainable source of funding from fees drawn from licensing royalties.
EMILA will have members representing a wide constituency from around the globe. These members will elect an executive board that will act as a board of directors.
Management will comprise an Executive Director, responsible for the day-to-day operations of the EMILA, and the executive board. The Executive Director and the executive board will determine staffing requirements in order to carry out the EMILA mission.
EMILA will have several expert committees that will assist the Executive Director and the executive board, including an EMILA Scientific Advisory Board (SAB).
EMILA Strategy
EMILA will assist various national, regional or multilateral third parties (partners) to create and manage patent pools.
The partners will determine the policy objectives for each pool, including, for example, the geographic coverage, targeted diseases or conditions, and the specific licensing terms for patent holders and patent users.
The pools may be national, regional or multilateral, and they may (or may not) be limited to specific diseases or conditions, depending upon the objectives of the partners.
Each pool will be operated as an independent licensing administrator. EMILA itself will not be a user of the patents under license, except when EMILA decides to be responsible for product registrations in a target market.
EMILA will appoint a Scientific Advisory Board (SAB) that will provide advice on medical technologies for which licenses should be sought, will determine the essentiality of patents to be included in the pool, and will provide advice on royalty allocations in cases involving multiple patents in a single product or combination therapy.
On behalf of such pools, EMILA will seek voluntary licenses from owners of relevant patents and other intellectual property rights. To the maximum extent practicable, EMILA will strive to standardize licensing terms for each pool, in order to facilitate sub-licensing. Ideally, EMILA licensees would execute a single standard contract providing access to the pooled patents. In practice, individual licenses will likely be necessary for some products.
EMILA will execute Memoranda of Understanding (MOU) with governments, donors and key procurement bodies (e.g., PEPFAR, Global Fund, UNITAID, the Gates and Clinton Foundations) in order to generate support for a patent pool, as well as to facilitate cooperation between the numerous interested parties.
Once the patented technology is licensed to EMILA, it will be licensed out to generic manufacturers or distributors on an open and non-discriminatory basis, subject to standards, such as ensuring quality and safety.
EMILA would collect royalties from generic manufacturers and pay royalties to patent owners on a pre-determined transparent and predictable formula basis that takes into account the actual use of each patent in the manufacture of products by patent pool licensees.
If EMILA fails to secure a voluntary license for a desired medical technology, EMILA will consider cooperating with governments and third parties who seek compulsory licenses from target market countries in which patents are in force.
EMILA Model License Terms and Conditions
After consultations with industry, universities, health activists, academics and technology licensing experts,[1] Knowledge Ecology International (KEI) has drafted three model agreements:
- Between patent holders and EMILA (patent in-license agreement),
- Between EMILA and generic manufacturers/distributors (patent out-license agreement), and
- An authorization to reference or rely upon health registration data.
These draft agreements are attached as Appendices A, B and C.
Each EMILA-managed pool will modify the draft agreements in order to address the policy objectives of the partner organization.
The In-License
The model standardized voluntary patent in-license agreement for licensing of medical products and vaccines to EMILA by patent owners is attached as Appendix A. It provides for these terms:
- A nonexclusive, worldwide royalty-bearing license for the sole purpose of non-exclusively sublicensing patents essential to the manufacture, registration, exportation, importation, distribution, offering for sale, sale, and use of the product in identified developing world countries;
- Patent holders retain nonexclusive rights in all countries covered by the license, and exclusive rights throughout the remainder of the world;
- Licensees will grant back equivalent licenses to the EMILA on any patentable improvements made to products, and licensors will have rights of first refusal to licenses to patents on such improvements in all high-income countries;
- Licensees shall pay to the EMILA a royalty based on sales of products in each country covered by the license, but no royalty shall be paid if the product is neither manufactured nor sold in a country in which patents covering the product are in force; and
- The royalty will be calculated using the Tiered Royalty Method;
The Out-License
The model standardized voluntary patent out-license for licensing of medical products and vaccines to third parties by EMILA is attached as Appendix B. It provides Non-Discriminatory access to the pooled patents to qualified companies. Significant terms are:
- EMILA or authorized third parties will be responsible for product registrations in all target markets; and
- licensee manufacturers will be required to be certified under the WHO’s Prequalification of Medicines program or by other national regulatory authorities that enforce Good Manufacturing Practices of equal or higher stringency acceptable to licensor; and
- licensees will take reasonable steps to distinguish the licensed product, including not using licensor’s proprietary drug names or marks; and
- licensees will be required to procure product liability insurance protecting the licensor and EMILA from potential lawsuits arising from their licensed activities.
- licensees will provide for cross-licensing of new patents that involve improvements on licensed products.
- Licensees will provide a Development Plan and will annually report on its implementation.
The Test Data Authorization
A standardized model authorization to reference or reply upon health registration data when needed for registration of medical products and vaccines is attached as Appendix C.
Antitrust Review
Patent pools and other intellectual property licensing strategies can raise antitrust issues. The EMILA model licenses have been submitted to the U.S. Federal Trade Commission (FTC) for review. A similar review will be carried out in other jurisdictions, as needed.
EMILA Benefits
The benefits of EMILA to various parties can be summarized as follows:
1.Patients.
a. Lower prices, through greater competition and larger economies of scale,
b. Enhanced access to follow-on innovations, such as new Fixed Dose Combinations or delivery mechanisms.
c. Ensure that licenses are tied to appropriate standards for product quality.
2) Patent owners:
a. Ensure respect for national patent laws and trade agreements on intellectual property rights,
b. Provide a predictable, transparent and fair system for remuneration,
c. Facilitate cross licensing of new patents that involve improvements on licensed products.
d. Serve a more efficient strategy to license out their patented technologies,
3) Donors:
a. Ensure that the “solution” to the patent problem is focused on the rule of law,
b. Obtain lower prices through open competition,
c. For regional or multilateral pools, aggregate markets to ensure sufficient economies of scale
4) Generic manufacturers:
a. EMILA will facilitate access to patented technologies on a non discriminatory manner,
b. Lower costs of obtaining licenses,
c. For regional or multilateral pools, aggregate markets to ensure sufficient economies of scale
5) Governments:
a. Provide technical assistance on management of licenses and access to patented technologies,
b. For regional or multilateral pools, the pool will be perceived as the norm setting body, insulating the national government from political pressure and antagonistic reporting in the financial press.
6) Civil Society:
a. The pools provide a more effective opportunity to lobby for voluntary licenses to provide access to patented medical technologies in the developing world and to encourage socially responsible behavior.
Possible Partners
EMILA will approach several potential partners who have interest in establishing pools. This will include discussions with U.N. Agencies such as WHO, UNAIDS, UNFPA and UNDP, donors such as the Global Fund, PEPFAR, UNITAID and the World Bank, and regional bodies in Africa, Asia and Latin America, as well as groups concerned about specific diseases or conditions, such as AIDS, TB, or HPV.
EMILA will offer a range of possible services or partnerships, including, for example, the design, set-up and management of a pool, or any lesser combination, depending upon the partner’s interest in undertaking or contracting out tasks.
Possible Relationship Between EMILA and Prize Type Rewards for Innovation
An optional feature of EMILA that could encourage voluntary licensing of patents is the possibility that licensing patents to a pool would be a requirement to qualify for innovation prizes.
The possibility of rewarding innovators with prizes or monetary rewards has been advocated by several economists and health experts and it is currently being considered in different forums, including the WHO Intergovernmental Working Group on Intellectual Property Rights, Innovation and Public Health (IGWG).
Footnote:
[1] Persons consulted in the drafting of the model EMILA licenses included: Amy Kapczynski, Brook Baker (Northeastern University), Eric Easom, Frederick M. Abbott (Florida State University), James Love (KEI), John Frase (Florida State University/ 2007 Immediate Past-President, AUTM), Jon Merz (University of Pennsylvania), Michelle Childs (KEI), Judit Rius (KEI), Mark Rohrbaugh (NIH), Michael Whitham and Bob Cook (Whitham, Curtis, Christofferson & Cook), Polly Murphy (Scripps), Rob Weisman (Essential Action), Sandra Shotwell (Alta Biomedical), plus several anonymous persons.