Coronavirus: What are the intellectual property implications for life sciences companies?

Coronavirus: What are the intellectual property implications for life sciences companies?

 

Authors: Chris Boyle, Bethany Wise and Maria Isabel Manley of Sidley Austin LLP

 

We are facing a new life-threatening virus, rapidly spreading on a global scale, for which there is currently no effective treatment or vaccine. Thankfully, this crisis has been met by an explosion of innovation and new product development, supported by incredible generosity from pharmaceutical and medical device companies that are pooling their resources, making accessible their relevant intellectual property (IP) and supplying products for free or at cost. While the unprecedented sharing of IP is highly commendable to combat the pandemic, companies should be mindful of the manner in which their IP is protected and shared to avoid potentially adverse consequences to their IP rights and sustainable product development in the longer term.

Companies will also need to be aware that some governments are considering extreme measures such as the use of compulsory licensing to allow third parties to use new technologies while avoiding patent infringement. This is concerning because the erosion of IP protection risks undermining future research and development (R&D) since effective IP protection is essential to secure high-risk life sciences investment. Governments must therefore ensure that any extraordinary measures implemented in response to the pandemic do not compromise the development of future medical technologies.

 

Legal framework

Companies typically rely on patents for their core IP protection for medicines and medical devices. However, legislators have found patent protection to be insufficient to incentivise the development of medicines for unmet patient needs, necessitating the creation of additional regulatory IP rights. In the EU, these rights include supplementary protection certificates (to partially compensate patentees for the erosion of their patent protection due to the lengthy regulatory approval process), regulatory data protection and marketing protection (to protect the scientific data submitted with marketing authorisations for medicines and to support investments in medicines), orphan market exclusivity (to incentivise the development of drugs for rare diseases) and paediatric rewards (to stimulate and reward for conducting testing in the paediatric population). Medical devices cannot benefit from these regulatory IP rights, but they may additionally benefit from other forms of IP such as patent, copyright and design rights.

Exceptions to patent protection have been built into legislative frameworks for use in cases of national emergency, such as the compulsory licensing of patents in certain circumstances or the ‘Crown use’ exception in the UK. Some countries, such as the UK, have introduced further protective measures for third parties that are looking to rely on coronavirus (COVID-19)-related IP, for example by indemnifying them against third-party claims for patent infringement should equipment made in response to the Ventilator Challenge infringe third-party IP rights.

Faced with a significant global shortage of essential medicines, medical devices (in particular ventilators and incubators) and personal protective equipment, and the necessity to increase the production of those products exponentially, many life sciences companies are taking proactive measures to make their COVID-19-related IP available on a voluntary basis, mitigating against the need for governments to resort to exceptional measures to circumvent IP rights.

 

Voluntary licences

A number of pharmaceutical companies and medical device companies have already ‘donated’ IP by making the relevant information publicly available, or have offered voluntary licences, on a large scale. For example, Medtronic has publicly posted design specifications for its Puritan BennettTM560 (PB560) ventilator and Smiths Group has provided IP and advice in relation to its paraPAC Plus ventilator to the Ventilator Challenge UK.

We have seen a number of different approaches taken by these companies, ranging from individual company initiatives, to the co-ordinated ‘pledging’ of IP and the creation of broad IP pools. In practice, measures have also included announcements that patentees will not enforce related patent rights and will make available clinical trial data through non-exclusive voluntary licences, appropriate waivers or similar mechanisms. For example, Novartis will make IP from its COVID-19 clinical trials available through non-exclusive voluntary licences/waivers etc and has published a set of compounds from its libraries that it considers suitable for in vitro antiviral testing. AbbVie has announced that it will not defend its patent rights to its drug Kaletra and Gilead Sciences has asked the Food and Drug Administration in the US to rescind the orphan drug designation awarded for its drug remdesivir for the COVID-19 indication.

In some instances, time-limited licences have been granted which will be valid for a set period of years or until a specific event occurs such as the lifting of the World Health Organisation (WHO)’s public health emergency of international concern designation. Some licences have included terms requiring any subsequent modifications to the IP to also be made available under a licence on the same terms, so that new innovation continues to be passed forward.

Companies have also been careful to ensure that trade marks are not infringed and that adequate warnings restricting the use of the product to the COVID-19 pandemic have been included.

Innovators are also being encouraged to share their IP under the Open Covid Pledge, a scheme established by an international group of scientists and lawyers which provides a framework by which companies can freely licence their IP in order to support action against the pandemic. The pledgor will not assert any regulatory exclusivity against any entity for use of the licensed IP in accordance with the licence and will not seek injunctive or regulatory relief to prevent any entity from doing so.

Licensing pools such as the Medicines Patents Pool (MPP) have existed for some time to support low- and middle-income countries. MPP has now expanded its mandate, in collaboration with Unitaid, to include medicines and diagnostics for COVID-19 in their licensing pools. In addition, the President of Costa Rica called on WHO to create a pool of rights to tests, medicines and vaccines for COVID-19, with free access or licensing on reasonable and affordable terms for all countries. WHO endorsed this proposal and, together with Costa Rica, has launched the COVID-19 Technology Access Pool (C-TAP).

The MPP is already gathering patent knowledge for products being used in clinical trials and making it available on its patents and licences database, MedsPaL. Products already included in the database include: remdesivir, lopinavir/ritonavir, favipiravir, and two biologics: tocilizumab and sarilumab. In the UK, the Ventilator Challenge UK Consortium has been established to pool IP, technology, knowhow and resources to respond to shortages of ventilators.

Further, many companies participating in the COVID-19 Therapeutics Accelerator, backed by the Bill & Melinda Gates Foundation, have agreed to share their proprietary libraries of molecular compounds that already have some degree of safety and activity data to quickly screen them for potential use against COVID-19.

Industry participants who are generously sharing their IP should be mindful of the potential longer-term consequences to their IP after the crisis. For instance, future R&D of antiviral medications for non-COVID-19 indications may be undermined if the investments into this research cannot be sufficiently protected. This situation could arise, for example, if early access of the product leads to the erosion of IP regulatory protection or if overly broad waivers of IP rights have been granted. Companies should therefore carefully consider the scope of their IP licences and may wish to limit this collaboration to the period of the pandemic and specifically for COVID-19-related indications.

 

Compulsory licences 

In contrast to the voluntary contributions of IP as outlined above, compulsory licences are a mechanism by which a government, or a third party authorised by the government, can produce or import the subject matter of a patent without the authorisation of the patent owner. Compulsory licences are provided for by Article 31 of the World Trade Organisation (WTO)’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement). As a member of the WTO, the EU is party to the TRIPS Agreement.

A compulsory licence under Article 31 of the TRIPS Agreement may usually only be permitted, if, prior to such use, the proposed user has made efforts to obtain authorisation from the patent owner on reasonable commercial terms and conditions and that such efforts have not been successful within a reasonable period of time. However, this requirement may be waived ‘in the case of a national emergency or other circumstances of extreme urgency or in cases of public non-commercial use’.

Several countries around the world, including France, Germany, Canada and Chile, have passed new legislation to ensure that their governments have the power to implement compulsory licensing in the context of the COVID-19 outbreak. So far, Israel is the only country to actually grant a compulsory licence, for the importation of generic versions of Abbvie’s Kaletra (containing lopinavir and ritonavir). The World Intellectual Property Organisation (WIPO) has published a ‘COVID-19 IP Policy Tracker’ which records IP policy changes implemented by WIPO Member States in their response to the pandemic, including these legislative and regulatory measures, as well as voluntary co-operation within the scientific community as outlined above.

In the UK, as well as compulsory licensing, there is the possibility of the ‘Crown use’ of a patented invention under the Patents Act 1977 (PA 1977). Under this provision, the government, or a third party authorised by the government, may do certain acts in relation to a patented invention without the consent of the patent owner ‘for services of the Crown’. This provision is seldom used, but has been successfully invoked in the past for a company supplying medicine to the NHS and, in a case this year, by a mobile network provider that allowed emergency responders privileged access to mobile phone networks.

As of yet, governments aside from Israel have not felt the need to enforce compulsory licensing, given the proactively collaborative approach taken by life sciences companies in tackling the outbreak. However, should governments take this step, various issues arise.

 

Reimbursement

Article 31 of the TRIPS Agreement provides that patent owners should receive ‘adequate remuneration’ from the government should compulsory licensing be enforced. Further, the ‘Crown use’ provision in PA 1977 states that the patent owner must be paid ‘compensation’ if the exception is invoked. However, at present, it is not clear how adequate remuneration or compensation would or should be calculated. It is important that patent owners are sufficiently compensated for compulsory licensing in order not to undermine the innovation that will lead to new and effective vaccines and treatments for COVID-19. Indeed, it is not anticipated that companies will seek high prices for their COVID-19 products, but it is essential that measures are not taken to circumvent IP in such a way as to stifle further innovation.

 

Scope

A further problem is how far we should expect the scope of compulsory licensing to apply, particularly in relation to patents for medicines which already have multiple other indications (in addition to COVID-19), or if new (non-COVID-19) indications or formulations are developed in the future. In such circumstances, the consequences of making IP freely available could undermine the viability of active pharmaceutical ingredients (APIs) that have relevance outside the context of COVID-19. Indeed, many of the medicines that are currently undergoing clinical trials for treating COVID-19 were originally developed to treat other indications.

Another pertinent question is how long compulsory licensing measures might last. The WIPO has stated ‘The application of these provisions should be targeted and time-bound, in other words, related specifically to demonstrated IP barriers to access in the course of the COVID-19 pandemic and bearing in mind that, without innovation, there will be nothing to have access to’. Indeed, companies may gain greater control if they determine, and if necessary negotiate, the time period for licensing before compulsory licensing is imposed.

 

Efficacy

In any event, it is questionable whether compulsory licensing would actually be an effective solution where there is a lack of patent-protected medicines available. Commentators have noted that compulsory licensing may be ineffective due to the common practice of outsourcing the manufacture of APIs to other countries (eg India and China). The TRIPS Agreement requires that compulsory licences must be ‘predominantly for the supply of the domestic market of the Member authorising such use’. This creates a problem for the authorities in API-producing countries who may need to grant a compulsory licence that permits export to other countries. This may provide another reason why negotiated licensing agreements would be preferable to all parties.

 

Looking forwards

So far, life sciences companies have been proactive in making COVID-19-related products and IP readily accessible, and the indications are that other market access issues, such as pricing and reimbursement, will not act as barriers to rapid market access. Life sciences companies have demonstrated a sense of responsibility and co-operation in joining forces to tackle COVID-19. Indeed, some manufacturers have agreed to provide COVID-19 medicines either for free or at cost for the duration of the pandemic. To undermine the IP framework at this point would generate unnecessary uncertainty and disregard the extraordinary efforts and significant investment risks undertaken by the industry so far.

Indeed, the WIPO has emphasised the importance of prioritising innovation in the first instance before focussing on access issues including compulsory licensing: ‘Focusing on access to non-existent vaccines, treatments or cures, rather than the encouragement of needed innovation, at this stage, may not only represent a misunderstanding of the sequencing of innovation and access, but also create a disincentive to investment in needed innovation’.

In circumstances where the life sciences industry is showing such flexibility, the fundamental tenet of IP protection should not be circumvented unless strictly necessary. Governments must ensure that the generosity of the industry will be met by a legal framework that stimulates, rather than hinders, scientific progress in the aftermath of the pandemic. Where necessary, companies may want to negotiate with governments to ensure that future investment in the development of their technology will not be affected by voluntary licensing or compulsory licensing measures.

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About the author:

Maria Isabel (‘Marie’) Manley leads Sidley Austin’s Life Sciences team in London and is a distinguished thought leader and adviser on EU and UK regulatory law. She represents development-stage and established global life sciences companies in a broad spectrum of matters, both contentious and non-contentious. Marie advises clients in the pharmaceutical, biotechnology, medical devices, chemicals, cosmetics and food sectors in proceedings before both national and European courts and the regulatory agencies in the UK and across Europe. She has particular experience on issues arising during the life cycle of medicinal products, including IP, advertising, product liability and competition.