Forced cure: compulsory licensing in the coronavirus era

The World Health Organisation declared coronavirus a pandemic in mid-March. So far, the global onus has been on prevention. But with the virus spreading, ease of access to treatment is becoming increasingly urgent. Furthermore, a way to prevent future cases must be found. Companies are ramping up efforts to achieve these goals as governments across Europe ready themselves to adopt compulsory licensing.

Aside from government intervention, some pharmaceutical companies are already making headlines. For example, innovator pharmaceutical conglomerate Gilead Sciences announced the launch of late-stage tests for an anti-COVID-19 therapeutic. The drug, remdesivir, is an antiviral being tested against viral pathogens such as Marburg, MERS, SARS, and Ebola.

Last week, AbbVie already declared it would not enforce patent rights for its antiviral HIV drug Kaletra. Currently, the drug is undergoing clinical trials to determine its use against the coronavirus. Such moves allow generics companies to take up the baton and begin production of potentially antiviral drugs on a wider scale. But, where patenting is concerned, it’s not always simple.

Essential legislation

Pharmaceutical companies are already pulling out stops to help deliver an effective barrier to coronavirus. In some instances, laws around second medical use patents provide leeway for companies to adapt existing drugs. But, given the urgency of the current situation, the issue of compulsory licensing has already been raised. A legislative power, it is rolled out by governments to side-step the traditional process of acquiring the means to produce patented goods. It is imperative in pharmaceuticals, when time is of the essence.

The application of compulsory licensing, or crown use in the UK, is broadly similar across Europe. In Germany, the roll-out of compulsory licensing is covered by section 13.1 of the German Act on the Prevention and Control of Infectious Diseases in Humans. Section 13.1 sets out the provisions made for public welfare, which covers pandemics.

Currently in Germany, the government can order another company to produce an active ingredient if it sees a problem with its rapid production, bypassing the patent holder. However, the patent holder must be informed by the government at a later date, as well as the government paying an appropriate fee.

Jörg Thomaier

Jörg Thomaier, chief IP counsel at Bayer Intellectual Property, says “It makes sense, in an epidemic situation such as the corona crisis, for governments to prepare to produce active ingredients or a vaccine against the disease quickly and in large quantities. But for the time being, the introduction of Section 13(1) of the Patent Act into the new law to protect the population in an epidemic situation remains rather theoretical.”

“Most pharmaceutical companies will probably cooperate and will voluntarily do everything they can to produce large quantities of active ingredients or vaccines in such a situation. However, I am also sure that the German government will not shy away from application [of Section 13] if this is not the case.”

Unilateral approach

In France, under Article L. 613-16 of its Intellectual Property Code (IPC), compulsory licences can be granted when “the conditions under which the patent is exploited are contrary to the interest of public health or (ii) the quality or the quantity of the products based on the patent made available to the public are not sufficient or too expensive or (iii) in the case of anticompetitive behaviour recorded in a final court or administrative decision.”

Similarly, in the Netherlands, ‘public interest’ is one of five grounds under which a licence may be obtained against the interests of the patentee. This is set out in Article 51.1 of the Dutch Patent Act. The application must be filed to the Minister of Economic Affairs, who then has an eight-week period in which to reply. The minister is also eligible to ask the patentee if they are willing to take a voluntary licence and stipulate terms, before enforcing a compulsory licence.

Congruous compensation

The various patent acts of national governments do allow for such exceptional circumstances. But the scale and magnitude of the coronavirus crisis is unprecedented. Implementing the policy is not the only aspect which requires careful attention. In the event of a compulsory licence being granted, governments must ensure patent holders are properly compensated in due course. Otherwise, the current medical crisis could give way to one at the IP departments of major pharmaceutical companies.

As Wolfgang Weiß, patent attorney at the Munich office of Weickmann & Weickmann, points out, the current crisis could create unprecedented intervention into the patent rights of research institutions, as well as biotechnology and pharmaceutical companies.

Weiß says, “It should be ensured that the practical expropriation of patent holders, even if it takes place in return for appropriate compensation, does not undermine the commitment of researchers around the world in the search for effective vaccines and medicines. It takes years from the development of active substances to their approval and patenting.”

He continues, “In the end, only one in ten drugs receives market approval. The process quickly costs several hundred million euros. The granting of a patent ensures that these investments are economically worthwhile. This should not be put at risk lightly, especially since there are no visible signs that any of the companies currently researching corona vaccines or drugs might refuse to provide them.”

Technical competence

Granting a compulsory licence is one step. But, as a London-based solicitor points out, it is as important to consider the technical competence of companies charged with creating generics of a drug. Creating biologics such as vaccines requires specific equipment and expertise. Naturally, high standards are crucial. However, pharmaceutical companies must ensure that manufacturing capabilities are in place which can not only produce the necessary amount of drugs – but also the highest quality drugs possible.

Biologics also need raw materials. Here, in the current climate, procurement becomes an issue – and not just due to widespread demand being placed on the necessary ingredients. Restrictions on cargo and goods globally is also putting pressure on transportation, with some companies raising concerns that the necessary ingredients will not reach production lines. Furthermore, countries with plentiful supplies of ingredients constitute some of the hardest hit by the coronavirus.

However, some patent experts are optimistic. So far, says Thomaier, he does not foresee any problems with the procurement of raw materials for producing large quantities of an active ingredient or vaccine. “I have not yet had any warnings from our sales and product supply departments. But you have to take into account that many companies in China and India produce many active ingredients. The coronavirus is strongly affecting these two countries.”

Thomaier also raises the issue of administration. It is not only the drugs which must bypass patent legislation. Thomaier says, “Beyond the development of an active ingredient against corona or its symptoms, the question arises of how it should be administered. Whereas a malaria drug used to be administered orally, for example, it is now important for corona sufferers to get it into the lungs quickly. This might require special inhalers, which in turn could affect other patent rights. But, in a crisis, these would be subject to the same rules as patents for active ingredients.”

Crown use in the UK

Europe-wide legislation is similar. But in the UK, compulsory licensing is not the only option. The issue of ‘crown use’ recently emerged during a technical trial between IPCom and Vodafone, at the High Court in London. The case concered EP 25 79 666 and the UMTS mobile communication standard and accessiblity of a random access channel. Vodafone, in its defence, relied on MTPAs (Mobile Telecommunications Privileged Access Scheme), a government-made provision which allows network access in case of an emergency.

Here, deputy judge Douglas Campbell ruled that, although the scheme did not explicitly allow infringement of IPCom’s patent, written authorisation for channel access by a member of the police service constituted application of crown use principles. The judge thus found IPCom’s patent valid, essential and infringed. However, Campbell also agreed with Vodafone’s crown use defence in view of the MTPAs system.

This is the first application of crown use principles in UK patent proceedings in many years. But it came at a crucial point. Under section 56 of the UK Patents Act, another circumstance where crown use is applicable is “the production or supply of specified drugs and medicines.”

Keeping record

Paul England

According to Paul England, senior professional support lawyer at Taylor Wessing in London, the crown use provision is also an important function to ensure biologics are produced as efficiently as possible. “Crown use provisions are designed for circumstances such as the current pandemic,” says England. “The provisions are an important tool, as a short term measure, for the government to ensure drug supplies in its battle with COVID-19.”

But England notes that the legislation should be used with caution. As a short-term solution, crown use could provide the government with a way of developing a vaccine quickly. The current demand for ventilators and equipment might also benefit from applying these seldom-used principles. However, the government must be vigilant about its distribution of the method.

England says, “With more than two dozen companies of all shapes and sizes currently working on vaccines and treatments, many in collaboration, in the long-term there may be a lot of unpicking necessary. This includes whose patented technology has been used, and what compensation from the government is due.”

Medicines for the many

In the UK, application of crown use and compulsory licences had already taken a political turn. During the December 2019 General Election campaign, soon-to-be-former leader of the opposition Labour Party, Jeremy Corbyn, set out a pharmaceutical policy in the party’s manifesto. In Medicines for the Many: Public Health Before Private Profit, Labour set out a policy whereby a future government could “Actively use voluntary and compulsory licenses to secure affordable generic versions of patented medicines where the patented product cannot be accessed.” The manifesto also recommended an increase in the transparency of medicine prices and research and development, as well as a reduction in corporate control over IP rights for pharmaceuticals.

The manifesto covered both crown use and compulsory licences. Some patent lawyers and critics met the suggestions with derision. For example, some patent experts suggested that application of compulsory licences would see an increase in litigation. This is because of uncertainty around the extent to which the government could exercise such legislation. Patent lawyers suggest a potential for bilateral treaties on patents to be exploited, among other issues.

Probably to the surprise of both Labour supporters and critics, these ideas are making their way into a potential Conservative government strategy. However, for the most part pharmaceutical companies seem content to waive controls over their patents. While the government has not yet implemented compulsory licensing and crown use, it provides the tools needed in exceptional circumstances.

View to the future

Some patent experts suggest that existing pharma company policy, for example Gilead’s current testing of its remdesivir antiviral drug, is tantamount to an ‘aggressive’ strategy. Furthermore, it is likely that current developments will lead to a critical discussion about the monopoly position of pharmaceutical patents in politics in the long run. There is also likely to be stronger production reservation for critical products, especially pharmaceuticals and medical devices. Courts need to clarify their positions on marketing authorisations and supplementary protection certificates (SPCs). This is bound to constitute a follow-up discussion.

But right now, the PR is certain to be bad for any pharmaceutical company which declines the request to help protect more people from coronavirus. The provisions are there. Now it’s up to the government and pharmaceutical companies what happens next. (Co-author: Mathieu Klos)

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