This document discusses potential approaches universities can take to promote access to medicines in developing countries. It describes how lack of competition leads to high drug prices in developing markets. The document proposes a model called an Equitable Access License (EAL) that universities could use when licensing their patents. An EAL would allow generic producers to make and sell copies of the drugs in low-and middle-income countries, promoting competition and lower prices. Potential objections to this approach from universities and pharmaceutical companies are also outlined.

5. University-based approaches to
ensuring access to medicines
Universities Allied for Essential Medicines
University of Pennsylvania
September 30, 2006

6. Caveats
• Striking the balance between complexity and accessibility
• Stop me!
• HIV exceptionalism

7. Defining the problem
• Adequate drugs and diagnostics simply do not exist for many
neglected diseases
• Even where drugs and diagnostics do exist, prices in
developing countries are often out of reach when the market is
not competitive
• Even where prices are affordable, other barriers to delivery
exist (human resources, infrastructure, management capacity)

8. Price Disparity Across Markets
Average
NVP regimen
EFV ABC ddI TDF LPV/r SQVRTV
$270 $330
$705
$300 $250
$460
$840
$120
$390
$480
$1,580
$3,560 $3,540
$1,930
$540
1st
-Line ARVs 2nd-Line ARVs
Low-Income Countries
Middle-Income Countries
Disparity driven largely by
originator price discrimination;
Potential prices are even lower
than LIC prices for drugs that
lack robust generic competition

9. Consequences for developing countries
*World Health Organization. http://www.who.int/medicines/services/essmedicines_def/en/
0
10
20
30
40
50
60
70
Developed
Countries
Developing
Countries
Percentage of
Total Public and
Private Health
Spending

10. January 2006
ARV Price Comparison: 3TC+d4T(40)+NVP
Branded Best
Price
$562
Generic List
Price
$290
$562
$192
October 2003
Branded Best
Price
Generic List
Price

11. Effect of generic competition on market prices

12. Other problems associated with originator market exclusivity
• Untimely product launch
– Heat-stable LPV/r
– Tenofovir
• Unreliability of supply in single-
source situations
• Barriers to innovation
Pricing is not the sole concern
with respect to patent-
protected market exclusivity:
do not equate ‘access’ with
‘low prices’

13. Features of generic competition
Generic competition produces superior outcomes
Economics
(cost advantages,
competition)
Innovation
(eg, FDCs,
pediatric
formulations)
+ + Quality

14. Potential university role in promoting generic competition
• Increasing rates of university patenting and licensing post-
Bayh-Dole: roughly two-fold increase 1993-2003
• 4 of top 10-12 antiretroviral compounds were developed at
universities (d4T, 3TC, FTC, ABC)
• Recent report found that 15 of the 21 drugs with the most
therapeutic impact emerged from university research
• Out-licensing to biotech & pharmaceutical companies for
downstream development creates moment of opportunity

15. Case study: Emory Univ. and Emtricitabine/Tenofovir
• Case study will be presented in greater detail tomorrow
• Emory developed Emtricitabine (FTC) and licensed the
compound to Gilead for development
• Gilead linked FTC with Tenofovir (TDF) in a fixed-dose
combination called Truvada that proved very successful
• Gilead and Royalty Pharma recently bought Emory’s rights to
royalty stream for $525 million

16. TDF/FTC: Under-realized potential
Originator
$370
Potential
generic
$140
Price comparison
$190
Leading
first line
regimen
• TDF is a wonder drug:
- Low toxicity
- Potentially dominant 2nd line
drug in near term
- Potentially dominant 1st line
drug in medium term
- Potentially widely used
prophylactic in long term
• Unbridled generic competition is
essential for TDF (+ FTC) to
realize full potential

17. Current situation in the TDF market
• Possibility of patent protection in key
countries such as:
– India
– Brazil
– China
• Patent opposition in India
• Gilead voluntary licenses to Indian
suppliers but with restrictions
Pricing will not be as low as is
achievable due to restrictions, in
market where every $ matters
Yet this outcome represents
close to the best possible
outcome in absence of ex ante
university-pharma agreement

18. Ex post
Ex ante
Potential university approaches
Description of possible approaches
• Rely on potential for government march-in
• Address access concerns and seek exceptions post-launch and only upon activist
pressure (as with d4T)
• University non-patenting in Low and Middle Income (LMI) countries
• Potential ex ante agreements with licesee (pharma or biotech):
– Equitable Access License (to be discussed)
– “Fair pricing” provisions
– Provisions stipulating voluntary license program meeting certain minimum
standards
– Other means of retaining some discretion for licensees?

19. Equitable Access License (EAL) overview
• Basic idea: Means of maintaining open door for robust generic
competition
• Deals with three basic hurdles: patent, regulatory/data, and
production capacity
• Major benefits include simplicity and ease of administration,
maximum flexibility for generic producers, and wide coverage
• Leaves relatively little discretion to university or licensee: self-
executing rights, covers all LMIs, no eligibility (eg, quality)
restrictions on suppliers, etc.

20. EAL schematic: Cross-license and grant-back

21. EAL schematic: Notification

22. EAL schematic: Notifier improvements
4.
Royalties flow to university and
licensee

23. Universities
Objections to the EAL
Known and suspected objections
• Lost revenue
• Lack of leverage/lost deals if individual universities adopt EAL alone; big
disincentives to ‘first movers’
• Anti-trust concerns if universities move toward EAL in concert
• EAL-specific concerns:
– Lack of discretion over licensed suppliers
– Lack of discretion over companies
– Limited discretion re: license terms
• Usual concerns about generic production as general matter:
– Parallel importation
– Quality and legal liability concerns
– Fear of price/cost transparency
– Loss of revenue will force cut-backs in R&D because R&D costs will not be
recouped
Pharma

24. Changing strategic considerations for pharma
• Parallel importation poses severe risk to sales in developed nations
• Substantial risk of legal liability if generic producers/licensees sell poor-quality product that produces
adverse clinical events
• Fear of cost transparency
• Revenue loss will compromise R&D
• Public pressure to reduce prices via generics in LMIs can be withstood
• Excess manufacturing capacity can be allocated to developing world demand
• No benefit to be gained from licensing to generics
Initial perspectives
• Little empirical evidence of widespread parallel importation
• Increasing confidence in quality standards among leading Indian generic manufacturers, coupled with expanded WHO and FDA quality assurance
• Costs have become quite transparent, at least in HIV/AIDS sphere, with only modest increase in public pressure on pricing in developed nations
• Disingenuous claim from beginning
• High levels of public pressure on pricing in LMIs, and generic competition difficult to avert entirely
• Little desire to invest in new manufacturing capacity to serve rapidly growing low-margin developing world demand
• Potential strategic benefits to voluntary licensing: new sources of intermediates/API, and significant potential for grant-backs of process improvements
Emerging perspectives