Thailand Law Journal 2012 Fall Issue 1 Volume 15

Antiretrovirals - Tamiflu

Tamiflu was originally invented by Gilead Sciences, a California Biotech Company in the year 1996. Gilead had licenses its commercial and manufacturing rights to Roche. Tamiflu is patent protected till the year 2016. Tamiflu has no patent status in India. There were two process patents granted to Tamiflu earlier. The drug manufacturers Roche and Gilead Sciences had applied for patents in the eyar 1996, two of which were mailbox patent applications. While applying for the patent, Roche and Gilead has claimed compositions of Oseltamivir and its salts which is wider than oseltamivir phosphate.While comparing the differences between an epidemic of influenza and an epidemic of HIV/AIDS he identifies the concern in the fact that while HIV is a prolonged epidemic, and lasts for a longer period of time, the disease is non-contagious. Influenza on the other hand is short-lived yet spreads fast thereby disrupting the predictability of business functioning in the area of its operation . Rajnish Rai had noted that voluntary license agreements generally result in increased prices of the drug which are factored into the selling cost as a result of the licensing fees and the royalties. he also suggests that such high licensing fees are irrelevant considering that the actual transfer of technology is not required to take place considering that the generic company generally produces the product through reverse engineering .

The 1996 Development and Licensing Agreement for Tamiflu, signed between Gilead Sciences, Inc. And Roche suffered a threat of termination by Gilead for an alleged material breach of the agreement. On 16th November 2005, an amended agreement was signed between Roche and Gilead which has repercussions on calculations for royalty payments . 
The Development and License Agreement between Gilead Sciences and Hoffman-La Roche is dated as of September 27,1996. Gilead had identified that it is involved in the development of a series of proprietary compounds which act as influenza neuraminidase inhibitors which might be effective in the prevention and treatment of influenza. Under clause 9.5, following termination of the Agreement by Gilead, the products would revert back to Gilead. Provision 2.2 deals with Sublicensing, which states the Roche possesses the right to sublicense the rights granted to it: further Roche is supposed to be fully responsible for the performance of all obligations imposed on a sublicensee. Under Provision 2.3, Gilead possesses the ‘Right of first refusal’ with respect to sublicense for commercialisation.

Tamiflu (oseltamivir) and Relenza (zanamivir) had been identified in 2006 as the two products which though not being vaccines, fell under a category of medicines known as neurodiaminase inhibitors .

Roche does not hold the patent for Tamiflu – Gilead Sciences, a California-based biopharmaceutical company does. The contract signed between Gilead Sciences and Roche is available online . This gives Roche the specific legal right to undertake, sublicense the manufacture, sale and distribution of oseltamivir-based products covered by their patents.The patent right is territorial. Hence, the patent right does not operate worldwide. There is no patent in existence for Tamiflu in Thailand etc.

Roche’s Strategy to address worldwide demand

Though aspersions have been cast on the ability of Roche to cater to demands worldwide, the options wielded by the company are largely based in contract so as to counter the possible intervention by the State in any case. Despite the disclosure of the patent information worldwide, companies in other countries hesitate to start production of Oseltamivir. The reasons as cited by the WIPO could range between falling into economic, political and social considerations. Further, Roche despite having disclosed the contents of the patent has built up sufficient manufacturing capability.

Roche so far has granted two ‘sublicenses’.  This permits other countries to manufacture and sell Tamiflu. To clarify as to what other right it grants to those producers in countries where Roche never held a patent... The two current holders of a sublicense from Roche are Shangha Pharmaceutical Group in China and Hetero Drugs in India.

In defence of Roche

As per Roche, manufacture of the drug is complicated and involves ten main steps and will take six to eight months to produce a capsule of Tamiflu after the sourcing of the raw material . The four core principles identified by Roche which underlie their relationship with developing countries are (i) Research and Development (ii) Fair Pricing Policies (iii) Partnerships (iv) Sustainable and ethical programmes.

Roche states in its precursor to its argument that the supply of the medicines, solely do not guarantee viable health care to the vast populations distributed world-over point out that despite a large number of medicines identified by the World Health Organisation as being ‘essential’ are off patent, complete eradication of these diseases has not yet been achieved, nor is access to them guaranteed. According to Severin Schwan, the CEO of the Roche Group, the fact that most of the essential medicines identified by the WHO are off-patent would have eliminated access issues. Hence, if generic manufacturers were able to produce the required medicines, there would have been no access to medicine problems. Roche, points out that there might be a possibility that are exist other reasons than merely patents as a barrier to access .

Roche classifies countries based on the level of investment the State advances into the issue of individual healthcare. It is possible to identify those countries with an established health care system which accord reimbursement following recognition of the forms of treatment. Roche identified that as governments worldwide attempted to increase their ‘population coverage ’, sales of Tamiflu rose in response to pandemic stockpiling . In their Forward Looking Statement , whilst enlisting those risks which could be material in determining returns Gilead had identified that in European countries, patients will not use prescription drugs which are not reimbursed by the Government. Further compulsory  licensing, especially for HIV drugs was identified as a threat by Roche as affecting the returns which were due. Under Form 10K, Gilead outlines that the payment it receives from Roche is based on a percentage of the net sales that Roche generates from Tamiflu worldwide . Gilead had identified its concerns in the form 10-K filed in February 27,2009 stating that in the eventuality of increased sublicensing agreements or compulsory licenses, the amount of royalties which would be payable to Gilead would be reduced. Further, following Brazil’s negotiation to reduce the price for its drug in response to the threat of compulsory licensing wielded by the Government (HIV Drug-Viread). The Canadian Government for example allows Canadian manufacturers to manufacture and export the active ingredient in Tamiflu under Canada’s Access to Medicines Regime.

The company states that simply ‘giving away’ their medicines and diagnostic tools can do little in the long run when compared to the company’s contribution in sharing its expertise and resources.

In developed countries Roche has identified that despite having an advanced healthcare framework in place, there are many people who have limited or no access to healthcare or health insurance. Roche in this case seeks to demonstrate its capacity and potential so as to agree on a level of reimbursement which enhances access to the drug.

Specifically with respect to Tamiflu

• Roche launched the Tamiflu Reserves Programme to produce and store oseltamivir for pandemic stockpiling in specified developing countries at a ‘significantly’ reduced price.
• Roche renewed contracts with sub-license holders in China and India.
• To replenish the earlier stores Roche had donated to the World Health Organisation, Roche had announced a donation of 5.65 million treatment courses.