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