Voluntary licensing is a better, more sustainable approach to increasing access to

medicines. Here are a few reasons why.

Wider Technology Transfer Beyond Patents

Compulsory licensing enables generic competitors to override a patent. But when it
comes to making a medicine, a patent by itself is generally insufficient. Modern vaccines
and medicines are complex and cannot easily be copied or reverse-engineered with just
a patent. Successful licensees require a bundle of technology including, but not limited
to, patents – know-how, teaching, skills and other technical assistance.

Most vaccine and biologic medicine production technology is embodied in technical

know-how specific to each product, which is not easily transferred. Such information is
often known by few people within the innovator organization.

For COVID vaccines, originators entered into voluntary licenses not only for wholesale
manufacture but also for discrete parts of the manufacturing process. Both approaches
helped drive rapid manufacture at a scale well beyond originators’ capacities.
Licensing within an agreed IP-protected framework is crucial to each of these deals
given the amount of proprietary and commercially sensitive information shared.

Each partnership involves huge transfers of data and know-how, with dozens of
specialist staff from the innovator spending time with the partner to teach and oversee
the safe and accurate transfer of manufacturing knowledge. Such an orderly knowledge
transfer can only occur in an environment in which IP rights are protected, to ensure
partners (possibly competitors in other areas) do not use the information for their
advantage.
By contrast, such close cooperation would be highly unlikely under coercive
interventions such as compulsory licensing, forcing the would-be manufacture to
develop and devise its own manufacturing processes – a time consuming and costly
exercise. Voluntary collaboration should always be preferable.

Quality Assurance
Another strength of the voluntary licensing approach is the emphasis on quality. This is
a real issue considering the various scandals and quality issues that have surrounded
certain substandard medicines marketed in low-income countries.
The Medicines Patent Pool (MPP), which administers voluntary licenses for products
across HIV, hepatitis C, Covid and others for use in LMICs has strict safeguards to
ensure medicine quality.

To be eligible for a license, a MPP licensee must demonstrate its production facilities
meet Good Manufacturing Practice. They must also include pharmacovigilance
monitoring and reporting requirements by the generic manufacturers; and also to have
adverse event reporting systems in place before commercialisation. Licensees also
need to show the infrastructure to supply all the markets in the license has passed anti-
bribery and anti-corruption assessments, export controls and trade compliance, and
have strict health and safety measures in place.

Most bilateral voluntary licenses also include conditions requiring the licensee to follow
certain quality standards. These licenses also include a commitment by the originator to
maintain pharmacovigilance for the licensed products, as an extra layer of security to
patients.

Speed
Voluntary licenses (VLs) can be a faster way of making innovative medicines available
in LMICs. Most countries (except a handful of exempted poorest countries) have in
place minimum standards of IP protection in line with the WTO TRIPS Agreement –
they cannot simply override patents and manufacture. By signing a VL agreement,
generic manufacturers do not have to wait for patent outcomes, pre-grant patent
oppositions or even apply for a compulsory license. This can save considerable time
and money.

As mentioned, voluntary licensing also provides a safe platform for sharing of key
information between the license holder and licensees, which can accelerate access.
Originators who share their own proprietary clinical data with generics manufacturers
remove the need for costly and time-consuming clinical trials. The result is speedier
manufacturing and lower costs.

Flexibility
Depending on market circumstance, need and objectives, there are a range of voluntary
licensing models an innovator can choose from.

One option is bilateral deals, in which an originator licenses to a single or multiple

generic manufacturers. This has been widely and successfully used for HIV and
Hepatitis C medicines, enabling many countries to make significant inroads against
these diseases. When multiple generic partners receive licenses, competition drives
prices down further.

There is also a centralized “clearing house” model, in which originators pledge their IP
to a third party to out-license on their behalf, according to a pre-agreed set of criteria
and standards.

The Medicines Patent Pool is the most notable, which negotiates with patent-holding
pharmaceutical companies for public-health-driven licenses agreements and then
grants royalty-bearing sub-licenses to qualified generic manufacturers in developing
countries that then supply medicines to certain LMICs.
One 2017 study estimates actual cumulative savings generated by MPP licenses
between 2010 until 2028 at around US$2.3 billion. MPP operational costs were only
US$50 million over the same period.
Finally, for companies manufacturing complex products such as vaccines who want to
maintain control of their marketing and supply chains, there is the option to license
discrete parts of the manufacturing value chain. This proved its worth in the COVID
pandemic, as mentioned.

Benefits to Generic and Innovator

Voluntary licensing provides significant benefits to both licensee generic manufacturers
and originator companies. Armed with a license, generic manufacturers do not need to
challenge patents or apply for compulsory licenses, both of which are time consuming
and expensive. In most cases generic companies would rather cooperate.

For originators, there are many benefits beyond their desire to provide quality products
for previously unserved patients. Notably, voluntary licenses offer a low-cost way to gain
access to markets where they do not have established supply chains and distributional
networks. With the African pharmaceutical market forecast to reach US$60 billion by the
end of 2023, the scale of the opportunity is immense.

Cooperation, Not Coercion

The success of voluntary licensing in improving access to medicines where it has been
most widely applied – HIV, Hepatitis C and COVID – shows that IP rights protection is
vital to stimulate future innovation and can help meet public health objectives.

As the global health debate in Geneva and elsewhere moves beyond COVID and
refocuses on how to promote equitable access to all medicines, voluntary approaches
will be key. Confrontational approaches such as compulsory licensing are time
consuming, risky and an ultimately unsustainable way of addressing global health
challenges. Voluntary licensing, by contrast, benefits all stakeholders, especially
patients. Cooperation, not coercion should be the guiding principle.

Voluntary licenses and non-assert declarations

Actions by R&D pharmaceutical companies that facilitate access to medicines

Background/Rationale:
IFPMA member companies are committed to improving access to antiretrovirals
(ARVs) for those who cannot afford them, particularly in Least Developed Countries
(LDCs) and low-income countries (LICs). For many years, the pharmaceutical
industry has created and delivered ARVs that have saved millions of lives in the
global fight against HIV/AIDS. UNAIDS reports that approximately 2.9 million lives
have been saved because of access to ARV therapy1 . About 1.2 million people
started treatment in 2009, bringing the total number of people receiving treatment
to 5.2 million, compared to 4 million at the end of 20082 . That access has often
been achieved through the numerous access initiatives developed and deployed by
the R&D
pharmaceutical industry, such as preferential pricing, donations, licensing and
capacity building.
Most of these access initiatives do not depend on intellectual property rights. For
example, preferential pricing and capacity building are relevant whether or not
there are patents on pharmaceutical products. This is often the case in the LDCs
and LICs. Where patents do exist, many companies have gone beyond preferential
pricing initiatives to implement access models allowing generic companies to
produce the patented medicine. Examples of these IP access models include
voluntary licensing and non-assert policies.

Voluntary Licenses and Non-Asserts: What they are, how they work:
Voluntary License . A voluntary license is an authorization given by the patent
holder to a generic company, allowing it to produce the patented article, such as a
medicine, as if it were a generic. The license usually sets quality requirements and
defines the markets in which the licensee can sell the product. The decision
to grant a voluntary license, and the terms therein, can be tailored to account for
many factors, including the nature of the epidemic/disease, social factors,
economic considerations and the capacity of the licensee to meet and maintain
quality standards for the product.
Non-Assert Declaration . A non-assert declaration (sometimes called a “non-
assertion covenant”), is where a rights holder commits not to enforce certain
patents in a defined group of countries allowing a generic version of a patent-
protected article to be produced in a resource-limited setting. Some non-
assert declarations may require a party wanting to make the product to meet
certain quality requirements e.g. being pre-qualified by the WHO or being granted
approval by a Drug Regulatory Agency (DRA).
Voluntary licenses and non-assert declarations build on other industry-led access
initiatives enabling generics manufacturers to serve the market. However, in
countries where IP rights are rarely sought, one might expect to see a sustainable
supply of cheap generic medicines from a vibrant community of
generic competitors, but that is often not the case. Generics companies need
economically-viable markets in which to compete. These observations lead to the
conclusion that the barrier is not IP, but the inability of generics manufacturers to
operate sustainably, either because there is no commercial market or because the
cost of doing business is too high. This problem is particularly acute when
medicines are difficult and/or expensive to manufacture. Other major factors, such
as the condition of infrastructure and/or health care systems, also play a crucial
role in enabling access to medicines. If these factors are not in place, or fail to
operate effectively, then the objective of medicine access is significantly
undermined.

The IFPMA welcomes the current efforts to create “innovative mechanisms” to

further improve access to ARVs in resource-limited settings. However, any such
mechanism should not undermine the current and proven initiatives already in
place in order to ensure the most effective and efficient use of the
resources available.

Geneva, 28 July 2010

1
UNAIDS Report on the global AIDS epidemic, 2009, p.17
2
http://www.unaids.org/en/KnowledgeCentre/Resources/FeatureStories/archive/
2010/20100719_Vienna_PR_WHO

IPLEADERS

Introduction

Intellectual Property Rights are exercised through various forms – patents, trademarks,
copyright etc. They need to be registered/licensed in order to be protected from possible
infringers. The term patent refers to exclusive rights given to an inventor/assignee over
an invention/creation created by them for a limited period of time in exchange of the
said invention be disclosed to the public.

The problem with patents in India was that owners of patents used the said creation to
gain excesses monetarily and thus restricting access to the general public. A classic
example of this is the pharmaceutical industry where medicines were not easily
accessible to the general public due to its exorbitant prices in the market. One thing we
need to understand is that patents are granted to encourage inventions in the society
and our Indian Patents Act ensures that no patentee (who has got patent on the
invention) could create a monopoly in the Indian market which can go against our
competition laws.

The agreement on Trade-Related Aspect of Intellectual Property Rights (TRIPS)

concluded the relation between Patents on medicines and their prices. This agreement
enforces the member countries to grant patents to Pharmaceutical companies on their
product and provides certain flexibility to safeguard the public health. India faced a lot of
issues after the implementation of the patent on medicines in India as it was expensive
for the people suffering from diseases like Cancer, HIV and the medicine was not
reaching to the patients to the extent as it should have been. But our Indian patent laws
provide a remedy to the issue in the form of licenses to the generic manufacturers.

Access to Voluntary License

Indian Patent laws provide a remedy in the form of Voluntary and Compulsory license.
Voluntary license(VL) has emerged from the issue of high prices on patented
medicines. Voluntary license(VL) help the license holder to make, produce and market
the generic drug and provide that to patients at affordable prices through the process of
Reverse Engineering. There is no legal provision given under Patent Act as this license
access is done through mutual contractual agreement.

Voluntary Licensing

Voluntary licensing is the arrangement between the parties where the patent holder and
the third party from any of the country come to an agreement of making affordable
medicines in their respective countries and sometimes with discounts. A patent holder
may give license to the third party either with an exclusive or non-exclusive right, the
right to manufacture, import and distribute a pharmaceutical product and much more.
The licensee of the patent will act as an agent of the company. The terms in a voluntary
license, they may set price ranges or could include other terms like the holder royalty
from the distribution of the sales. Voluntary licensing arrangements, at the discretion of
the holder, are usually made for strategic reasons rather than as price gestures and
they may not entail any price reduction at all.

Implementation of Voluntary License over Compulsory License

The agreement between the countries during TRIPS (Trade-Related Aspects of

Intellectual Property Rights) discussion evolved with the patenting of Pharma Products
which lead to many issues in India due to a high cost of patented medicines. The Indian
patent Act got amended in 2005 and the procedure of Compulsory license was
introduced under Section 84 of Indian Patent Act which provides three conditions and
on breach of any of those conditions, the government will issue the compulsory license
to the applicant without the permission of the Third Party who is a holder of Patent.

1. That the reasonable requirements of the public with the respect of the
invention have not been satisfied.
2. That the patented product is not available at the reasonably affordable price.
3. That the patented invention is not worked in the territory of India.
The TRIPS allowed the Compulsory License but it is very difficult in the whole world to
implement that due to the involvement of the litigation proceedings. The application for
the Compulsory License requires the minimum waiting period of three years of time and
after that, the applicant can file for Compulsory License to the Controller General and
the decision will depend upon his discretion. This gap of three years can affect patient
lives in a severe manner due to either high prices of medicines or due to the shortage of
medicines. The very existence of statutory provisions on compulsory licenses may, in
fact, be adequate to encourage voluntary licenses. The voluntary licenses are based on
the mutual contractual agreement between the patent holder and the third party who is
a generic manufacturer. Voluntary License is more favourable as they can save
litigation time and cost of both the companies and could save many patient lives.

Gilead case of offering Voluntary License

Gilead Pharma is a US pharmaceutical company which manufactures medicines for

different diseases and health issues. Gilead already had a patent on the medicine which
helps to cure Hepatitis C. In 2011, The Company offered Voluntary Licenses to the local
generic manufacturers of Indian, Malaysia and many more countries as they have the
distribution in many countries. Malaysia didn’t accept the offer and waited for one more
year to have the compulsory license from the government over the same drug but the
Indian generic manufacturers accepted the offer. The Gilead issued VL’s to 11 Generic
Companies and one of the company was Natco Pharma Ltd. Which had opposed
Gilead Patent but withdrew the opposition as soon company gave Natco the Voluntary
License. In 2014, The Gilead filed for the patent on the medicine which was the
modified drug of the last patented drug only. The Indian patent office rejected Gilead
application on the same day. The rejection was based on sec 3(d) of the patent Act
which states that no patent could be registered if it is an improved version of the
previous patent. Later on, the Gilead went on to file an appeal in Delhi High court which
instructed the patent office to reconsider the rejection of patent and after considering
that again, the patent office granted the patent to the company drug which resulted in
Indian generic manufacturers to stop the production of generic medicines. There could
be some loophole in the decision as the application was rejected because of not having
novelty in the new product but after the instructions of the patent office, authorities
found novelty in the same product. It is little bizarre but we could just wait for the
expiration of three years for obtaining a compulsory license for the manufacturing of
Gilead generic medicine.

Pros of Voluntary License

1) It could speed up the access to products. As all generic companies in developing

countries are now operating under product patent regimes. This would directly help the
patient as they will get the medicine according to the need and the Drug consumer need
not have to wait for the pre-grant opposition.

2) This could help the patent holding company to get their product promoted and could
reach the invented product to each corner of the world. This helps the holder to
accelerate the marketing of the company’s name free of cost and that too with the
royalty on total sales of the company.

3) It can speed up the manufacturing with the help of generic manufacturers as

the Patent holder being the single holder of the patent could not manufacture
with regards to the demand of the whole world.

4) It could also help to improve manufacturing in a more better and affordable way
which would eventually lower down the prices for the drug consumer.

5) It would increase competition (if the VL is not exclusive) in the market and curb
monopolistic trade practices in Pharma industry as one license could be issued to many
generic companies.

Cons of Voluntary License

1) Offering VL to the generic manufacturers could deteriorate the due grant of patent
process as the generic manufacturers won’t oppose to the patent application.
2) The generic companies also require enough technology to manufacture the generic
medicines and most of the generic manufacturers lack in the technology and only some
of them able to go forward with the release of the generic product but it doesn’t create
much difference with the prices.

3) Licensor has all the authority to put any restriction during the agreement of the VL
such as Geographical Indications that is where to supply the medicines and where not
to and many other restrictions to which the licensee is bound.

4) Licensor royalty rate is 5% but it eventually adds up in the product so which

is generally borne by the patient only.

Conclusion

In the light of above pros and cons, the Voluntary Licenses are preferable if we consider
the areas like Sub-Saharan Africa where there is lack of money and improper R&D. The
Indian Patent Act needs the amendment of Voluntary License provision which should
include the restriction to the power of Licensor and which should solely be made
according to the need of poorer section of the country. Voluntary Licenses should not be
discussed while the process of pre-grant opposition is going on as it deteriorates the
process of grant of the patent. Voluntary Licensing could eventually increase the GDP
of the country as the import and national sales would be increased and would add up to
National Income.