The following is a guest post from Ana Santos Rutschman, the Jaharis Faculty Fellow in Health Law and IP at DePaul. I invited Prof Santos Rutschman to write about her work on Vaccine Preparedness and IP. Her new article titled IP Preparedness for Outbreak Diseases is forthcoming in UCLA Law Review. – DC.
In September 2017, the development of the US Army’s Zika vaccine—once a leading candidate in the Zika vaccine race—came to a halt after almost all federal funding for Zika R&D was cut short. This happened less than a year from the end of the global public health emergency. Funding will now resume only if the Zika epidemic re-emerges.
That R&D on diseases like Zika is not attractive to pharmaceutical companies is a well-known phenomenon. It usually takes a major public health crisis to shake up the playing field. With Ebola, for instance, funding for R&D increased 258% in 2015. The Zika outbreak had the same effect, and so will future outbreaks of similar diseases.
But funding spikes triggered by outbreaks are short-lived. They fuel an accelerated R&D race, with multiple pharmaceutical companies and research institutions jumping in. As soon as the fear factor begins to decline, so does the support for R&D. The looming possibility of another outbreak guarantees that some drug development will still occur, but only at a residual level.
The relationship between outbreaks and R&D funding has long been a feature of our vaccine development cycles—from diphtheria and polio in the 1920s and 1950s to Ebola and Zika more recently. But Zika is teaching us something new about the role of IP in the development of vaccines through outbreak-spiked funding: we need to look at IP well beyond the realm of patents operating as incentives to prospective R&D players. Transfers of IP rights between R&D entities, if poorly designed, can hinder the development and the availability of new vaccines (and of drugs in general).
We are seeing the consequences of such a bad licensing deal right now. The Army’s Zika vaccine was once considered a top candidate in the Zika vaccine race. Its initial development was supported during the early stages of the outbreak by the National Institute of Allergy and Infectious Diseases (NIAID) and the Biomedical Advanced Research and Development Authority (BARDA), an office under the umbrella of the Department of Health and Human Services. In 2016, the Army brought in a private-sector company, Sanofi, to help with the clinical development of the vaccine. Shortly thereafter BARDA awarded the company $43.2 million for phase II clinical trials. Then, in late 2016, the Army announced that it intended to license the vaccine to Sanofi on an exclusive basis.
Two provisional patents covered the Army’s vaccine—one encompassing methods of production, and another encompassing methods of preparation. Having been developed through government funding, the vaccine is subject to §207-§209 of the Patent Act, which regulate the transfer of federally owned inventions. §207 allows an agency to grant both exclusive and non-exclusive licenses. §209, however, establishes that an agency can only grant an exclusive license if exclusivity is “a reasonable and necessary incentive” to bring the innovation to the public. The fact that Sanofi had already received a substantial amount of government money to develop the vaccine makes it doubtful that exclusivity was needed in this case.
Even more troubling was the fact that, when prompted to disclose the main terms of the license, the Army indicated that no pricing provisions had been agreed upon with Sanofi. Exclusive licenses, per §209, must “promote the invention’s utilization by the public.” The lack of an affordable pricing clause, or of tiered pricing categories, seems to be at odds with this goal. Sanofi, incidentally, has a record of drug overcharging, having recently paid $19.8 million to resolve claims brought by the Department of Veterans Affairs with regard to two different contracts.
Now that federal funding for Zika R&D is over, the problems posed by the existence of a sole licensee become more acute. Even with last year’s $43.2 million boost in federal funding, Sanofi has chosen to stop all work on the vaccine. Meanwhile, several competitors across the globe keep developing other candidates. But the damage is done. All the outbreak-induced R&D at the Army is put to simmer and won’t likely be rekindled until there is a new outbreak (at which point, for all we know, the Zika virus might have mutated and the Army’s vaccine technology rendered ineffective). All the money poured into this project—including the portion of federal funding that subsidized Sanofi’s R&D—will yield no vaccine to help prevent the next outbreak.
Over the past few years, I have been studying IP inefficiencies in the context of outbreaks and outbreak-spiked vaccine R&D. The case of the Zika vaccine is not unique, but rather emblematic of the current lack of IP preparedness to support the development of drugs for outbreak diseases. Much in the same way that health systems struggle to cope with outbreaks, our IP regime works poorly when it comes to making the most out of the R&D funding brought about by an outbreak. As a consequence, we will miss out on vaccines and life-saving drugs before other public health crises arise.
Now that we are seemingly in an inter-outbreak period, it would be timely to address these problems. Here are a few simple solutions to the licensing problem: we can create a limited list of diseases that are ineligible for §207 exclusivity (with neglected tropical diseases coming immediately to mind); we should amend the disclosure requirements in §209 and have agencies disclose all terms of proposed licenses involving federally funded vaccines; and we should make the incorporation of pricing provisions mandatory in §209 exclusive licenses (at least for outbreak-related technologies).