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Gilead Gives Royalty-Free Remdesivir Licenses to Five Drugmakers (1)

May 12, 2020, 8:24 PMUpdated: May 12, 2020, 9:12 PM

Gilead Sciences Inc. is licensing its potential Covid-19 treatment, remdesivir, to five generic drug manufacturers in India and Pakistan to speed supply chain development and help meet anticipated demand.

The company on Tuesday announced it signed non-exclusive, voluntary licensing agreements for the drug, which it originally developed in 2010 to treat Ebola.

The companies are Cipla Ltd., Ferozsons Laboratories, Hetero Labs Ltd., Jubilant Lifesciences, and Mylan. They will be able to produce the drug without paying Gilead royalties until the World Health Organization declares the end of the pandemic or until another drug or vaccine is approved to treat or prevent Covid-19, whichever comes first.

The licenses mark the latest step by Gilead to increase access to its antiviral drug in developing countries.

Royalty-free licensing is rare in the U.S., but it does happen more often “in countries where you’re not going to see a robust profit, or in countries where you truly just want to help out,” said Chad Landmon, who chairs Axinn Veltrop & Harkrider LLP’s IP and FDA practice groups.

The companies will be allowed to set their own prices for the generic version of the drug, which they will manufacture for 127 countries. They’ll primarily distribute their products in lower-income countries, although they will also serve several higher-income countries that face health-care access challenges.

Gilead’s licensees “have a proven track record of developing and distributing high-quality, low-cost medicines efficiently,” company spokesman Ryan McKeel said in an emailed statement. “We are confident that these long-standing voluntary licensees can efficiently scale up production of high-quality, low-cost remdesivir.”

Mylan said in a statement that it expects to have its product ready in the coming months, subject to national regulatory body reviews.

“We applaud Gilead’s progress on remdesivir and are committed to continue deploying our resources and expertise in the fight against COVID-19 by applying our R&D and manufacturing capabilities to help expand access to this potential treatment option as it is further evaluated by regulatory authorities,” Mylan CEO Heather Bresch said in the statement.

Boosting Production

Gilead still has patent exclusivity in the U.S. on remdesivir for the next 15 years, but lawyers and analysts have raised questions about whether the company was prepared to scale up production to meet demand.

The company’s latest step suggests it is starting to address those questions from an international perspective, Landmon said.

“It definitely shows one way they’re going to be able to scale up production in the U.S. by relying on these other companies in other countries,” he said.

Gilead is expected to make “every effort to meet global demand for remdesivir on an essentially at-cost basis,” Bloomberg Intelligence analyst Marc Engelsgjerd said. “We view today’s royalty-free licensing deals as consistent with that thesis.”

Some attorneys have said that the U.S. or other governments could use their authority to compel Gilead to license the drug if it didn’t do so voluntarily.

The U.S. government has the option to use what is known as “march-in” rights, a provision of the Bayh-Dole Act of 1980 that allows the government to seize patents for inventions created with government funding and license them to other entities. It could also choose to use a broader, eminent domain-like authority to step in during a pandemic and mandate how a new vaccine, test, or treatment is produced, distributed, or even priced—known as compulsory licensing.

This latest development will help Gilead focus its production on the U.S. and Europe, Landmon said. “From that perspective, it will help them, but it doesn’t necessarily shield them [from compulsory licensing] if they can’t make enough supply.”

(Updated with additional reporting throughout.)

To contact the reporter on this story: Valerie Bauman in Washington at vbauman@bloomberglaw.com

To contact the editors responsible for this story: Fawn Johnson at fjohnson@bloomberglaw.com; Alexis Kramer at akramer@bloomberglaw.com

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