The cost of a cure for COVID-19

If Gilead’s drug is successful, the Indian government should issue a compulsory licence under the Patents Act

Updated - April 01, 2020 01:58 am IST

Published - April 01, 2020 12:15 am IST

A man walks near a drug store sign in downtown Tijuana, Baja California State, Mexico, on March 27, 2020.

A man walks near a drug store sign in downtown Tijuana, Baja California State, Mexico, on March 27, 2020.

The World Health Organisation declared the COVID-19 outbreak a pandemic . However, the U.S. Food and Drug Administration (FDA) declared COVID-19 an orphan disease, or a rare disease . Which of these statements is true? As of March 23, it seemed both.

COVID-19 and the Orphan Drug Act

In the U.S., under the Orphan Drug Act, 1983, companies are provided incentives to develop therapies, or orphan drugs, for rare diseases. The idea is that without these incentives, companies would find it difficult to recoup their R&D costs given the small number of people suffering from the rare disease. The Act allows seven years of market exclusivity and financial incentives to innovators of these drugs. As a result, orphan drugs are often exorbitantly priced. Privileges under the Act may be conferred to companies for drugs to treat a disease that affect less than 200,000 people in the U.S., or for a disease that affects more than 200,000 people but for which there is no hope of recouping R&D costs. Interestingly, according to the regulations for revocation, if the number of people suffering from the disease exceeds 200,000 after designation but before approval, this would not be a ground for revocation.

Coronavirus | India to join WHO’s COVID-19 trials

In an egregious misuse of the Act, the FDA granted Gilead Sciences orphan drug status for its antiviral drug, Remdesivir, on March 23. Originally developed to treat Ebola but found ineffective, the drug is now being tested for treating COVID-19. Clinical trials are already in Phase III. But in an interesting turn of events, on March 25 Gilead announced that it had submitted a request to the FDA to rescind its designation for Remdesivir. It alluded to the fact that abbreviated trials were behind the initial designation, though it is well known that there are other avenues for abbreviated trials in such circumstances.

The question that remains is, how did the Act apply to a potential drug for COVID-19, which is anything but a rare disease, with 800,049 confirmed cases across the world? How does the U.S. FDA justify conferring the status of an orphan drug on a therapy designed to treat COVID-19? Sure, as of March 25, the U.S. had 54,941 people suffering from the disease. But this is simply a technicality. Congressional findings for the Act state that the purpose of the legislation is to provide financial incentives for drugs that may reasonably expect to generate relatively small sales. Is it legal to apply the benefits of a statute to something entirely outside its stated objective and purpose? The simple answer is no.

Gilead is reported to have said that it intends to make the drug accessible and affordable around the globe. However, Gilead’s exorbitant pricing of its drug to treat hepatitis C and its drug to treat HIV attracted attention in the past. Yet in 2017, Gilead placed its HIV therapy in the Medicines Patent Pool, a move that would make the medicine more accessible. For Remdesivir, Gilead’s suspension of its “compassionate use” programme raised alarm bells. The programme was reinstated for only children and pregnant women; Gilead said it cannot process “the overwhelming number of applications”. Gilead also stated that it had transitioned to an “expanded access” programme, for emergency use in severely ill patients. Public apprehension is somewhat justified, not least of all on account of the FDA’s conduct in conveniently interpreting a statute to benefit big pharma during a pandemic.

Impact on the U.S. and India

So, what would have been the impact of this orphan drug status for the U.S., given the status of its patents? Patents are open to challenge. Had Gilead not sought that orphan drug status be rescinded, generic manufacturers would not have been able to market a drug to treat COVID-19 with the same active ingredient till the seven-year period of market exclusivity had ended. This would have given Gilead free rein on pricing and licensing which would have had disastrous consequences on the healthcare system.

What does this mean for India? While the orphan drug status of Remdesivir would have no impact on India, Gilead Sciences does hold a patent in India, which it is likely to claim for this use. As far as its patent rights are concerned, Indian law permits the government to issue a compulsory licence in certain circumstances of a public health crisis under Section 92 of the Patents Act. This would allow third parties to manufacture a patented drug without permission of the patent holder. Indian companies have already expressed their capability to manufacture the drug. The firepower under this provision has never been deployed before. If the government does not exercise its powers to issue a compulsory license if required, Indian manufacturers would not be able to manufacture generics (without challenging the patent). This would leave the people vulnerable to Gilead’s pricing policies and licensing conditions, should its drug be successful.

Shyel Trehan practises in the Delhi High Court and the Supreme Court of India

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