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Compulsory Licensing for Hepatitis C Medication in Malaysia

By Lekhya Kintada

In August of 2017, the Malaysian Cabinet decided to make available affordable generic versions of the hepatitis C cure sofosbuvir (Sovaldi). The U.S. government and the patent-based pharmaceutical industry are placing some pressure on Malaysia for this decision, but it is an important one to protect public health.

Approximately 500,000 people in Malaysia are living with hepatitis C (HCV). Sofosbuvir, as a direct-acting antiviral medicine, has cure rates of over 90% and far fewer side effects than previous treatments, representing a breakthrough for people with chronic HCV. However, the cost of treatment is exorbitantly expensive, making the treatment less accessible to patients. The list price of Sovaldi in the U.S. is $84,000 and RM 300,000 ($71,300 USD) in Malaysia. The Malaysian household income per capita is a small fraction of this price: $4,571.17. As of 2017, only 500-550 patients per year had received treatment.

Since sofosbuvir is patented, a government-use license is needed to waive the monopoly right and enable the sale of generic drugs at affordable prices. In other words, the Malaysian government granted the U.S.-based corporation Gilead Sciences a patent covering sofosbuvir. In exchange, Malaysia retains the right to make use of the patented invention to serve the public interest. This government use is a core feature of patent systems everywhere.

The Health Ministry of Malaysia, in cooperation with Geneva-based Drugs for Neglected Diseases initiative (DNDi), is hoping to procure a generic sofosbuvir, priced at RM 1,000, for use in public hospitals throughout the country.

Gilead had announced earlier in 2017 that Malaysia would be included in the company’s own licensing plan – allowing some generic versions to be sold locally. Gilead Sciences signed non-exclusive licensing agreements with seven India-based generic pharmaceutical manufacturers to produce and sell sofosbuvir in 91 least developed countries. Most of the middle-income countries where the vast majority of hepatitis C patients live were excluded from the licenses. Malaysia was one of those 41 middle-income countries.

Gilead also failed to register the drug in many of the 105 countries within the licenses territory. This obstructed access to hepatitis C treatment.

The Malaysian government engaged in negotiations with Gilead to be included in the licenses and reduce the price. Negotiations failed in 2016.

Malaysia’s decision to license government-use is believed to be the pivotal reason Gilead is now including Malaysia in its licensing plans. Gilead may have hoped that the Malaysian government would reverse its government use decision, or at least that Gilead would be able to control the terms of licensing and generic competition. However, relinquishing the government use license would limit what Malaysia can import or produce. Gilead’s licenses are dependent on conditions set by the company, and Gilead could also alter or terminate them.

Currently, the Malaysian government continues to face pressure from the U.S. pharmaceutical industry and potentially the U.S. government to undo an action taken to make a key hepatitis C medicine more affordable in Malaysia. However, according to TRIPS Article 31, usage of patented drugs in a non-commercial sector does not require prior negotiation with the patent holder. A government agency or a third party (e.g. a generics company) can be authorized to import or manufacture a generic version of a patented drug limited to use in public programs and hospitals. Government use does not override a patent. Rather, the government has the right to make use of an invention which is embedded in this initial grant of every patent.

In the 2018 Special 301 Report, the USTR announced that it will conduct an Out-of-Cycle Review of Malaysia to “consider the extent to which Malaysia is providing adequate and effective IP protection and enforcement, including with respect to patents.” The WTO Ministerial Declaration on TRIPS and Public Health not only recognized the legality but also the desirability of countries taking pro-public health measures and not letting patents come in the way of people’s health interests. The U.S. government should not criticize Malaysia for making use of an invention to protect public health. It is consistent with Malaysia’s international obligations and long-established U.S. policy.

In this way, Malaysia is making strides in the public health sector. For example, Malaysia became the first country to issue a compulsory license on a medicine to treat HIV, following the adoption of the Doha Declaration on TRIPS and Public Health in 2003. In 2017, it was again the first country to issue a government-use license for HCV treatment. These decisions showcase the Malaysian government’s commitment to provide lifesaving medicines to its people. Thus, the decision to issue a government-use license for sofosbuvir is an admirable example of a country exercising its right to make medicines available to save thousands of people from serious ailment and potentially death.