Setting a major precedent in bringing drugs to fight the AIDS epidemic in Africa, Yale and drug maker Bristol-Myers Squibb Co. agreed to relax the patent to the Yale-invented AIDS drug d4T in South Africa, allowing other companies to import and produce generic versions of d4T.
With this announcement last Wednesday, Bristol-Meyers became the first pharmaceutical company to allow other companies to produce generic versions of an AIDS drug for which it has exclusive production rights. In countries like South Africa, the prices charged by pharmaceutical companies have generally been too high to make drugs affordable to most AIDS victims. But now, many hope that competition between Bristol-Myers and other generic producers of d4T will drive down the price of the drugs to more affordable levels. Bristol-Myers itself has also agreed to cut the prices of its South African AIDS drugs.
The University holds the South African patent for d4T, invented by Yale pharmacologist William Prusoff in the late ’80s. Under South African law, it has the right to grant voluntary licenses to other companies looking to produce generic versions of the drug. But the licensing agreement which Yale and Bristol-Myers had signed prevented either party from unilaterally issuing such a license without being potentially slapped with a lawsuit from the other party.
Yale administrators started discussions about relaxing the patent rights to d4T with Bristol-Myers after receiving a mid-February letter from the humanitarian group Doctors Without Borders.
“We decided on our stance early on,” President Richard Levin said. “They were considering a number of options. I don’t think there was a substantive disagreement; it just took them a little time [to decide on] which way to go.”
But after a few weeks of negotiation, both parties agreed that relaxing the patent would be the best solution to the Doctors Without Borders’ request.
“There was no argument between us [and Bristol-Myers], and this agreement happened very quickly,” said Jon Soderstrom, director of Yale’s Office of Cooperative Research, which works with private companies to commercialize Yale discoveries.
Soderstrom and Yale General Counsel Dorothy Robinson were the primary Yale representatives in the discussions with Bristol-Myers. Levin, Provost Alison Richard and several other major Yale officials were involved in the negotiations.
Doctors Without Borders representative Toby Kasper said the group was pleased with the announcement and hopes that other pharmaceutical companies will follow suit.
“This is the first time that a pharmaceutical company has done this,” Kasper said. “This is revolutionary. And Yale deserves much of the credit here.”
He further called on Yale and Bristol-Myers to extend the policy to other regions of the world where AIDS epidemics exist, particularly in Asia and Latin America.
Talks about how to make d4T more affordable in South Africa first began after Doctors Without Borders sent a letter to Yale and Bristol-Myers outlining the epidemic in South Africa and stressing the inability of the group and the South African government to afford AIDS drugs at their current prices.
Yale and Bristol-Myers contacted one another by phone late February and had at least one meeting in New Haven early March to discuss how they could respond to Doctors Without Borders’ request. They considered lowering the price of the drug, granting sub-licenses to certain generic versions or simply letting any company produce the drug. Yale decided to take the third route, and Bristol-Myers soon also came to a similar conclusion that relaxing the patent would be the best remedy.
Bristol-Myers’ decision likely resulted from a confluence of different forces. The fact that Yale owned the patent to d4T played a major role in their decision.
“With [d4T] we were directly dealing with Yale. Any action surrounding this drug would be partly based on permission we would get from Yale,” Bristol-Myers spokesman Bob Laverty said.
Soderstrom agreed that it is not a coincidence that d4T is the only drug whose patent is owned by a university and the only drug to have its patent relaxed.
But Soderstrom said this was not a matter of the University forcing Bristol-Myers to change its policy.
“I don’t think that we had any contractual provision that would have allowed us to make that action unilaterally,” Soderstrom said.
Another external factor that likely played a role was public pressure. On March 7, Merck, another pharmaceutical giant, announced that it would lower the prices of two of its AIDS drugs, Crixivan and Stocrin, to the amount that it costs for it to produce them: $600 per patient per year for Crixivan and $500 for Stocrin, although many agree that the Bristol-Myers move goes above and beyond the Merck announcement.
The AIDS situation in Africa, and particularly in South Africa, has recently entered the national spotlight in America. Publications from The Economist to Time magazine have run cover stories on the epidemic over the past two months and AIDS groups have been increasing their levels of protest and education campaigns. A major target of protest is a lawsuit, which began hearings March 5 in Pretoria, South Africa, where over 30 pharmaceutical companies, including Bristol-Myers, are suing the South African government over legislation that will make it legal to import generic copies of AIDS drugs. Doctors Without Borders is also pushing for Bristol-Myers and the other pharmaceutical companies to drop the lawsuit, but Bristol-Myers has not yet agreed to do so.
Yale’s future patent policy
The circumstances surrounding d4T have cast new light on Yale’s patenting policy. Should Yale change its licensing practices to protect its rights to terminate contracts during health emergencies?
Soderstrom cautioned that if Yale creates patenting contracts giving the University the right to terminate or change the contracts if health emergencies arise, then pharmaceutical companies may be less willing to sign on with Yale in the first place.
“[Any new clause] is going to create barriers that are going to increase our difficulty to attract pharmaceutical companies to take a license to our inventions,” Soderstrom said.
The topic has already been discussed by the Committee on Cooperative Research, Patents and Licensing, and will likely get more attention in the near future, he said.
Levin agreed that such health-emergency clauses may be present in future contracts, but will have to be worded carefully.
“The drugs will never get into the market if we don’t give strong protection to companies in developed countries,” Levin said. “A future clause [allowing the University to terminate a contract if it disagrees with a pharmaceutical company in times of a health emergency] is a possibility, but I don’t know if it will be commercially practical.”
Soderstrom said the situation with d4T was unusual, but with Yale continuing to invest in biotechnology firms in New Haven, a similar situation could happen again. And, in the case of d4T, an agreement with Bristol-Myers may be more elusive when AIDS groups ask Yale and the pharmaceutical company to release the d4T patent in other countries. Bristol-Myers, for one, has said that its policy currently holds only to Africa.
“We’re focused on Africa because of the devastation there,” Laverty said. “Outside of Africa we intend to maintain our existing pricing.”