Trade Secrets

In a groundbreaking deal for a promising Covid-19 treatment, the pharma firm Merck signed a licensing agreement on Oct. 27 to allow drugmakers in 105 developing countries to produce Merck’s Covid-19 pill, molnupiravir. In clinical trials, the new drug cut hospitalizations and deaths in half among patients with early Covid-19, Merck said. Unlike most licensing arrangements, Merck will not receive any royalties. As wealthy countries rush to buy up molnupiravir, drugmakers can now produce identical, generic versions for 105 countries with about half the world’s population. More than 50 companies have already inquired about obtaining a license to make generic molnupiravir for the developing world. But even as the pill and the licensing deal raise hopes of controlling the pandemic, less than half of the world’s population has received a single dose of a coronavirus vaccine. So why haven’t Pfizer, Moderna, and Johnson & Johnson made licensing deals like Merck’s?

James Love is the director of Knowledge Ecology International, a nonprofit research foundation that supports intellectual-property transfers in biotechnology. In Love’s view, the primary reason is that pharma corporations don’t want to share the new technology that underlies their vaccines, confident it will lead to the further innovation of blockbuster drugs and major profits. The Pfizer and Moderna vaccines are biologic drugs based on a new platform called messenger RNA, or mRNA, which only a few other pharmaceutical companies know how to use—and none of them are large-scale generic-drug manufacturers. For Love, even if national governments require vaccine makers to license their patents—which all countries’ laws allow their governments to do—only a handful of manufacturers worldwide could produce the vaccines without extensive training in mRNA technology. Potential generic versions of the branded drugs would require regulatory approval, which would be time-consuming, expensive, and difficult, because of the novel technology. Despite these challenges, Love says, governments could do more to promote or compel greater vaccine production, but around the world, they all tend to tread lightly with Big Pharma.

Michael Bluhm: Why is Merck giving away its breakthrough drug for free to developing countries?

James Love: Merck has a fair amount of experience in infectious disease and working with the public-health community. They’re comfortable with the idea that sometimes, it’s better to make a voluntary agreement for areas that you’re not likely to serve very well than to be involved in endless disputes about why you’re not doing a better job of serving their populations.

I was surprised that it was royalty-free. Merck will want to focus its attention on selling the product in higher-income markets. The voluntary license covers little more than half the world’s population, with a per-capita income of just under $2,600 per year. The area that Merck is retaining an exclusivity for has a per-capita income of over $20,000 per year.

Merck would rather sell in the higher-income market and avoid being subject to criticism for focusing on it and not the lower-income market. Merck’s in a position to say, If people don’t have access to our drug in the lower end of the market, don’t blame us, because we’ve licensed and even offered technology transfer to the best generic companies in the world, regardless of where they’re located. It’s no longer our responsibility to address access in those countries.

There have been three voluntary agreements involving Covid-19 therapeutics. Who has not issued voluntary licenses? None of the biologic therapeutics—such as [the broad-spectrum antiviral medication] remdesivir—and none of the U.S.-approved vaccines have been licensed.

Bluhm: Why aren’t the vaccine makers voluntarily licensing their drugs?

Love: For biologics like the messenger-RNA vaccines, the know-how is considered a much more valuable asset than the know-how for small-molecule drugs such as molnupiravir. We had a discussion with Moderna early in 2020, when they announced they were not going to enforce their patents on their vaccine technology. We asked them, What will do you do about sharing know-how? They said, We won’t do it. If other companies can make our vaccine, they can make our next product.