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Sanofi gets an exclusive on Zika vaccine; what do taxpayers get?

Despite exclusivity, Sanofi makes no promises about price or availability

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When medical authorities last year celebrated test results confirming the success of a new Ebola vaccine, the doctors who work on the front lines of the world’s poorest countries warned that the arrangement behind the vaccine’s development must never happen again.

In 2010, the Public Health Agency of Canada granted a small, Iowa-based pharmaceutical company called NewLink Genetics an exclusive patent to develop a vaccine against Ebola, the deadly, highly contagious fever that first erupted in central Africa in 1976.

Government health agencies here and elsewhere will grant a single corporation an exclusive patent to prevent or cure a disease that otherwise might go ignored. The thinking behind these public-private partnerships is that they give corporations an incentive to find cures for rare, unprofitable diseases. But the reality is often something different. 

Under the Ebola deal, NewLink paid $205,00 for the exclusive right to build on research conducted by Canada’s government scientists, who had already found that the Recombinant vesicular stomatitis virus–Zaire Ebola virus, or the VSV-EBOV vaccine for short–could be "highly effective" at preventing the deadly fever.

Nowhere to be seen

But three years later, when a new, devastating Ebola epidemic suddenly emerged in West Africa, the VSV-EBOV vaccine was nowhere to be seen. NewLink genetics had not so much as began Phase I clinical trials. In a race against time, Canada’s public health agency allowed a different company to work on the vaccine that year and then donated 800 vials they had created to the World Health Organization. Finally, as the outbreak ravaged West Africa, Merck & Co. purchased the rights from NewLink in November 2014 and acted quickly to roll out the vaccine. 

By 2015, Canadian scientists were able to administer VSV-EBOV to 5,800 people in Guinea. Research published late last year confirmed that VSV-EBOV is effective. But for the estimated 11,000 people who had already died and the doctors who treated them while NewLink dithered, the vaccine came far too late. 

The story “shows how the Canadian government’s exclusive licensing was unnecessary and tragically delayed urgently needed innovation,” Doctors Without Borders wrote to the United States government in January. “If at least Phase I clinical trials had been conducted prior to the most recent outbreak, the vaccine could have been deployed during the emergency and potentially helped save lives.”

Citing the Ebola example, Doctors Without Borders is now trying to convince the United States Army to back away from a deal that gives French pharmaceutical corporation Sanofi the exclusive patent to develop a vaccine against the Zika virus. “Based on our experience, leaving these decisions exclusively to a pharmaceutical company may not lead to appropriate public health outcomes,” Doctors Without Borders writes.

Some lawmakers object

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A group of Congressional Democrats and Senator Bernie Sanders (I-Vt.) have already been outspoken about their objections to the Army’s proposal. They argue that granting Sanofi an exclusive deal and limiting the competition isn’t necessary to encourage innovation in this case, because pharmaceutical executives have already described the dollar signs in their eyes at the thought of a blockbuster Zika cure.

Even Sanofi acknowledges this much. “It’s important to note that dozens of other companies, many with funding from the US government, are also developing Zika vaccine candidates, some using similar approaches, others using other novel technologies,” Sanofi spokesman Ashleigh Koss writes to ConsumerAffairs. She says that winning the license from the United States government does not hinder competitors from selling a Zika vaccine in the United States that is “based on alternative technologies.” 

But front-line doctors and the objecting lawmakers do not want any potential Zika cure, be it Sanofi's or a competitor's “alternative technology,” to belong in the hands of one company. “In order to ensure that the investment made by taxpayers was worthwhile, it is critical that we ensure the vaccine to prevent against the Zika virus is accessible to anyone who requires it,” a small group of Democratic lawmakers wrote to the Army earlier this year.

At the very least, the Democrats who protested asked that the Army demand Sanofi set its Zika vaccine at a price that is affordable. But Sanofi has rejected even that request. In late April, the Department of Defense ignored the concerns and announced that it planned to grant Sanofi an exclusive, royalty-bearing license, though the details are still being finalized and critics are quickly filing appeals. 

Sanofi says taxpayers will get royalties

Stat News reported last Wednesday that Sanofi has declined to agree to price controls on its Zika vaccine. “It is unacceptable that Sanofi has rejected the Army’s request for fair pricing,” the office of Senator Bernie Sanders told Stat News in a statement. “American taxpayers have already spent more than $1 billion on Zika research and prevention efforts,” an amount that includes a $43 million grant that Congress approved to fund Sanofi’s vaccine specifically. 

On May 10, Republican Louisiana Governor Robert Speer joined the fray of concerned politicians. In letter to the Army, Speer described his state’s vulnerability to tropical diseases such as Zika, and the necessity for an affordable vaccine. “A decision to give one company, Sanofi, a monopoly, without any constraints on the price of the vaccine, could cripple state budgets and threaten public health in the event of local Zika transmission,” Speer wrote. He noted that up to 540,000 Louisiana residents are currently on Medicaid. 

Sanofi argues that it is "premature" for people to discuss the price of the Zika vaccine. “At this time, it is premature to consider or predict Zika vaccine pricing at this early stage of development,” Sanofi spokesman Ashleigh Koss writes to ConsumerAffairs. “In fact, the Phase 2 trials won’t even start until early 2018.”

But what about the taxpayers who gave Sanofi $43 million to fund the research into its vaccine, and are likely to hand over another reported $130 million? Sanofi suggests that American taxpayers will recover their investment because Sanofi might to give the United States government some royalties and “milestone payments” if the vaccine is licensed and “successful."

“Historically under the terms a licensing agreement, Sanofi would provide WRAIR [Walter Reed Army Institute of Research] with milestone payments, and if successful, royalties too if a vaccine candidate is licensed. The US government and taxpayers recover their investment,” Koss writes to ConsumerAffairs. 

Sanofi does not specify how much those royalties and milestone payments would be, should Sanofi even commit to pay them. "The details of a potential licensing agreement are still being discussed, and as noted earlier these discussions continue to be ongoing," Koss says.

NewLink still made millions off Ebola

Pharmaceutical companies can make millions off of exclusive licenses, even when they do not actually help administer the vaccine or save any lives. During the Ebola outbreak, NewLink actually profited enormously after their product reportedly sat on shelves for years. As panic over the Ebola virus spread through 2014, NewLink was able its exclusive rights to Merck for tens of millions more than they had paid the Canadian government. 

“This wasted opportunity and failure to advance the vaccine’s development nevertheless netted NewLink more than $63.5M profit when they sold the rights to pharmaceutical company Merck during the most critical phase of the outbreak,” Doctors Without Borders wrote to the United States Army. A more competitive license would have encouraged NewLink and other companies to work faster to develop the vaccine, the group argues.  

“A non-exclusive license could have allowed the Canadian government, either prior to or during the outbreak, to take more decisive action to encourage or require the timely testing and development of the vaccine.” Doctors without Borders similarly pressed the United States to consider a non-exclusive license for the Zika vaccine. 

Through a spokesman, NewLink declined to comment on their role in potentially hindering the introduction of VSV-EBOV. 

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