Drug Companies Contemplating Cipla’s Royalty Offer for African AIDS Drugs

Two U.S. pharmaceutical companies "appear" to be contemplating India-based drug maker Cipla Ltd.'s offer of 5% royalties in exchange for permission to sell generic versions of their patented antiretroviral drugs in developing countries, the Wall Street Journal reports. Bristol-Myers Squibb Co. and Pfizer Ltd. have both "promised to respond soon" to the offer made by Cipla, according to letters made public by the company. GlaxoSmithKline PLC and Boehringer Ingelheim Ltd. have not yet responded to the company's Dec. 19 letter. Pfizer expects to respond within the month, but spokesperson Bob Huber said that an agreement is "unlikely." A spokesperson for GSK said that the company is "focused" on selling its drugs through a program brokered by the United Nations. According to the Journal, Cipla's offer has put the multinational drug makers in a "sticky" situation. Denying Cipla's offer "could hand Cipla a weapon to enter those markets anyway, through a maneuver called 'compulsory licensing,'" the Journal reports. Under compulsory licensing guidelines, a government can "force" patent holders to grant licenses to make generic drugs if there is a "national emergency," according to the Journal. In the absence of an emergency, generic companies must first establish that they attempted to get a license under "reasonable commercial terms" but were unsuccessful. Cipla officials said that eligibility for compulsory licensing was not "necessarily the intent" of the letter and that they "don't have a definite plan of action" if the royalty bid fails. Cipla is expected to meet soon with officials from Doctors Without Borders to "iron out" an agreement to sell antiretroviral combinations to the group for $350 per patient per year, but distribution could be problematic in countries with "strong patent protections" (Pearl, Wall Street Journal, 2/16).