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Using Contracts to Lessen Inequities in Access to Medicines in Pandemics and Epidemics

By Sapna Kumar and Ana Santos Rutschman

Research funding contracts can help to safeguard against profound inequities in global allocation and distribution of lifesaving diagnostics, drugs, and vaccines.

During large transnational public health crises, global demand soars for diagnostics, drugs, and vaccines. Although some of these products can be developed within compressed timelines, global production capacity remains limited. Against a backdrop of product scarcity, wealthier countries can out-bid their lower-income counterparts and capture most of the supply during the early stages of pandemics and epidemics. This leaves the vulnerable low-income populations waiting months, or even years, for their turn.

This predictable, inequitable pattern can be held off before the next pandemic. At the research and development (R&D) stage, government funders can bind producers to equity goals through targeted contractual provisions, as we explain in a recently-published Nature Biotechnology article. We summarize our proposals in the following sections.

Pandemic Technology and the Contract Landscape

R&D processes resulting in the production of lifesaving medicines during a pandemic or epidemic are remarkable. They tackle relatively complex scientific challenges and generate medical products that would normally be produced over a much longer span of time. However, there is one aspect of this story that is often overlooked: most pandemic- and epidemic-related R&D builds on pre-existing science and technology. Consider, for instance, the case of COVID-19 vaccines. Even those relying on a new type of vaccine technology, such as mRNA vaccines, resulted from well over a decade of R&D in mRNA vaccinology and used vaccine components that were developed well before the COVID-19 pandemic began.

These R&D dynamics also leave an imprint on the contractual landscape surrounding the technologies needed to develop diagnostics, treatments, and vaccines in response to a pandemic or epidemic. R&D funded prior to the onset of a large public health crisis is governed by contracts negotiated before problems of product scarcity and inequitable allocation become mainstream problems. As such, while funders may have general concerns with regard to the affordability and equitable distribution of medicines, they are seldom held to contractual provisions that would require real-world equity in access to these products.

By contrast, R&D funded after a pandemic or epidemic begins is governed by contracts negotiated under pressure to move technology along the R&D pipeline as quickly as possible. At this point, bargaining conditions are heavily constrained by available resources and geopolitics. These negotiations, moreover, are further colored by the existence of patents (or patent applications) and other proprietary rights that may cover some of the components needed to produce these products. Due to these heterogenous and complex constraints, our proposal calls for funding entities to make greater use of contractual frameworks ahead of the onset of a public health crisis.

Using Contracts to Further Equity Goals

We further argue that there are at least two contractual pathways that funders can use to prevent, or at least lessen, the likelihood of inequitable allocation of medicines produced under the constraints posed by a pandemic or epidemic.

The first pathway is requiring funding recipients to use out-licensing to alleviate scarcity. This is a contractual framework negotiated when the government funds research related to a specific pandemic or epidemic. Contractual language would obligate the recipient to produce any resulting drug in sufficient supply to meet public health needs during the relevant public health crisis. If necessary, the producer will be granted a grace period to ramp up production. If the drug remains scarce after the grace period ends, then the company would be obligated to license out its patents and manufacturing know-how to willing third-party manufacturers. The agreement would require the funding recipient to license the technology covered to other parties on a non-exclusive basis, thereby allowing multiple manufacturers — as many as the market will bear — to produce the medicine or product in question. In exchange, the government would pay a pre-negotiated royalty as compensation.

The second pathway is that of a dormant license. This is a contractual framework negotiated at the time of funding that only becomes legally operative if and when an event selected as a trigger occurs — in our case, the onset of a pandemic or epidemic. As with the first pathway, the terms of the dormant license would require non-exclusive licensing of the covered technology. For the sake of legal certainty, we suggest that the trigger should be a formal declaration of a public health crisis by a public health entity, such as the World Health Organization or a domestic public health agency. Still, with a view to safeguarding predictability and legal certainty, the dormant license should specify how to calculate the term and royalties owed to the licensor.

In both cases, we argue that governments should also insert provisions into the funding contracts designed to lessen inequities at the time of allocation of medicines. Consider the case of COVID-19 vaccines: because, in most cases, there were no contractual obligations to reserve a percentage of vaccine doses for the populations shouldering the greatest burden of disease, populations in wealthier countries were the first recipients of a disproportionately large share. We argue that future contracts should require manufacturers of vaccines resulting from publicly funded R&D to reserve a significant percentage of doses to be distributed according to public health needs—this could be accomplished, for instance, by committing a meaningful percentage of product to a transnational procurement facility, such as COVAX. This approach preserves the economics underlying the purchase and sale of vaccines and other products needed during pandemics and epidemics. At the same time, it does not require manufacturers to make a call about public health needs, or to prioritize certain countries. Rather, it shifts that decision to the procurement facility, which should have greater expertise to deal with allocative problems in the context of a public health crisis.

Lastly, although our work has been primarily focused on publicly funded R&D, we note that our prescriptions can (and should) be applied to funders other than governments, including public-private partnerships and philanthropic organizations.

Sapna Kumar is a Professor of Law at the University of Houston Law Center.

Ana Santos Rutschman is an Assistant Professor of Law at Saint Louis University School of Law.

The Petrie-Flom Center Staff

The Petrie-Flom Center staff often posts updates, announcements, and guests posts on behalf of others.

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