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The Worldwide Stakes of Israeli Compulsory Licenses for Anti-Coronavirus Drugs

Client Updates / Mar 24, 2020

At the end of last week, the Israeli Attorney General authorized the issuance of a special compulsory license to allow the importation of generic versions of Abbvie’s patented Kaletra to treat Coronavirus. In response, as reported this week in the Financial Times, Abbvie has decided not to enforce its Kaletra patents throughout the world.

From an Israeli perspective, this is the first compulsory license issued in Israel for a patented drug in over 20 years. In fact, the end of the practice symbolized a new age of stronger intellectual property rights that occurred as part of Israel’s opening up to the world in the wake of the peace process, and the decline of the Arab boycott. As described below, even in the era of the Coronavirus, the compulsory license for Kaletra, which has led to a worldwide domino effect, is concerning for several reasons.

In contrast with the compulsory licenses issued in the 1990s, the Kaletra license was issued without consultation with the patentee or the option of direct judicial review. The fast track license was possible as it was issued under Section 104 of the Patent Law, which allows the State to permit the use of an invention (e.g. the use of an imported drug) for national defense purposes, to ensure sufficient supply, and for critical services. Similarly reasoned compulsory licenses were issued in the 1990s, in response to purported insufficient supply of a drug as a result of bad faith, anti-competitive activity. However, those licenses were issued under Section 117 of the Patent Law, and at least afforded a patentee a right of response, a hearing, and direct judicial review.

Further, the manner in which the terms of the compulsory license issued for Kaletra, when fully determined, will most likely be significantly less favorable than the 1990’s licenses. First, while the Attorney General has already decided to limit the license to the importation of generic Kaletra for the treatment of Coronavirus, the means and ability by which Israel (or other countries) could prevent off-label anti-HIV use of a generic widely used for the treatment of Coronavirus are unclear. Second, while the terms of the 1990s licenses were determined in an open manner that required the consideration of both the market value of the license and the patent, Abbvie’s compensation for the Kaletra license will be determined by a closed-door committee unbound by market considerations, regular judicial procedure, and whose decision cannot be appealed.

Possibly more troubling is the use of the license to allow importation of the generic drug from countries where Kaletra, a breakthrough HIV treatment, was not granted the same level of patent protection. Specifically, the Attorney General’s decision was directed toward the importation of generic Kaletra from India. In contrast with the Israel Patent Office, the Indian Patent Office rejected several of Abbvie’s patent applications for Kaletra. For example, while the Israeli Patent Office granted a patent to IL 173939, the Israeli National Phase Application of PCT/US2004/027401, the Indian National Phase Application of PCT/US2004/027401, Indian Application 339/MUMNP/2006, was rejected due to a lack of novelty and inventive step. It is worth noting that the Israeli Patent Office decision to grant a patent to the national phase application of PCT/US2004/027401 was not an outlier and recently the European Patent Office’s Board of Appeal ruled that a European member of the patent family, EP 1663183 was novel, had an inventive step, and was patentable. Abbvie also has several valid US Patents for Kaletra.

The differences in the Israeli Patent Office and Indian Patent Office Kaletra decisions means that the Attorney General’s authorization of a compulsory license for Kaletra allows Israel to exploit generic production of drugs in countries with weaker IP laws. During “peacetime”, countries such as Israel, with first world patent systems, heavily criticize countries, such as India, for having weak patent systems with “patentability requirements outside international standards”, as it was termed in the US Chamber of Commerce International IP 2020 Index. However, now during “wartime”, when the Coronavirus epidemic is rampant, countries with stronger patent systems, such as Israel, are forced to turn to India to obtain generic drugs unavailable due their stronger patent regimes. In fact, due to Abbvie’s decision to adopt the Israeli Attorney General’s determination throughout the world, all countries will benefit from the often-maligned Indian patent system.

Moreover, countries with weaker intellectual property systems have been criticized for issuing compulsory licenses for patented drugs. Specifically, Columbia was severely criticized for the issuing a compulsory license ten years ago to lower the cost of Kaletra, a lifesaving drug, in the fight against the plague of HIV/AIDS. In fact, the US Chamber of Commerce International IP 2020 Index, highlighted the use of compulsory licenses, like that issued for Kaletra, as a key area of weakness in Columbia’s patent system. Thus, only the apocalyptic nature of the Coronavirus outbreak can explain the silence of Columbia’s critics in the wake of the Israeli Attorney General’s determination to issue a compulsory license for the very same drug. A determination from which all countries with strong patent regimes will benefit due to Abbvie’s decision to apply the determination worldwide.

Significantly, the compulsory license for Kaletra does not appear to be an outlier and may be the first of many such licenses issued by Israel during the present crisis. This is because the license for Kaletra, an HIV protease inhibitor, with little or no proven effectiveness against the Coronavirus, was issued at a very early stage of the epidemic in Israel (i.e. prior to the first Coronavirus associated death in Israel). Therefore, it appears just a matter of time until compulsory licenses are issued without consultation for other patented drugs which have shown initial effectiveness in the treatment of the Coronavirus, such as Gilead Science’s Remdesivir, and FujiFilm Toyama Chemical’s Avigan.

The Israeli decision also has relevance for other countries. As noted above, the Financial Times reported that the Israeli Attorney General’s decision has led Abbvie to waive enforcement of its Kaletra patents throughout the world. This means that Israeli decisions to issue a compulsory license for the use of a patented drug in the fight against the Coronavirus may have, at least a moral domino effect throughout the world. Accordingly, it is important for any company, with patented drugs that may have possible effectiveness against the Coronavirus, to consider the potential worldwide impact of an Israeli decision to issue a compulsory license.

There are several avenues available to patentees to protect their Israeli intellectual property rights. One potential avenue involves reaching out the Israeli Attorney General and Ministry of Health to guarantee the supply of a drug potentially effective against the Coronavirus. As the Attorney General authorized the issuance of the compulsory license for Kaletra without consultation with Abbvie, a patentee should consider acting proactively prior to the issuance of a compulsory license. Based on the potential worldwide stakes, it is imperative for drug companies to engage counsel experienced in both Israeli administrative and intellectual property law to insure a favorable outcome.