Patented inventions for services of the Crown: Can IP law break the deadlock over Orkambi?

It is not that often that intellectual property makes headlines news, but the discussion about the availability of cystic fibrosis drug Orkambi and the possible invocation of a little-known law which might force its patent holder to provide it at a reasonable price in the UK has been mainstream news recently.

Orkambi, a combination of lumacaftor and ivacaftor, is indicated for the treatment of cystic fibrosis (CF) in patients age 2 years and older who are homozygous for the F508del mutation. This mutation is found in around 4,000 CF patients in the UK.

CF is a genetic disorder caused by the presence of mutations in both copies of the gene for the CF transmembrane conductance regulator (CFTR) protein. This protein functions as a channel across the membrane of cells that produce mucus, saliva, tears, sweat and digestive enzymes. The channel transports chloride ions (amongst others) into and out of cells, and thus helps to control the movement of water in tissues, which is necessary for the production of freely flowing mucus. 

Mutations in the CFTR gene alter the production, structure or stability of the channel. This in turn impairs the transport of chloride ions and the associated movement of water. As a result, the mucus produced by cells that line the passageways of the lungs, pancreas and other organs is abnormally thick. This abnormal mucus obstructs the airways and glands.

More than 1,000 mutations in the CFTR gene have been identified in people with cystic fibrosis. Most of these mutations result in a single amino acid change or deletion. The most common mutation in the CFTR gene is a deletion of one amino acid at position 508 in the CFTR protein (the F508delta mutation). 

Lumacaftor improves the conformational stability of F508del-CFTR; ivacaftor is a CFTR potentiator. These two compounds work together in Orkambi to increase the quantity, stability and function of F508del-CFTR protein, resulting in increased chloride ion transport.

Orkambi was authorised for use by the European Medicines Agency in November 2015. In 2016, NICE (the National Institute for Health and Care Excellence) reviewed the use of Orkambi – which has a list price in the UK of £104,000 per patient per year – but was unable to recommend it as a cost effective use of NHS resources.1

Since then confidential talks between NHS England (the executive non-departmental public body of the Department of Health and Social Care, which oversees the budget, planning, delivery and day-to-day operation of the commissioning side of the NHS in England) and the patent holder for Orkambi, Vertex Pharmaceuticals Incorporated (Vertex) have continued, but with no progress. 

Vertex claim to have offered the best price to the UK government for the drug, but NHS England maintains that the drug remains unaffordable. An offer of £500 million over five years for all of Vertex’s CF drugs by NHS England in July 2018 was rejected by Vertex. 

In response to an open letter from campaigners Vertex stated: “Precision therapies like ours are delivering unprecedented results, but they also present new economic challenges. We recognise fully the constraints that health systems around the world are working under, which create unenviable choices for the health authorities. Health authorities need to adapt their systems to the realities of modern medicine. Vertex shares the responsibility with governments and regulators to do all that we can to agree to a fair price that reflects the value of these medicines in all countries where they are needed.”

In an adjournment debate held in Parliament, Bill Wiggin, Conservative MP for North Herefordshire, asked the government to invoke Crown Use provisions in order to “overturn the patent monopoly on Orkambi by Vertex”2.

These provisions are set out in Sections 55-59 of the UK Patents Act, and allow a government department, or person authorized by a government department, to carry out acts which would otherwise infringe a patent without the consent of the patent proprietor, providing such use is ‘for the services of the Crown’ in the UK, and is of the kind specified in the subsections to Section 55. 

If Crown Use is invoked, a licence is effectively ordered between the patentee and the relevant government department. The patent proprietor (or exclusive licensee, if there is one) is entitled to royalties and/or compensation for potential loss of profit (for example to compensate for loss resulting from being awarded a contract to supply the patented product, perform the patented process or supply an item made by means of the patented process). The terms of the licence, including royalty rates and amount of compensation, are agreed between the government department and patent proprietor with approval of the Treasury, or in the case of dispute, by the court. 

These provisions are intended to allow the government to act in the best interests of the public, by providing a means for exploiting important patented technology.

The provisions have been enacted in the past specifically for pharmaceuticals: in the 1960s and ‘70s generic versions of the antibiotic tetracycline were purchased for use in NHS hospitals against the wishes of the patent holder, Pfizer, from a manufacturer in Italy3. It was held that the use of a patented drug in NHS hospitals was ‘for the services of the Crown’. In this regard, The House of Lords held that the phrase was not to be limited to the internal activities of Crown authorities, but could ultimately benefit individual members of the public. Crown Use provisions were also threatened during a dispute over hepatitis C diagnostic test kits4; and the supply of machines known as lithotripters for treating kidney stones.5

The situation with Orkambi, however, differs from that in the Pfizer v Ministry of Health case, in that there are no suppliers of Orkambi other than Vertex. As such, there is no secondary source from which a generic form of the drug could be purchased, as there was with generic tetracycline.

Instead, under Crown Use provisions the government could allow another manufacturer to make a generic version of Orkambi.

But in practice, how much use would this be? 

Firstly, under Crown Use legislation the patent holder, Vertex, would need to be compensated. The compensation would need to take into account any loss of profit from not being awarded a contract to supply Orkambi in the UK. Unless an agreement could be reached with Vertex, the level of compensation would be for a court to decide. 

Secondly, as acknowledged in the Parliamentary debate, Crown Use was not historically intended to circumvent commercial agreements or to create a mechanism for the production of medicines at a lower price. It is not clear how the invocation of Crown Use provisions could affect other medicines that are being developed or are supplied to the NHS by Vertex, or, for that matter, any other company.

Further to this, a new manufacturer of Orkambi would need to be found, and a price negotiated for a generic version of the drug. In addition, marketing authorisation would need to be obtained for the generic drug to demonstrate its safety, quality and efficacy. Whilst the regulatory regime allows a generic company to rely on information filed by the innovator company for a marketing application (but nevertheless requires the generic company to show that their product has the same qualitative and quantitative composition as the originator product and is bioequivalent) this is only possible once the data exclusivity period has expired.

The data exclusivity period prohibits the use of pre-clinical and clinical test data generated by the originator in the processing of a marketing authorisation for a generic medicine for a period of eight years. 

As Orkambi remains within the data exclusivity period, the manufacturer of the generic version would need to generate the data necessary for a separate marketing authorisation application anew.

These factors effectively render reliance upon Crown Use provisions impractical: the cost and length of time needed to overcome such hurdles mean that the use of such provisions is an empty threat. It would therefore seem that the government, despite its frustrations with Vertex, will have to negotiate further if Orkambi is to be made available on the NHS. 

References:
1 NICE, Lumacaftor–ivacaftor for treating cystic fibrosis homozygous for the F508del mutation, July 2016 https://www.nice.org.uk/guidance/ta398
2 https://hansard.parliament.uk/Commons/2019-02-04/debates/12C071ED-9463-4502-8625-89B910AD12F5/Orkambi
3 Pfizer v. Ministry of Health [1965] AC 512
4 Chiron Corp and others v Murex Diagnostics Ltd and others [1996] RPC 535 
5 Dory v Sheffield HA [1991] FSR 221