Report of the Medicines Patent Pool Expert Advisory Groupon the Proposed Licence Agreement with Merck Sharp & Dohme (MSD) on Molnupiravir
Introduction
The Expert Advisory Group (EAG) of the Medicines Patent Pool (MPP) submits the following report to theGovernance Board of the Medicines Patent Pool (Board) on the proposed License Agreement (the Agreement)
between MPP and MSD for molnupiravir (MOL) for treatment of mild to moderate COVID‐19.
This report reflects the outcome of consultations with the EAG on 7 June 2021 (chaired by Peter Beyer andjoined by EAG members Zeba Aziz, Akthem Fourati, Manuel Gonçalves, Giten Khwairakpam, Gugu Mahlangu,
Deus Mubangizi, Valérie Paris, Fatima Suleman and Ellen ‘t Hoen, as well as François Venter from the Scientific
Advisory Panel (SAP)) and on 21st of October 2021 (chaired by Peter Beyer and joined by EAG members ‐Alexandra Calmy, Akthem Fourati, Jan Gheuens, Manuel Gonçalves, Martha Gyansa‐Lutterodt, Jordan Jarvis,
Giten Khwairakpam, Gugu Mahlangu, Deus Mubangizi, Valérie Paris, Fatima Suleman and Ellen ‘t Hoen, as well
as Nathan Ford from the SAP). François Venter from the SAP endorsed the conclusions of this report.
The Terms of Reference for the EAG pose two questions that the EAG must address in assessing the results offinal negotiations: (i) do the results sufficiently meet the requirements set out in the Statutes, and (ii) do thenegotiation results offer sufficient added value over the status quo?
Having reviewed the proposed Agreement between MPP and MSD and having received a briefing from MPP
on the Agreement, the EAG answers both questions in the affirmative and recommends that the Board
requests the Executive Director of MPP to finalise and execute the necessary documents with MSD.
Background, Overview of the Proposed Agreement
In March 2020, as the severity of the Covid‐19 pandemic became increasingly clear to the global community,
MPP’s Governance Board announced the temporary expansion of MPP’s mandate to include any healthtechnology that could contribute to the global response to Covid‐19 and where licensing could facilitate
innovation and access. The proposed Agreement would represent the first MPP licence on a Covid‐19
technology following the mandate expansion.
MOL is a key target of the Access to Covid‐19 Tools Accelerator (ACT‐A) therapeutics pillar, noted as apromising small molecule Covid‐19 treatment in late‐stage development for non‐hospitalized patients withmild to moderate symptoms. MSD’s Phase 3 trials showed promising results (reduction of hospitalization by
50%, according to MSD’s press release) in at risk, non‐hospitalized adult patients with mild‐to‐moderate
COVID‐19. WHO will make a recommendation based on these Phase 3 results. Currently MOL is not includedin WHO COVID‐19 treatment guidelines.
With the support of Unitaid and other key members of ACT‐A, MPP entered into negotiations with MSD for
MOL in February 2021. The EAG was initially consulted in March 2021 and in June 2021 at earlier stages in thenegotiations, and at that time stressed the need to expand the proposed Territory, and to ensure that theAgreement would be compatible with TRIPS flexibilities. In October 2021 MSD updated MPP about theencouraging Phase 3 outcome and its request for emergency use authorization by the US Food and Drug
Administration (FDA).
1Key aspects of the proposed Agreement are as follows:
Scope of Grant of Licence. The proposed Agreement would grant MPP a nonexclusive licence to the
MSD patents and documentary know‐how with the ability to grant nonexclusive, royalty‐bearing
sublicences to eligible API and finished product manufacturers anywhere in the world for purposes ofsupplying API or finished product into the Territory for use in the treatment of Covid‐19.
Patent Status. Many patent applications have been filed in different jurisdictions and the patents havestarted to be granted in several countries. Some unpublished patent applications that are not yet in
the public domain as they are still within the 18‐month window from filing date will not be listed inAppendix 2 in the proposed Agreement. The EAG notes that this is MSD’s statutory right and alegitimate exception to MPP’s commitment to transparency as noted in the organisation’s
Transparency Policy.
Royalties. Royalties are set at 5% of net sales for governments and other public purchasers (includingNGOs) in the Territory, and at 10% of net sales to commercial entities in the Territory. Royalties arepayable regardless of patent status in the country of manufacture or sale. The Agreement is royalty‐
free until the World Health Organization (WHO) declares the end of the Public Health Emergency ofInternational Concern regarding COVID‐19 (PHEIC).
Territory. The Territory of the proposed Agreement consists of 105 countries.
Other key public health‐oriented terms and conditions. The proposed Agreement contains otherimportant public health‐oriented terms and conditions, such as the requirement that MSD provides
regulatory waivers. Anti‐diversion restrictions are limited to those countries outside the Territory
where there is a Non‐Territory Patent.
Compatibility with TRIPS flexibilities. The proposed Agreement contains language that provides that
nothing in the Agreement shall be interpreted as preventing activities that would not infringe upon
MSD’s patents and/or know‐how.
Termination‐for‐challenge provision. For the first time, an MPP licence includes a termination‐for‐challenge provision, which provides
 MSD the right to terminate the head licence in the event that MPP or any of the sublicensees
with the support of MPP challenges any of the licensed patents, and MPP the right (but not the obligation) to terminate a sublicence in the event that a sublicensee
challenges any of the licensed patents.
The provision states that these clauses were included only as a result of a requirement of MSD’s
upstream licensors, namely, DRIVE (a fully‐owned subsidiary of Emory University) and Ridgeback
Therapeutics and expressly states that this provision is severable from the rest of the Agreement in
the event that the clause is declared invalid or unenforceable.
The EAG’s interpretation of this language is discussed further below.
Assessment of the Proposed Agreement in Light of MPP's Statutes
MPP's Statutes contain guiding principles against which the results of negotiations are assessed. The EAG findsthat the proposed licence agreement meets the requirements in the Statutes, as summarised in the tablebelow.
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Relevant Considerations in the Statutes of the Medicines Patent Pool
Statutes
Negotiating terms and conditions of licenceagreements with aim to maximize public healthbenefits, taking into account the Global Strategy
and Plan of Action on Public Health, Innovation
and Intellectual Property of the WHO (GSPOA);WTO Doha Declaration

Terms in Proposed Licence
Provisions ensuring that sales inside oroutside the Territory are not a breach of theAgreement if the sales do not infringe MSD
intellectual property (as, for example, if acompulsory licence has been granted) and/or
misappropriate MSD know‐how.

Entering into licence agreements with patent
holding entities, and sublicence agreements withgeneric manufacturers and other appropriate
sublicensees on a non‐exclusive and no‐discriminatory basis
As and when necessary, enforcing terms andconditions of licence agreements, withappropriate dispute resolution mechanisms

MPP to enter into non‐exclusive licences withlicensees chosen through MPP’s Expression ofInterest Portal.

Requiring stringent quality criteria for licensed
products

Including anti‐diversion and traceability
mechanisms

MPP takes on significant obligations tomonitor and enforce terms of agreements;
specifies mediation at WIPO in case of
dispute.
Requires all licensed products to be made inaccordance with WHO PQ or Stringent
Regulatory Authority standards, or throughany provisional or emergency use
authorizations available from WHO or an SRA.
Licensees required to implement a system ofbatch control as a means of tracing ofproduct to monitor potential diversion.

Assessment of the Proposed Agreement in Light of the Status Quo
The EAG finds that the terms and conditions of the proposed Agreement represent a significant added value
over the status quo. The added value consists of the potential medical significance of enabling affordable
access to MOL in 105 countries around the world, as well as the strategic and norm‐setting significance of
demonstrating MPP’s viability in meaningfully engaging in the fight against Covid‐19.
From a medical standpoint, in the event that it proves to be safe and effective, the EAG believes that MOL canform an important component of the Covid‐19 response, as it will be an all‐oral treatment available to high‐risk patients outside the hospital setting that appears to significantly reduce the risk of hospitalisation anddeath. The need for such interventions for Covid‐19 treatments is all the more apparent in light of the ongoingdisparities of access to vaccines against the virus.
The EAG notes that the Agreement marks the first transparent, public health‐oriented MPP licence on a Covid‐
19 technology. This accomplishment represents an important step both for MPP as well as the global
community, as this Agreement may encourage other innovators to step forward and engage with MPP onother important Covid‐19 technologies.
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In the earlier EAG consultation on MOL, the EAG stressed the importance of ensuring that the Agreement
would be compatible with TRIPS flexibilities. The EAG notes that the critical element of compatibility with TRIPS
flexibilities has been preserved through Section 2.6:
For the avoidance of doubt, nothing in this Agreement shall be construed to prevent the Licensee
from engaging in activities inside or outside the Territory where such activities would not (1) infringe
the Patents and/or any other intellectual property rights; and/or (2) misappropriate MSD Know‐
How. Licensee acknowledges that MSD has expressly reserved all its rights under the Patents, except
as expressly set forth in the MSD‐MPP Agreement, and under any additional patents and/or patentapplications owned or controlled by MSD. Licensee also acknowledges that MSD does not waive any
applicable statutory and/or regulatory exclusivities owned or controlled by MSD, except as expressly
set forth in the MSD‐MPP Agreement. Nothing in this Agreement shall provide a right tocommercialize outside the Territory.
Though ‐ as noted in the last sentence of this Section ‐ the Agreement itself does not confer an explicit rightof commercialization outside the Territory, the EAG views an express grant of right unnecessary in light of thefirst sentence of this Section. Provided that MSD has acknowledged that activities that do not infringe MSD
Patents or use MSD Know‐How do not constitute a breach of the Agreement, a further right granted by MSD
is not needed. The EAG interprets this provision as acknowledging that a licensee is not in breach of theAgreement if it manufactures in a country with no Patents to sell to a country outside the Territory where
there are no Patents, as long as it does not rely on the MSD Know‐How. It would also acknowledge the same
where a licensee sells outside the Territory where a compulsory licence for the patented technology has been
issued.
As previously mentioned, an MPP‐negotiated licence includes for the first time a termination‐for‐challenge
provision. Such a provision goes against long‐established core MPP principles of compatibility with TRIPS
flexibilities and complementarity with other access mechanisms, as laid down in MPP’s Statutes. Moreover,such a provision may raise competition law concerns in many jurisdictions. MPP recognises this and expressly
made clear that the provision was severable from the rest of the agreement in case it is invalid.
In principle, the EAG considers termination‐for‐challenge provisions as incompatible with the core MPP
principles as mentioned above. However, the way in which the provision was drafted allows the EAG torecommend the agreement for adoption:
First, in the Head licence, MSD is only given the right to terminate if MPP itself challenges any of thelicensed patents or actively supports its licensees in challenging the patents – something that MPP
does not do.
Second, in the Form Sublicence, MPP has the right, but not the obligation, to terminate the Sublicencein the event that a Sublicensee challenges any of the licensed patents.

The EAG, however, strongly recommends that the MPP Board clearly state that the inclusion of termination‐for‐challenge clauses are not compatible with MPP core principles and that the MPP does not intend to
exercise this right. The EAG further understands that this provision was included not at MSD’s insistence, butof MSD’s upstream licensors (DRIVE, a fully‐owned subsidiary of Emory University, and Ridgeback). The EAG
thus recommends that after execution of the agreement MPP continue to work with MSD and its upstream
licensors to delete these provisions.
4The EAG further notes that the Territory remains essentially the same as during the previous consultation on
MOL in March 2021, and that the Agreement excludes several middle‐income countries from the Territory of
the licence, particularly in Latin America—one of the regions most impacted by the Covid‐19 pandemic. While
MSD’s global access plan for MOL states that MSD will make MOL affordable and available worldwide, the plan
does not clearly address what level of affordability will be achieved, particularly in those middle‐income
countries that remain outside of the Territory. The EAG thus recommends that MPP continue to work with
MSD to explore options to further expand the Territory in order to ensure access and affordability in all low‐
and middle‐income countries.
The EAG further notes that while the licence is royalty‐free for as long as COVID‐19 remains the Public Health
Emergency of International Concern as per the WHO, the royalty obligations are subsequently payable
regardless of patent status in the country of manufacture or sale, marking a departure from MPP’s practice ofmaking royalties payable only where there is a granted patent in force. The EAG understands that thisobligation is one that is imposed on MSD from upstream licensors but encourages MPP and MSD to work withsuch licensors to make appropriate amendments to this provision.
Finally, the EAG notes that MSD has already signed bilateral licence agreements with a number of Indian
manufacturers. Given the scope of the pandemic and the dire circumstances in India, however, it is important
for there to be a broad base of manufacturers both inside and outside India sufficient to satisfy demand,
including in countries where there appear to be no MOL patents. EAG therefore recommends that MPP takes
this need into account when identifying and evaluating prospective sublicensees. The EAG strongly
recommends that MPP work with MSD in transferring MSD direct licensees into MPP licences, which haveimportant public health‐oriented terms that may not exist in the bilateral licences.
Recommendation
The EAG concludes that the proposed Agreement with MSD is consistent with MPP's mandate as defined in its
Statutes and represents a significant improvement over the status quo in terms of the public health‐oriented
nature of the licensing terms and conditions. Therefore, while emphasising the areas for improvement detailed
above, the EAG recommends that the Medicines Patent Pool Governance Board request the Executive Director
to sign the proposed Agreement between MSD and MPP on the condition that it clearly states that theinclusion of termination‐for‐challenge clauses are not compatible with MPP core principles and that the MPP
does not intend to exercise its right of termination‐for‐challenge.
Signed,Peter Beyer
Chair, Expert Advisory Group
Date: 25 October 20215