On 31 December 2020 the Government of the Russian Federation adopted Order No. 3718-r (the "Order"), which allowed JSC Pharmasyntez to use inventions protected by Eurasian patents owned by the American biopharmaceutical company Gilead Sciences Inc., without the latter's consent in 2021, and, accordingly, the production of "Remdeform" by JSC Pharmasyntez using the above inventions. The Order was adopted by the Government of the Russian Federation on the basis of the Article 1360 of the Civil Code of the Russian Federation in order to provide the population of the Russian Federation with drugs with the international nonproprietary name Remdesivir – antiviral drugs widely used in the world for the treatment of COVID-19 (for example, in the Russian Federation, Remdesivir is included in the Temporary guidelines of The Ministry of Health of the Russian Federation "Prevention, diagnosis and treatment of a new coronavirus infection (COVID-19). Version 10", and in the United States of America it was the first approved drug for COVID-19).
Compulsory licensing in favor of JSC Pharmasyntez was carried out on the condition that the JSC Pharmasyntez paid commensurate compensation to Gilead Sciences Inc., however, the amount of this compensation was not disclosed by the parties.
Compulsory licensing for Remdesivir to JSC Pharmasyntez received a different assessment in the pharmaceutical market: some noted the decrease in the initial maximum price for Remdesivir almost twice as a positive effect, others noted the presence of similar drugs on the Russian market, for example, Favipiravir, and as a result, they did not see the need for compulsory licensing. Gilead Sciences Inc., in turn, was disappointed with the Order and noted that the company could satisfy the needs of Russians for Remdesivir (trade name – Vekluri®) on its own, without compulsory licensing. Note that patents of Gilead Sciences Inc. for Remdesivir in the Russian Federation are valid until 2035.
In our opinion, taking into account the absence of a clear definition of "national defence and security" in the legislation of the Russian Federation, the validity of the application of the compulsory licensing mechanism for drugs is controversial. In addition, the methodology for calculating compensation to copyright holders, as well as the mechanism for establishing the compliance of compensation with the fair market value of a license, raises a lot of questions. We note that the decree of the Government of the Russian Federation, containing the methodology for calculating compensation, has not yet been adopted, its draft was submitted by the Federal Antimonopoly Service of the Russian Federation back in February 2020 and received a negative decision based on the results of the regulatory impact assessment procedure.
On 19 April 2021 it became known that Gilead Sciences Inc. applied to the Supreme Court of the Russian Federation with a statement challenging the Order, the hearing in the highest court was scheduled for 27 May 2021. More detailed information on the case is available here.
The absence of judicial practice related to the application and interpretation of the Article 1360 of the Civil Code of the Russian Federation makes the future decision of the Supreme Court of the Russian Federation unpredictable, but we assume that the position of Gilead Sciences Inc. will most likely be based on the argument that demand for Remdeform is low and that at least two of the six patents listed in the Order are from another drug from Gilead Sciences Inc. - Sofosbuvir for hepatitis C, which follows from the data of the Register of Eurasian patents.
In conclusion, we note that in the near future, the Article 1360 of the Civil Code of the Russian Federation will be expanded and the previous goals of compulsory licensing (national defence and security) will be supplemented with the protection of the life and health of citizens. The draft law on this was adopted in the third reading on 13 April 2021 and is currently under consideration by the Federation Council of the Federal Assembly of the Russian Federation. We believe that the expansion of the scope of the Article 1360 of the Civil Code of the Russian Federation directly indicates that the issuance of a compulsory license for Remdesivir will not remain the only precedent.
