MAPGuideⓇ
Equitable Access Toolkit
Approaches to Product Supply Commitments in License and Technology Transfer Agreements
Product supply commitments in license agreements can help to secure sufficient and timely supplies of quality-assured licensed products for the populations that need them. Detailed provisions related to product supply are more likely to be included in downstream licenses where the licensee is expected to be the commercializing entity for the licensed product.
Questions to consider when developing and negotiating supply commitments for license agreements include:
What commitments should the licensee make in relation to fulfilment of demand for the access territory?
How should the licensed product be made available for purchase by relevant procurement entities?
What is the risk of disrupted or delayed supply, and what steps could be taken by the parties to mitigate this risk?
What steps should the parties take to monitor and minimize any risk of diversion of the licensed product outside of the licensed territory?
1. Sufficient supply
License agreements can include different types of provisions aimed at ensuring sufficient supplies of a licensed product for the access territory. The commitments negotiated will depend on the context and scope of the agreement as well as product-specific demand and supply factors, but some examples include obligations to meet demand forecasts or minimum supply volumes, requirements for the licensee to use best or commercially reasonable efforts to meet demand.
Examples from the MAPGuide
SIIPL shall at its sole cost and expense Manufacture Conforming Product in accordance with this Agreement, including the Quality Agreement, in sufficient quantities to meet market demand in the SIIPL Territory based on the Forecasted Quantities.
Source: taken from a license agreement between Valneva (Licensor) and Serum Institute of India (Licensee). Partner types: industry, industry; Product type: chikungunya vaccine; Development stage at signature: phase 3 clinical trials. Read in context.
[T]he Parties shall develop a detailed forecasting, supply, access and implementation plan for the supply of the Drug Product and define related operational supply chain management processes to ensure availability and access of the Drug Product in the Field with the consultation, as appropriate, of one or more funding agencies or partners, e.g., the World Health Organisation.
Source: taken from a collaboration agreement between Entasis Therapeutics and GARDP. Partner types: PDP, industry; Product type: gonorrhea treatment (zoliflodacin); Development stage at signature: Phase III clinical trials. Read in context.
The Final Product will be made available in a timely manner and in sufficient quantities to meet the needs of the Public Sector in the Territory, including in accordance with any Minimum Supply Targets.
Related definitions: “Minimum Supply Targets” means any targets agreed between Unitaid and [Licensor] in relation to minimum production capacity, minimum annual production volumes, maximum order lead time for delivery and/or minimum order quantity for a Final Product, each for the benefit of the Public Sector in the Territory. For the avoidance of doubt, the Minimum Supply Targets may be expressed as a specific volume of the Final Product or a means of calculation of the volume, for example, “20% of the estimated target market for the Final Product in the Territory.”
Source: taken from a license agreement between MedinCell (Licensor) and MPP (Licensee). The license grant to MPP was required under a related grant agreement between Unitaid and MedinCell, with terms to reflect Unitaid’s access objectives. Partner types: industry, multilateral; Product type: malaria vector control (long-acting ivermectin injectable); Development stage at signature: pre-clinical. Read in context.
The Sublicensee will use all reasonable commercial efforts to manufacture the Licensed Compound and Licensed Products for use and sale in the Territory consistent with this Sublicense Agreement and to provide a sufficient supply thereof to meet the needs in the Territory. The Sublicensee will, upon [Sublicensor]’s reasonable request, undertake to manufacture in sufficient volumes certain presentations and strengths of Licensed Products as listed in Schedule A.
Source: taken from a form of sublicense annexed to a license agreement between Bristol-Myers Squibb (Licensor) and MPP (Licensee). Partner types: industry, multilateral; Product type: hepatitis C antiviral (daclatasvir); Development stage at signature: licensed product on WHO EML. Read in context.
Licensees shall be responsible for establishing, and managing Manufacture of, the Licensed Product, as well as engaging their Best Efforts to Manufacture the Licensed Product in an amount sufficient to meet demand for the Licensed Product in the Territory, as required by the demand formalized by the Ministry of Health.
Source: taken from a technology transfer agreement between AstraZeneca (Transferor) and Fiocruz (Transfer Recipient). Partner types: industry, state-owned manufacturer; Product type: COVID-19 vaccine; Development stage at signature: conditional/emergency use authorization. Read in context.
2. Procurement mechanisms
In addition to obligations to make a sufficient volume of the licensed product available, license agreements may wish to establish a specific requirement for the licensee to actively engage with applicable procurement mechanisms, for example by responding to public tenders.
Examples from the MAPGuide
Head license
In the event that [Licensor] becomes aware of a tender that includes the Licensed Product (including for [Licensor]’s branded version of the Licensed Product and Licensed Compound) in the presentations and strengths listed in Schedule [x] in the Territory, [Licensor] will promptly inform [Licensee] and upon receipt of such information, the [Licensee] will, upon [Licensor]’s reasonable request, request that one or more of its Sublicensees submit a good faith proposal for such tender.
Form of sublicense (agreement annex)
In the event that [Licensee] becomes aware of a tender that includes the Licensed Product (including for [Licensor]’s branded version of the Licensed Product and Licensed Compound) in the presentations and strengths listed in Schedule [x] in the Territory, the Sublicensee will, upon [Licensee]s reasonable request, submit a good faith proposal for such tender.
In the event that the Sublicensee becomes aware of a tender for [disease] medicines that includes the Licensed Product and the presentations and strengths listed in Schedule [x] in the Territory, the Sublicensee will consider to submit a good faith proposal for each such tender.
Source: taken from a license agreement between Bristol-Myers Squibb (Licensor) and MPP (Licensee). Partner types: industry, multilateral; Product type: hepatitis C antiviral (daclatasvir); Development stage at signature: licensed product on WHO EML. Read in context.
Commercialisation Partner shall make best efforts to ensure that the Final Product can be purchased by the Public Sector in the Territory through relevant governmental or international procurement mechanisms including, without limitation, Global Fund, PEPFAR and the Global Drug Facility (“GDF”). The said efforts shall include without limitation responding to tenders launched by such procurement mechanisms.
Source: taken from a commercialization agreement term sheet annexed to a patent and know-how license between the University of Washington (Licensor) and the Medicines Patent Pool (Licensee). Partner types: multilateral, academic institution; Product type: HIV therapeutic (long-acting injectable); Development stage at signature: pre-clinical. Read in context.
3. Supply security
License agreements may need to include provisions designed to mitigate potential risks to maintaining sufficient, stable and timely supply of the licensed product for the access territory. These risks may arise for a number of reasons including prioritization of more profitable commercial markets over the access territory, or external disruptions to supply chains or to business as usual processes.
Some of the ways in which agreements can address these risks include:
A commitment to timely product delivery and fulfilment of purchase orders for the access territory;
Obligations for the licensee to prioritize delivery of supplies for use in the access territory over commercial market orders;
Obligations for the partner to ensure that it has sufficient capacity to meet its volume commitments;
Temporary step-in by the licensor in the event of disrupted supply or supply shortages;
Joint development and monitoring of a supply plan for the licensed product, for example through a steering committee; and/or
Sublicensing requirements if the licensee chooses not to, or is unable to, commercialize the product in all or part of the access territory.
Examples from the MAPGuide
Commercialisation Partner will ensure that Final Products are made available in accordance with the following specific commitments (the “MPP Licensee Commitments“) and therefore shall: […]
- prioritise delivery of firm orders from the Public Sector over firm orders from the Private Sector;
- implement measures to protect volumes destined for purchase by the Public Sector in the Territory;
- possesses or will possess prior to any applicable activities related to the Final Product, sufficient known sources of supply and production capacity to ensure a continuity of supply of the Final Product to the Public Sector in the Territory in accordance with any Minimum Supply Targets, provided that [Licensor] shares with [Licensee] the Minimum Supply Targets in a timely manner;
Source: taken from a commercialization agreement term sheet annexed to a license agreement between MedinCell (Licensor) and MPP (Licensee). The license grant to MPP was required under a related grant agreement between Unitaid and MedinCell, with terms to reflect Unitaid’s access objectives. Partner types: industry, multilateral; Product type: malaria vector control (long-acting ivermectin injectable); Development stage at signature: pre-clinical. Read in context.
To the extent that Licensee shall satisfy the potential Public Sector market through its own resources, and provided there is a commercially reasonable market therefore, Licensee shall make commercially reasonable efforts to deliver the first allotment of a safe and effective Licensed Product to the Public Sector for distribution and/or sale in Developing Countries within two (2) years of First Commercial Sale and thereafter Licensee agrees to use commercially reasonable efforts to meet any delivery date and in the quantities required in an order placed by the Public Sector.
Source: taken from a license agreement between the U.S. NIH (Licensor) and Aridis (Licensee). Partner types: public research institute, industry; Product type: rotavirus vaccine; Development stage at signature: early stage development. Read in context.
Within fifteen (15) days after the Effective Date, the Parties (through the JSC) will submit a comprehensive written a preliminary commercialization plan setting forth all Supply activities to be undertaken by or on behalf of Licensees and the estimated timelines applicable to such activities (the “Supply Plan”) to the JSC for analysis, discussion and suggestions. Licensees undertake to update and refine such preliminary Supply Plan to annually provide [Licensor] with its Supply Plan to provide most accurate estimate, in relation to the anticipated quantities and terms, and in doing so it must use your best Commercially Reasonable Efforts. Licensees must inform [Licensor] in writing of any material changes to its Supply Plan. At all times during the Term, Licensees will Supply the Licensed Product in accordance with the Supply Plan.
Amendments. The JSC will periodically review, and, as required, prepare suggestions of amendments to the initial Supply Plan, for review and discussion by the JSC. The amended Supply Plan will become effective and supersede the previous Supply Plan as of the date Licensees submit the new version of the Supply Plan Amendments to the Supply Plan will only be effective if made pursuant to this Section [x]
[…]
In case Licensees, in view of (i) problems in the Manufacturing of the Licensed Product at Licensees premises; (ii) need to expand the Manufacturing capacity to meet the demand for the Licensed Product in the Territory; or (ii) delays in the execution of the Technology Transfer Work Plan, Manufacturing Plan, Supply Plan and Regulatory Plan, notify [Licensor] about such instances mentioned above, [Licensor] or any third party under [Licensor]’s responsibility may, according to demand, availability and delivery schedule by the time of the order, agree to manufacture and commercialize the Licensed Product or the IFA [API] in the Territory to Licensees, pursuant to conditions to be negotiated in good faith between the Parties which must be the subject matter of a separate agreement.
Source: taken from a technology transfer agreement between AstraZeneca (Licensor/Transferor) and Fiocruz (Licensee/Transfer Recipient). Partner types: industry, state-owned manufacturer; Product type: COVID-19 vaccine; Development stage at signature: conditional/emergency use authorization. Read in context.
[Licensee] shall at all times during the Term of this Agreement maintain the capability to Manufacture the [Licensee] Product in sufficient quantities 1) to satisfy market demands in the [Licensee] Territory based on the Forecasted Quantities according to Section 8.20, and 2) the Safety Stock agreed under the [Funder] Side Letter.
Market Demand Forecasts. No later than [***] prior to the anticipated First Commercial Sale of the [Licensee] Product, and thereafter on a quarterly basis, [Licensee] shall submit to [Licensor] a [***] rolling forecast of the estimated quantity of [Licensee] Product to be Manufactured by [Licensee] to satisfy market demands in the [Licensee] Territory (“Forecasted Quantities”).
Source: taken from a license agreement between Valneva (Licensor) and Serum Institute of India (Licensee). The access commitments in this agreement are related to a funding agreement between Valneva and CEPI. Partner types: industry, industry; Product type: chikungunya vaccine; Development stage at signature: phase 3 clinical trials. Read in context.
It is Licensee’s intent to provide Licensed Product(s) to the Public Sector in the quantity desired by the Public Sector and at the price described below. License therefore agrees:
- To provide a written report to PHS , within six months of a Licensed Product being approved for marketing in the U.S. or Europe detailing the potential Public Sector requirement for Licensed Product(s) to fulfill the public health need in Developing Countries, said report shall include the effect of any approved competing products being offered to the Public Sector. The report shall describe how Licensee intends to fulfill said Public Sector requirement for Licensed Product(s). A similar report shall be required within six months of marketing approval of the [*] of Licensed Product(s). Licensee shall amend the Commercial Development Plan and this Benchmarks and Performance Appendix as appropriate.
Source: taken from a license agreement between the U.S. NIH (Licensor) and Biosyn (Licensee). Partner types: Government, Industry; Product type: HIV prophylactic; Development stage at signature: unknown. Read in context.
Licensee, together with its Subsidiaries and/or Sublicensees, shall have the first right to develop, manufacture, have manufactured, import, have imported, offer for sale, sell, have sold or otherwise distribute or have distributed such Licensed Product or equivalent thereof (e.g., a generic product) to make such Licensed Products generally available at locally-affordable prices in any Developing Country(ies) which are chosen by Licensee and/or its Subsidiaries and Sublicensees in their sole discretion. Sales of such Licensed Products in Developing Country(ies) generally available at locally-affordable prices shall be entitled to the royalty discounts set forth in Section 4.5 of the Agreement.
Step-in Rights for Licensed Products in Developing Countries. At any time after [***] following [***], if Licensee, together with its Subsidiaries and/or Sublicensees, has not chosen to exercise its first rights to make such Licensed Products generally available at locally-affordable prices in accordance with Section 2.2.1 above in any particular Developing Country, [Licensor] may notify Licensee in writing of a not-for-profit Third Party to whom [Licensor] would like Licensee to grant a Sublicense under the Patent Rights to develop, manufacture, have manufactured, import, have imported, offer for sale, sell, have sold or otherwise distribute or have distributed such Licensed Product or an equivalent thereof (e.g., a generic product) for use in the Field, solely for sale or other distribution of such Licensed Product or equivalent on a locally-affordable basis in any Developing Countries in which such Licensed Product is not then available on a locally-affordable basis (a “Developing Country Sublicense“). […]
Source: taken from a license agreement between Harvard University (Licensor) and Tectonic Therapeutic (Licensee). Partner types: academic institution, industry; Product type: unknown; Development stage at signature: unknown. Read in context.
4. Non-diversion
Product diversion has been identified as a significant perceived risk among innovator companies considering licensing their products or technology to third parties. These risks can be mitigated through the inclusion of “non-diversion” provisions in license agreements which can include:
Undertakings from the licensee not to make sales where there is a reasonable suspicion that the product will be made available outside of the licensed territory;
Requirements to pass through non-diversion obligations in the licensor’s supply agreements;
Use of distinctive trade dress;
Licensor pre-approval of sales to higher risk markets; and/or
Use of batch tracing mechanisms.
Innovators can also consider mitigating diversion risks by licensing through organizations such as the Medicines Patent Pool which can employ its own surveillance mechanisms and provide additional oversight of licensee compliance with non-diversion obligations.
Examples from the MAPGuide
The Licensee shall not, directly or indirectly, sell or supply: (a) Licensed Products or Licensed Compounds to any Third Party that the Licensee knows, believes or ought reasonably to suspect will Commercialize Licensed Products or Licensed Compounds outside the Territory where such Commercialization would infringe an AbbVie Patent granted and in force; (b) Licensed Products or Licensed Compounds to any Third Party that the Licensee knows, believes or ought reasonably to suspect will Commercialize Licensed Products or Licensed Compounds outside the Field where such Commercialization would infringe an AbbVie Patent granted and in force; nor (c) Licensed Compounds to any Third Party that the Licensee knows, believes or ought reasonably to suspect will Commercialize the Licensed Compounds other than in a Licensed Product, where such Commercialization would infringe an AbbVie Patent granted and in force.
Source: Source: taken from a license agreement between AbbVie (Licensor), and MPP (Licensee). Partner types: industry, multilateral; Product type: antiretroviral HIV medicines (lopinavir and ritonavir) for pediatric use; Development stage at signature: WHO-recommended licensed product. Read in context.
Subject to any applicable competition law, the Sublicensee acknowledges and agrees the Licensed Product intended for distribution in the Territory is strictly prohibited from being diverted outside the Territory.
The Sublicensee shall implement a system of batch control and tracing following the GSI Global Traceability or comparable standards which will enable the identification and batch tracing of any such Licensed Product, notably so as to facilitate the determination as to whether any of such are subsequently re-exported outside the Territory. In addition, the Sublicensee shall include provisions in its Supply Agreements with each Customer to ensure that such Customer and any subsequent purchasers of the Licensed Product in all countries within the Territory shall not sell, distribute, export or donate the Licensed Product or offer the Licensed Product for sale or donation in any country outside of the countries in the Territory where the Customer has a right under its Commercial Sublicense to sell Licensed Product.
Source: taken from a sublicense agreement between GARDP (Licensor) and Orchid Pharma (Sublicensee) related to a head license between GARDP and Shionogi. Partner types: PDP, industry; Product type: antibiotic (cefiderocol); Development stage at signature: licensed product on WHO EML. Read in context.
Licensee shall provide [Licensor] with written notice at least three (3) months prior to its anticipated first sale of Product in each country within the Territory. Following [Licensor] ’s receipt of such notice, the Parties shall discuss in good faith programs that Licensee may implement to minimize diversion of Product outside of such country, including by using Commercially Reasonable Efforts in ensuring Product is sold direct to patients and individuals who would benefit medically from [Product] within such country, as may be determined by the Parties. On a country by country basis, if requested by [Licensor] at any time either prior to Licensee’s sale of Product in such country or at any time thereafter, the Parties shall discuss and agree upon a written anti-diversion plan that Licensee shall implement to ensure Product is not diverted out of such country (for each such country, the “Anti-Diversion Plan”). In all events, Licensee agrees to enact best practices protocols and programs, including, but not limited to, promptly raising all instances of known or suspected Counterfeit Product or Diverted Product to [Licensor] , conducting thorough investigations to identify the source of diversion and to enforce, in cooperation with [Licensor] , against parties involved in instances of diversion, adopting trade dress and marketing material practices as described in this Agreement, ensuring compliance with Licensee’s anti-diversion obligations and to otherwise prevent diversion. Licensee shall disclose the content of such protocols and programs to [Licensor] and shall consult with and implement any additional practices requested by [Licensor] , such as, where commercially practical, expressly identify on the labeling and packaging of all Product sold or offered for sale under this Agreement the country in which such Product is intended to be used.
Source: taken from a Gilead template license agreement for generic manufacturing. Partner types: industry; Product type: multi-drug-resistant HIV treatment and PrEP (lenacapavir); Development stage at signature: licensed product (treatment), phase III clinical trials completed (PrEP). Read in context.
In any Royalty Country, the Licensee must obtain prior written approval from the Licensor for any sale or supply of Licensed Product by the Licensee in the Public Market, unless the Licensor has expressly indicated that approval is not granted. The Licensor shall approve or reject any such written requests within five (5) Business Days of receipt of the request and approval shall be deemed given if not issued by the end of the fifth Business Day following receipt of the request. Any such written request for approval shall include copies of the relevant Royalty Country procurement documentation regarding the proposed sale or supply. Any Royalty Country Public Market procurement approved by the Licensor pursuant to this Clause [x]shall be referred to in this Agreement as an “Approved Royalty Country Public Procurement”.
Source: taken from a license agreement between ViiV Healthcare (Licensor) and MPP (Licensee). Partner types: industry, multilateral; Product type: long-acting PrEP (cabotegravir); Development stage at signature: US FDA approval. Read in context.
Save as provided under this Agreement, and to the extent that such restrictions comply with applicable law, the Licensee shall not, directly or indirectly, sell or supply Licensed Product outside the Territory, or sell or supply Licensed Product to any Third-Party that the Licensee knows, believes or ought reasonably to suspect will sell or supply Licensed Product outside the Territory.
The Licensee shall ensure that packaging (whether external, intermediate or internal), data sheets and promotional materials for the Licensed Product to be sold or otherwise supplied by the Licensee under this Agreement shall carry clear statements in bold type that:
(a) the Licensed Product has been manufactured under a license from the Licensor; and
(b) any other statements stipulated in the Trade Dress Guidance.
[…]
The Licensee shall give written notice, of the restrictions contained in this Section [x] to any Third-Party to which it sells the Licensed Product, prior to any sale of the Licensed Product to such Third-Party, and the Licensee shall use its best endeavours, without prejudice to any other provision of this Agreement, to ensure that such Third-Party(ies) will undertake to abide by the restrictions contained in this Section [x] and will assist the [Sub-]Licensor and [Licensor] in securing compliance with this Section [x] and the restrictions which it contemplates.
Source: taken from form of sublicense agreement annexed to a memorandum of understanding between Ferring (Licensor) and MPP (Licensee). Partner types: industry, multilateral; Product type: prevention and treatment of post-partum hemorrhage (heat-stable carbetocin); Development stage at signature: WHO PQ for prevention; clinical trials for treatment. Read in context.
Do the agreement supply commitments align with the likely procurement mechanisms and levels of demand?
What are the manufacturing scale-up plans to ensure that the supply obligations can be fulfilled?
To which markets and purchasers do the supply commitments apply?
What are the requirements to make the product available for purchase at an affordable price?
What is the timeframe for obtaining marketing authorizations in the access territory?
How can the licensor verify compliance with supply commitments?
What happens if the licensee does not or cannot comply with its supply commitments?
This toolkit has been built based on the data in the MAPGuide and the GHIAA team’s experience of negotiating and implementing agreements. We intend that the toolkit will evolve and expand over time based on input from MAPGuide users and availability of new agreements showing examples of alternative approaches. We welcome ongoing constructive dialogue around these materials and encourage you to contact us or fill in our feedback survey to share your thoughts, questions and suggestions.
