MAPGuideⓇ
Equitable Access Toolkit
Reporting Requirements and Audit Rights to Support Compliance and Impact Monitoring for License Agreements
Reporting requirements in license and collaboration agreements are an important mechanism for enabling licensors or collaboration partners to monitor the fulfillment of diligence obligations and evaluate both the commercial value and progress towards equitable access objectives achieved under the agreement. Reporting requirements should be supported by audit rights that enable a funder to review underlying records for the information reported, and to assess a funded partner’s compliance with access commitments.
Reporting requirements
The reporting requirements established under a license or collaboration agreement usually address the type and frequency of reports to be submitted. Some agreements additionally include rights for a licensor or collaboration partner to share certain elements of the information reported with their funders or other third parties, potentially on an aggregated or anonymized basis.
The type of information required in periodic reports should be determined based on the scope and goals of a particular agreement, as well as the information needed to meet internal reporting requirements and obligations to funders and external stakeholders. Information required as part of periodic reports often includes:
Product development and commercialization progress
Reporting on product development and commercialization activities, often with reference to project milestones or deliverables such as non-clinical or clinical trial start dates and end points, regulatory submissions and approvals, manufacturing scale-up, first commercial sale. Progress reporting requirements may also include an assessment of potential risks or delays and mitigation measures, as well as forecast progress in the next period.
Equitable access objectives or impact metrics
Reporting on the progress towards, or the fulfilment of, equitable access commitments such as product registration in the access territory, responses to public tenders, pricing and sales volumes to eligible purchasers.
Improvements and inventions
Information on any licensee or sublicensee improvements to the licensed IP, or inventions made under a collaboration agreement. These reports enable licensors to identify improvements subject to grantback rights, and collaboration partners to identify IP protection strategies for collaboration inventions.
Royalties and other fees due
Reporting on net sales of the licensed product and calculation of the resulting royalties due (including those from sublicense agreements), as well as reporting on milestone payments or any other licensing fees due. These reporting requirements sometimes apply only after the first commercial sale of the licensed product.
Some agreements also include ad hoc notification requirements for key events in addition to regular reporting. These notification requirements can act as a mechanism for licensors to mitigate some of the key perceived risks of licensing, such as product diversion and quality assurance.
Examples from the MAPGuide
For the purpose of supporting [Collaboration Partner]’s advocacy effort, Partner shall provide [Collaboration Partner] within sixty (60) days following the end of each calendar year with a report on the number of units of the Product sold worldwide, and in particular in the Territory, and the sale prices of such units.
Source: taken from DNDi’s template Development Collaboration and License Agreement. Partner types: PDP, industry/academic institutions; Product type: treatments for neglected diseases; Development stage at signature: template intended for use from Phase 1 clinical trials through to proof of concept in humans. Read in context.
The Sublicensee and [Licensor] shall discuss and agree on specific key performance indicators to assess and track the Sublicensee’s Manufacturing and delivery performance under this Sublicense Agreement. The Sublicensee shall report all such key performance indicators agreed by the Parties to [Licensor] on a quarterly basis in accordance with Section [x], which shall include at least the following: (a) the latest forecasts received from each Customer (and shall in such report provide a corresponding forecast for Licensed Product to be Manufactured for Commercialization by the Sublicensee in countries for which the Sublicensee has a Commercial Sublicense); (b) all indicative and firm orders received from each Customer and if applicable by the Sublicensee and corresponding contractual delivery dates; (c) all deliveries of Licensed Product made (whether to a Customer or to the Sublicensee for Commercialization in countries for which it has a Commercial Sublicense); (d) any delays in Licensed Product deliveries as compared with the contractual delivery dates; and (e) any rejections by Customers or by the Sublicensee of Licensed Product deliveries or other concerns raised by Customers or identified by the Sublicensee as to the conformity of Licensed Product deliveries with specifications or other Manufacturing obligations, and updates to any such rejections or concerns; in each case (a) through (e) occurring during the corresponding reporting period.
[…]
The Sublicensee will send to [Licensor], following the end of each calendar quarter, a report setting out all information required to be reported to GARDP pursuant to this Sublicense Agreement, including in particular the information set out in Schedule J hereto. The specific timeframes for reporting each category of information is specified in Schedule J. The Sublicensee and [Licensor] agree to confer on a quarterly basis regarding such reports the activities and information contained therein. [Licensor] agrees that information contained in quarterly and other such reports shall be treated as Confidential Information. The Sublicensee agrees that [Licensor] may share such information and reports with [Head Licensor] and that [Licensor] and [Head Licensor] may share all such information and reports with their Affiliates or with Third Parties for the purposes of pursuing the Access and Stewardship Objectives (subject to confidentiality and non-use obligations substantially similar to those set out in Section [x] hereof).
Source: taken from a sublicense agreement between GARDP (Licensor) and Orchid Pharma (Sublicensee) related to a head license between GARDP and Shionogi (Head Licensor). Partner types: PDP, industry; Product type: antibiotic (cefiderocol); Development stage at signature: licensed product on WHO EML. Read in context.
Within 10 business days following the end of each calendar quarter, Commercialisation Partner will be required to provide [Licensor] and the [Head Licensor] with a quarterly written report setting forth in relation to that quarter (a) Licensed Products in its development pipeline, (b) status of development of each licensed Product in development, (c) regulatory filing plan for each licensed Product, (d) a list of countries within the Territory for which such regulatory approvals or authorizations have been filed or obtained for any Licensed Product and (e) the Licensed Products (in terms of smallest units and patient packs for each formulation) sold or supplied by the Licensee under the Commercialisation Agreement during such agreement quarter, on a country-by-country basis; f) any scientific discoveries or Know how developed related to the Licensed Technology. [Licensor] and Licensee will agree to meet on a quarterly basis regarding such reports and also review development and filing status of Licensed Products. [Licensor] will agree that information contained in quarterly and other such reports shall be treated as confidential; provided, however, that such information may be shared with the [Head Licensor]; and that aggregated data may be publicly disclosed by [Licensor].
Source: taken from commercialization partner term sheet attached to a license agreement between the University of Liverpool (Head Licensor) and MPP (Licensor). Partner types: multilateral, academic institution; Product type: HIV therapeutic (nanomedicine); Development stage at signature: early clinical. Read in context.
Licensee will submit a Progress Report to University on or before each March 15th during the Term of this Agreement […]
Quarterly reports
(a) Within forty–five (45) days after the end of each Calendar Quarter during the Term (without regard to whether any payments are due to the University in respect of such quarter), Licensee will deliver to the University, a complete and accurate report which will contain the following:
- (i) identification of all Sublicenses related to the Patent Rights […] entered into during such quarter, together with a summary of the principal economic terms of each;
- (ii) a summary of those activities of Licensee and its Permitted Sublicensees directed toward promoting the sale and use of the Licensed Products and Licensed Processes; and
- (iii) identification of all Milestone Dates occurring during such quarter and an indication of whether the corresponding Milestone was met (and if not, a summary of the progress as of the end of such quarter and projected completion dates); and
(b) Only after the First Commercial Sale by Licensee and/or its Permitted Sublicensee(s) that gives rise to royalties or fees […], within forty–five (45) days after the end of each Calendar Quarter during the Term, Licensee will deliver to the University, a complete and accurate report which will contain the following:
- (i) the number of each type of: 1) Licensed Product made, used, leased sold or offered for sale or imported; and/or 2) Licensed Process (as appropriate) practiced by Licensee and/or a Permitted Sublicensee during such quarter;
- (ii) the total amount of Net Sales during such quarter; and
- (iii) calculations of each amount due under this Agreement in respect of such quarter, including without limitation, deductions applicable to Net Sales.
Related definitions: “Progress Report” means a written report summarizing Licensee’s material technical and other efforts made towards First Commercial Sale for all Licensed Products under development. Such reports will include, without limitation, reasonably detailed summaries of: (i) development and commercialization of Licensed Products; (ii) collaborations with third parties and sublicensing efforts; (iii) progress toward completing milestones described in the Principal Terms & Milestones List; (iv) key management changes and total number of employees; (v) Licensee’s finances; (vi) scientific and business goals for the next year; (vii) summary of any payments due under ARTICLE [x]; and (viii) any other company information which may materially adversely impact Licensee’s ability to develop Licensed Product.
Source: taken from Boston University’s template license agreement. Partner types: industry; Product type: multiple; Development stage at signature: multiple. Read in context.
For so long as a Party has obligations to conduct research or development activities under the R&D Plan, such Party will provide written quarterly reports to the JRC, and additional updates as requested by the JRC, summarizing all Program Data created in the preceding quarter by such Party, including a description of any inventions made, developed, conceived or reduced to practice by such Party. The purpose of these reports is to ensure the continuous sharing between the Parties of information regarding results achieved under the R&D Plan and to enable any Party to take prompt action to file any patent applications covering the Collaboration IP. In addition, each Party will submit to the JRC semi–annual written reports outlining the milestones achieved by such Party, key decisions made, and progress toward achieving the objectives set forth in the R&D Plan.
Source: taken from a research collaboration agreement between DNDi (non-profit partner) and BioDelivery Sciences International (commercial partner). Partner types: industry, PDP; Product type: treatment of African Human Trypanosomiasis , Chagas disease, and Visceral & Cutaneous Leishmaniasis (CAMB, a formulation of Amphotericin B); Development stage at signature: pre-clinical. Read in context.
Audit rights
License and collaboration agreements often include both financial and non-financial audit rights. Financial audits involve the review of accounting systems and data related to the calculation of royalties and other fees due, as well as compliance with affordable pricing commitments. Non-financial audits may involve the review of scientific, manufacturing, and other project data, as well as physical inspections of facilities related to the conduct of research, development, and manufacturing activities.
Audit rights enable licensors and collaboration partners to validate the accuracy of reports that they receive. These rights do not need to be limited to cases of suspected wrongdoing and can be exercised as part of business as usual project and financial governance activities.
Examples from the MAPGuide
[PDP] may mandate an independent and experienced auditor to verify the conformity of Partner’s current prices of the Product with the Affordable Basis definition. Partner undertakes to provide the independent auditor with all relevant data, methods and information that are required to allow the independent auditor to carry out its mandate. The conclusion of the independent auditor will be binding on the Parties. The fees and expenses of such auditor shall be paid by [PDP], unless the examination results in a determination that the current price of the Product was overstated by more than ten percent (10%) for the period examined, in which case Partner shall pay the fees and expenses of such auditor.
Source: taken from DNDi’s template Development Collaboration and License Agreement. Partner types: PDP, industry/academic institutions; Product type: treatments for neglected diseases; Development stage at signature: template intended for use from Phase 1 clinical trials through to proof of concept in humans. Read in context.
(a) [Licensee] and sublicensees shall keep complete, true and accurate books of account and records for the purpose of determining the payments to be made under this Agreement. Such books and records shall be kept at the principal place of business of [Licensee] , as the case may be, for at least three (3) years following the end of the calendar year to which they pertain,
(b) Such records will be open for inspection during such three (3) year period by a public accounting firm to whom [Licensee] has no reasonable objection, solely for the purpose of verifying payment statements hereunder. Such inspections may be made not more than once each calendar year, at reasonable times and on reasonable prior written notice. Inspections conducted under this Section [x] shall be at the expense of [Licensor], unless a variation or error producing an increase exceeding five percent (5%) of the amount stated for any period covered by the inspection is established in the course of any such inspection, whereupon all costs relating to the inspection for such period and the full amount of any unpaid amounts that are so discovered will be paid promptly by [Licensee].
(c) All information concerning payments and reports, and all information learned by [Licensor] in the course of any audit or inspection shall be subject to the confidentiality provisions set forth in Section [x]. The public accounting firm employees shall sign customary confidentiality agreement as a condition precedent to their inspection and shall report to [Licensor] only that information which would be contained in a properly prepared payment report by [Licensee].
Source: taken from a research and product development agreement between Bayer CropScience and SentiSearch. Partner types: industry; Product type: insect vector control; Development stage at signature: discovery. Read in context.
At all times the Licensee shall, to the extent permitted by law, keep, and shall require its Affiliates and any Third-Party manufacturers and Third-Parties making sales on its behalf, to keep complete and accurate records for at least seven (7) years of all quantities of the Licensed Product manufactured and/or sold under the licenses granted by this Agreement, together with that information contemplated by Section [x]. The Licensor and [Head Licensor] shall each have the right (and the Licensee shall procure such right), at its expense, through a certified public accountant or like person appointed by it, to examine such records during regular business hours during the Term of this Agreement and for one (1) year after its termination or expiry; provided, however, that such examination shall not take place more often than twice in any calendar year and shall not cover such records for more than the preceding two (2) calendar years and provided further that such accountant or like person shall report to [Head Licensor] only as to:
(a) the accuracy of the manufacturing and sales of the Licensee (and/or its Affiliates and/or its Third-Party manufacturers contemplated by this Agreement) in relation to such manufacture and sales;
(b) the appropriateness of quantities of Licensed Product imported, exported or manufactured pursuant to this Agreement by reference to what quantities of Licensed Product would reasonably be required to meet demand for actual sales made and sales forecasted by the Licensee;
(c) verification that all sales and other supplies of Licensed Product made by the Licensee have been made in the Territory and otherwise in accordance with Section [x] and
(d) verification that all sales and other supplies of Licensed Product made by Third-Party manufacturers contemplated by this Agreement have been made to the Licensee in accordance with this Agreement.
Source: taken from a form of sublicense agreement attached 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.
The Development Partner will permit [Licensor and Head Licensor], individually or together, and when required, through an independent third party auditor or consultant nominated by [Licensor or Head Licensor] respectively to: (i) inspect and audit the performance of, and compliance with, the Development Agreement and the applicable laws; and (ii) inspect and audit all documents and other records relating to the performance of the Development Agreement. Development Partner will cooperate with and provide all reasonable assistance to [Licensor or Head Licensor], their respective officers, employees, agents, advisors, representatives or consultants exercising their rights under this provision. [Licensor and Head Licensor] will provide Development Partner with a commercially reasonable period of notice of the proposed audit. [Licensor and Head Licensor], each individually, agree that such audits will not be conducted more than once in any 12-month period, unless the prior audit has shown evidence of the failure of Development Partner to perform in compliance with the Development Agreement or applicable laws.
Source: taken from a development agreement term sheet attached to a license agreement between MedinCell (Head Licensor) and MPP (Licensor). Partner types: industry, multilateral; Product type: malaria vector control (long-acting ivermectin injectable); Development stage at signature: pre-clinical. Read in context.
What information needs to be shared with other stakeholders to support coordination of broader activities to facilitate access?
How do the reporting requirements in the agreement align with the governance committee schedules and responsibilities?
What actions are available to the licensor or collaboration partner if the other party does not meet their reporting obligations, or if reports or audits show that diligence obligations or access commitments have not been fulfilled?
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.