Master Alliance Provisions Guide (MAPGuide)

Strategies for Affordable Pricing Provisions

Product pricing is a complex topic requiring consideration of the market dynamics and incentives specific to the product, for example the level of competition, the price at which manufacturing is sustainable, expected supply volumes, and the availability of advance purchase commitments. This commentary focuses on the provisions in funding agreements that can be used to support the achievement of an affordable price for subsequent procurement agreements, but it is not intended to provide a comprehensive assessment of the complexities of pricing negotiations. 

Global health funders and product development partnerships (PDPs) can incorporate product affordability requirements into their product development funding agreements in a number of ways. These requirements are likely to be limited to the sale of products intended for use in certain territories, purchasers and potentially certain time periods (for example, during a pandemic).

The figure below provides an overview of options for affordable pricing provisions, along with the related considerations for assessing the suitability of the different approaches. The available options are not always mutually exclusive, but their suitability can depend on the specific context of a partnership.

1. “Fixed” pricing obligations

Fixed pricing obligations are those that set a specific price threshold, either as a maximum absolute price cap, a maximum percentage mark-up over the cost of goods (also referred to as “cost plus”), or an obligation to sell a product at no profit. Some funders and PDPs also require their development partners to match the price of comparable products that are entering the market. Some considerations for the application of these different approaches are set out below:

a. Price Caps: The feasibility of using price cap provisions is dependent on the context of the agreement. They are more likely to be acceptable to a developer if the expected cost of manufacturing the product is already known and are therefore unlikely to be appropriate for agreements funding early stage research and development. An example of a context in which a price cap might be applied is an agreement for development of a substitutable medical product (for example, generic drugs), for which there are available reference prices.

There are a number of potential challenges associated with the use of a specified price cap in a funding agreement. For example:

    • A developer may interpret a ‘maximum price’ as the agreed ‘final price’, even if the developer were able to offer a lower price that is still sustainable. Lower pricing may particularly be possible over time as manufacturing efficiencies and economies of scale are achieved. Some analysis suggests that maximum prices used in the form of ‘buy down agreements’ used to support lower pricing for sales to LMICs can have unintended consequences including a lack of transparency over costs and acting as a barrier to entry for potential competitors.
    • Agreements that use specified prices will require expert legal review to ensure that they do not violate any applicable competition laws.
    • There must be a clear understanding between the parties as to what the ‘maximum price’ includes, in particular whether it is intended to be inclusive of freight and distribution costs, which can add significant extra cost to an end purchaser.

Examples from the MAPGuide

[Developer] will ensure that it or its manufacturing and/or commercial partner(s) sell the Product: (i) at a maximum price of USD XXX (XXX United States dollars) per Test Unit (based on EXW) and a maximum price of USD XXX (XXX United States dollars) per Instrument Unit, which shall apply to Eligible Purchasers (collectively, the “Affordable Price”) in the Territory. […] The Affordable Price does not include (i) freight and insurance charges to the country destination from the XYZ site of shipment; nor (ii) import duties into the final destination country. Regarding the freight charges, XYZ shall negotiate directly with the purchaser a mutually agreed cost, retaining at all times the requirement to minimise such a cost, in accordance with Global Access requirements.

Related definitions: 

  • “Ex Works” or “EXW” shall have the meaning under INCOTERMS 2020 and shall be based on [Developer] COGs.
  • “COGS” or “Manufacturing Cost of Goods Sold” means all of the direct costs such as labor, material, and allocated overhead costs in a Product manufacture as detailed in Schedule [x] “Cost Analysis”, and excluding research and development costs, sales and marketing costs, as well as selling, general, and administrative expenses.

Source: taken from template terms and conditions included in a FIND (Funder) request for proposals for the development of a point-of-care liver function tests platform adapted to low resource settings.

b. Cost plus and no profit/no loss pricing: The use of cost plus and no profit/no loss pricing provisions may be applicable to a broader range of funding agreements than price caps, because they provide developers with assurance that they will be able to cover their costs. However, to be effective these requirements need to be supported by a number of related provisions and definitions, including:

    • A definition stating the types of cost to be included in the calculation of cost of goods (“COGs”) or manufacturing costs that will form the basis of the agreed product price. COGs definitions in funding agreements are sometimes tied to accounting principles (for example, “as calculated under U.S. GAAP”), but other agreements may separately list the cost categories that may be included in the COGs calculations. Some funding agreements also require a reduction to COGs to reflect the amount of public or philanthropic funding used to support the development and manufacturing of the product.
    • Audit rights that enable a funder to verify that the final price of the product has been calculated in accordance with the agreement. COGs calculations are complex and commercially sensitive, and funders should periodically exercise their audit rights, either on their own or using an independent auditor, to verify that the developer’s calculations are in line with their expectations.
    • A requirement for the developer to make efforts to minimize COGs and be as cost efficient as possible. Without such a provision, a developer may lack an incentive to reduce their cost base over time and pass through efficiencies in its product pricing.

Examples from the MAPGuide

For clarity the following shall be considered to have satisfied the Equitable Access Plan for the relevant doses of Project Vaccine […]

  • during the Pandemic Period, and in respect of any region in which an epidemic is determined to exist according to Section [x], the sale of the Project Vaccine to Gavi, [Funder] or their respective designee at no more than (i) ** for allocation to LMICs; (ii) ** for allocation to UMICs and (iii) ** for allocation to HICs; provided always that in each case the sale of the Project Vaccine to Gavi, [Funder] or their respective designee shall be at a price that is no higher than the lowest price at which [Developer] sells the Project Vaccine to any third party in respect of the relevant country other than as contemplated by the Canada Agreement;
  • after the Pandemic Period for a period ending on the later of (i) five years from the end of the Pandemic Period; or (ii) ten years from the Effective Date, the sale of the Project Vaccine to Gavi, [Funder] or their respective designee at no more than ** for allocation to LMICs, provided always that in each case the sale of the Project Vaccine to Gavi, [Funder] or their respective designee shall be at a price that is no higher than the lowest price at which [Developer] sells the Project Vaccine to any third party in respect of the relevant country; and

during the Pandemic Period and after the Pandemic Period for a period ending on the later of (i) five years from the end of the Pandemic Period; or (ii) ten years from the Effective Date, the sale of the Project Vaccine not acquired by Gavi, [Funder] or their respective designee at no more than ** for allocation to LMICs.

Related definitions: “Pandemic Period” means the period of time beginning on 30 January 2020, when the World Health Organization (or “WHO”) declared COVID-19 to be a Public Health Emergency of International Concern (or “PHEIC”), and ending on the earlier of (1) the date on which WHO declares that the COVID-19 PHEIC is over or (2) the date determined by [Funder], in its reasonable discretion in consultation with the [Developer] and based on epidemiological data published by WHO.

Source: taken from an outbreak response agreement between CEPI (Funder) and Variation Biotechnologies Inc (Developer) for the development of COVID-19 vaccine candidates. According to a CEPI statement about this agreement, VBI will limit the price of the vaccines (for sales to Gavi) “according to a formula”. These clauses are used in conjunction with ‘soft’ obligations included in the examples in the section below. Read in context.

The [Developer] shall make [products] available to non-profit organizations and public-sector purchasers in Target Countries (“Global Health Purchasers”) at a price of no more than 30% above the [Developer]’s COGS, in Low-Income Countries and in Low-Middle-Income Countries, if approved by the Global Access Committee […]

Related definitions: “Global Access Committee” refers to a joint steering committee to oversee the [Developer]’s efforts in Target Countries. The Global Access Committee shall be comprised of up to four (4) members: (i) one individual appointed by the [Developer]; (ii) one individual appointed by the Investor (the “[Investor] Prime Impact Fund Appointee”); and (iii) up to two additional individuals unaffiliated with the [Developer] or the Investor, and appointed upon mutual agreement of the [Developer] and the Investor.

Source: taken from a global health agreement between the AXA Prime Impact Master Fund (Funder/Investor) and Revelation Biosciences (Developer) for the development of a therapeutic for allergic rhinitis and a diagnostic for respiratory virus infections. Read in context.

[Licensor] will, other than the clinical trial supplies as discussed in section [x], supply [product] to [Licensee] at the following prices: Fully-Burdened Manufacturing Cost increased by a margin not exceeding *** for all supplies of [product] for use in the Field and Distribution Through the Public Sector in the Territory. Once [Licensor] receives a first approval for [product], [Licensor] shall supply [product] to [Licensee] at [Licensor]’s Fully-Burdened Manufacturing Costs increased by a margin not exceeding *** for all supplies of CAMB for use in the Field and Distribution Through the Public Sector in the Territory. [Licensor] and [Licensee] agree that the cost for lot failures, batch failures, or other quality control or productions failures (collectively “failures”) will be shared equally between the parties and [Licensor] shall keep all the necessary records to document failures and allocate costs accordingly.

Related definitions: “Fully-Burdened Manufacturing Costs” means: the costs of all raw materials and labor used or consumed in such manufacture, packaging costs and expenses, shipping, handling, and delivery costs related to delivery of CAMB, quality assurances and quality control related expenses and all overhead amounts allocable to such manufacturing and delivery (including without limitation amortized capital equipment costs) provided that: (1) all of the foregoing shall be calculated in accordance with US GAAP, (ii) [Licensor] shall, notwithstanding anything to the contrary in the Agreement, use commercially reasonable efforts to minimize Fully-Burdened Manufacturing Costs.

Source: taken from a research collaboration and license agreement between BioDelivery Sciences International (licensor) and DNDi (licensee) for the parties to to assess the efficacy of CAMB (a formulation of Amphotericin B) in the treatment of visceral leishmaniasis and for DNDi to subsequently register and distribute CAMB primarily in low- and middle-income countries. Read in context.

Upon WHOPQ, and in compliance with applicable laws and regulations, [Developer] will offer and provide to Public Sector Purchasers the Aggregate Minimum Supply at the Annual Minimum Supply (as set forth in section 3(d)) of the Released Product for Maternal Immunization in the Developing Countries at a maximum price as reflected in Table A:

TABLE A

“Price Commitment” is equal to the [**] Costs (as adjusted from time to time under this section 3(c)) plus [**] mark-up but provided always that such price does not exceed:

[**] per Dose (USD) herein after the “[**]”

The Parties acknowledge and agree that (1) the [**] described in Table A above is based on principle assumptions about [Developer] future manufacturing efficiencies at the time of WHOPQ as set forth on Appendix C attached hereto and incorporated by reference herein, and (2) to the extent that actual results differ from such Appendix C principal assumptions, then the Parties shall take such factors causing differing results into account and will thereafter adjust such [**] pursuant to Section 3(c)(ii).

Notwithstanding Table A, within three (3) months prior to the estimated date for WHOPQ, and unless otherwise agreed by the Parties, at every third anniversary thereafter, coinciding with UNICEF tenders, the Parties shall, in good faith, discuss applicable adjustments to the Price Commitment (whether upwards or downwards) to proportionately, fairly, and reasonably reflect the factors set forth in Appendix C, including the impact on such factors caused by external or internal circumstances, including inflation, currency fluctuations, efficiencies of scale, product demand and yield improvements. In preparation for considering any such price adjustment, in the event that there are changes in [**] Costs that, in the aggregate exceed [**] since the last calculation, then [Developer] shall provide to the [Funder] an update to its [**] Costs consistent with Appendix C and the [Funder]’s COGS Principles and Assessment Methodology Handbook, at least sixty (60) days in advance of such third anniversary and the Parties shall meet in good faith to discuss such changes within sixty (60) days after [Developer] provides the [Funder] with such update. In the event of any conflict between Appendix C of this GACA and the [Funder]’s COGS Principles and Assessment Methodology Handbook, Appendix C of this GACA shall control. Upon agreement of the Parties to any price adjustment (which shall be reflected in a signed writing by the parties), the applicable price adjustments shall become effective within three (3) months after such written agreement or in time for the coinciding UNICEF tender, whichever is earlier. In the event that the Parties are unable to agree on a revised Price Commitment, an independent third-party, with specific expertise in assessing costs, [**]. and with experience with vaccines, reasonably acceptable to both Parties, shall be appointed to provide analysis of such potential adjustment upon the request of either Party and the cost of such analysis shall be shared equally by the Parties. That analysis will be shared with [Developer] and the [Funder] who will work together to resolve any adjustments to the Price Commitment. If there is no resolution within forty-five (45) days, the matter will be referred to [Developer]’s President/CEO and the [Funder]’s President of Global Health (or the equivalent in the event of any reorganization following which such position no longer exists). If these individuals are unable to resolve the matter of the revised Price Commitment based on this analysis within a further forty-five (45) days, then the price will be adjusted upwards in event that the third party analysis points to an upward adjustment or downwards if the third party analysis points to a downward adjustment, in each case, capped as follows: if the parties are unable to agree with respect to the first adjustment of the [**], then the adjustment shall be [**], as the case may be (based on the direction of the third party analysis) and if the parties are unable to agree as to any subsequent adjustments to the [**], then the adjustment shall be [**] as the case may be (based on the direction of the third party analysis).

[…]

Notwithstanding section 3(c)i) above, in the event that [Developer] sells Released Product for Maternal Immunization to a Public Sector Purchaser in any country (whether a Developing Country or a Developed County) at a lower than the Price Commitment in subsection 3(ci) above, [Developer] will promptly offer such Released Product for sale at such lower price to any Developing Countries in which the sale, use or marketing of Released Product is authorized by WHOPQ or applicable country registrations. [Developer] will promptly notify the [Funder] of any price decrease of the Released Product for Maternal Immunization.

APPENDIX C: Principal Assumptions for Price Cap Calculation

The initial Maximum Price Cap described in Table A is based on the assumptions of [Developer]’ US-based facility having the capacity to produce, [**] by the date of WHOPQ, 120 microgram (120 μg) Doses of Product annually using up to [**] reactors (or equivalent) assuming [**] weeks of production per year, an overall batch success rate of [**] percent [**], and an average of [**] yield, and [**] percent [**] overage/loss (averaged over all batches per year). These assumptions are expected to be a base case for production at the time of WHOPQ. Since a primary objective of this GACA is to assure affordable and accessible Product to people in Developing Countries, the [Developer] agrees that a decline in the overall batch success rate below [**] from the base case will not have an upward impact on the Product cost per Dose nor an upward impact on the [**]. 

TABLE C: Components of [**] Cost

[…]

Impact of Grant [**] The proposed grant would represent a reduction to [**] costs calculated as the $89 million grant, amortized over 10 years, and divided by [**] doses

[…]

Source: taken from a global access commitments agreement between the Bill & Melinda Gates Foundation (Funder) and Novavax (Developer) for the development of an affordably-priced RSV vaccine for use in maternal immunization to provide RSV protection in low income countries. Read in context.

 [Developer] is currently pursuing external validation of its not-for-profit calculation approach for the pricing of its [product] to ensure it meets its commitment to make the [product] available on a not-for-profit basis for use in the emergency pandemic, and [Developer] is developing a framework under which any profit would be returned to purchasers of the [product]. The Parties agree that the Government will benefit from the application of these procedures. This Project Agreement will not be closed out until at least one external validation is complete such that an appropriate credit can be completed if the final not for-profit price per [product] is determined to be less than $10. In no case shall the price per Regimen exceed $10.

Source: taken from a Rapid Advanced Research & Development to Large-scale Manufacturing Agreement for a COVID-19 vaccine between the U.S. Government (Funder/purchaser) and Janssen (Developer). Read in context.

2. “Soft” Pricing Obligations

A soft pricing obligation is one that requires a product developer to make efforts to achieve an ‘affordable’ price for the final product, but without setting any specific parameters on what this price should be. Funding agreements often include soft pricing obligations that recognize the need for a price that is both affordable for the populations in need of a product and commercially sustainable for the developer in order to promote long-term and widespread access to the product.

The nature of soft pricing obligations means that they are more straightforward for a developer to pass through in future partnering agreements for later-stage development and/or commercialization of a funded product. However, without a quantified expected price, these obligations are open to subjectivity, which means they could be difficult to enforce in the event of a dispute.

Examples from the MAPGuide

 [Funder] is committed to achieving equitable access to the results of all [Funder]-supported programmes pursuant to the “Equitable Access Policy” referenced in [Funder’s] Third Party Code. Equitable Access means that a Project Vaccine is available first to populations at risk when and where they are needed at affordable prices. For clarity, it is [Funder’s] intention that the price of a Project Vaccine shall be commercially sustainable to the manufacturer. […] The Parties acknowledge that the price of the Project Vaccine is critical to achieving Equitable Access during the Pandemic Period. Accordingly, [Developer] agrees that its pricing shall be reasonable to achieve Equitable Access for populations in need of a Project Vaccine as well as an appropriate return on investment for vaccine manufacturers that make on-going supply commercially sustainable. The Parties acknowledge that the availability of pandemic insurance […] shall be a relevant cost factor in Equitable Access. For clarity, the purchase of Project Vaccine by the Global Allocation Body or by any other purchasing agent(s) designated by [Funder] shall be considered to have satisfied the pricing requirements for Equitable Access.

Related definitions:

  • “Global Allocation Body” refers to a global allocation and purchasing entity […] to purchase, allocate, and direct the distribution of COVID-19 vaccines.
  • “Pandemic Period” means the period of time between the date that WHO declared COVID-19 to be a PHEIC [Public Health Emergency of International Concern] (that is, 30 January 2020) and the date that WHO declares the PHEIC to have ended including any period of a COVID-19 pandemic re-emergence as declared by the WHO.

Source: taken from a development funding agreement between CEPI (Funder) and Novavax (Developer) for a COVID-19 vaccine. Read more.

It is the Parties’ expectation that Gavi, pursuant to COVAX (or a similar purchasing entity as otherwise reasonably directed by [Funder]), shall provide funding to purchase the Project Vaccine and be responsible for its allocation. [Developer] shall respond promptly to any Gavi or UNICEF or [Funder] identified Request for Proposal for a COVID-19 vaccine. [Developer] shall negotiate in good faith with Gavi (or as otherwise reasonably directed by [Funder]) to sign a purchase commitment or purchase order to supply [product] as maybe required by Gavi, [Funder] or any designee of Gavi or [Funder] whether during or after a Pandemic Period, in accordance with and subject to the provisions of Clauses [x] and [x]. As part of the good faith negotiation, the Parties shall negotiate and settle the costs, expenses and other factors to be used in the calculation of COGs, such negotiation and settlement, at all times, be guided by and reflect the principle that [Developer] shall not suffer financial losses when supplying Project Vaccine to any market and take into account the amount of funding provided by [Funder] and any other grants or public funding received by [Developer] or Subaward from Third parties.

Source: taken from an outbreak response agreement between CEPI (Funder) and Variation Biotechnologies Inc (Developer) for the development of COVID-19 vaccine candidates. These provisions are used in conjunction with ‘fixed’ obligations included in the examples in the section above. Read in context.

The [Funder] requires that the innovations, products and information developed with its funding be created and managed to ensure “Global Access” can be achieved, in particular that (i) knowledge gained using its funding be promptly and broadly disseminated and (ii) the intended products developed with its funding and owned or Controlled by the [Developer] be made available and accessible at reasonable cost to people most in need in Access Countries.

Source: taken from a development funding agreement between the Bill & Melinda Gates Foundation (Funder) and CureVac (Developer) for a COVID-19 vaccine. This provision is used in conjunction with the ‘fixed’ obligations included in the examples in the section above. Read in context. The Global Access provision is widely used in funding agreements granted by the Gates Foundation.

[Developer] shall provide [medical product] to Public Sector purchasers at a price to be determined by the Parties, it being understood that in accordance with achievement of the mission of [Funder] to make available to Developing Countries a [product] that is safe, efficacious, accessible and affordable, the Public Sector price for such [product] shall be at a substantial discount to the Private Sector price for the same [product].

Source: taken from a development funding & collaboration agreement between PATH (Funder) and Aridis (Developer) for the formulation development of a rotavirus vaccine. Read in context.

3. “Indirect” obligations

A number of additional provisions can be included in funding agreements in parallel with fixed and/or soft pricing obligations to support the achievement of an affordable price and ensure that the commercial value that a developer derives from a funded product is equitably shared. These provisions include:

a. Access plans: As explained in more detail here, access, manufacturing and supply, or marketing plans can be used to detail the actions needed to achieve the equitable access goals of an agreement. These plans should include the steps to be taken to ensure that the product can be manufactured at an affordable price. The formation of access plans can begin during early stage R&D for a medical product, and it is important that they are updated along with progress in development of the product.

Examples from the MAPGuide

The [Developer] will work with the [Funder] to develop (by the time of completion of Phase II clinical trials) and execute a manufacturing and supply plan that will enable to be met the reasonably expected demand in Developing Countries for any Products. […] The manufacturing and supply plan could involve the use of manufacturing partners and support from donors, and the specific level and allocation of funding responsibilities in such plan will be decided as mutually agreed in good faith in writing by the parties based on a fair allocation of the expected benefits between Developing Countries and developed countries. […]

Source: taken from a strategic relationship agreement between the Bill & Melinda Gates Foundation (Funder) and Arsanis (Developer) in connection with an $8 million investment by the Foundation to support a Staphylococcus aureus antibody development program. Read in context.

b. Alternative manufacturers: Affordable pricing obligations can be supported by a requirement to conduct a technology transfer to a third party manufacturer who can manufacture the product at a low(er) cost. This requirement could be triggered either when a certain milestone is reached (e.g. first regulatory approval, or entering a certain clinical trial stage), or only if the developer is unable to manufacture the product at an affordable price itself (as discussed in more detail here).

Alternative manufacturer provisions are only likely to be effective if there are a number of viable potential manufacturers that would have the capacity and willingness to deliver the product at an affordable price. Funders planning to use this approach in their partnering agreements may wish to consider programs that establish connections with, and possibly provide capacity-building investment for, a network of potential manufacturers.

Examples from the MAPGuide

If the [Funder] reasonably determines that a third-party manufacturer is needed to achieve [Developer’s] price and volume commitments, [Developer] must license and transfer the IP needed for production to the third party at the [Funder’s] expense. The obligation is limited to transfers that allow production for Developing Countries.

Source: taken from a strategic relationship agreement between the Bill & Melinda Gates Foundation (Funder) and Arsanis (Developer) in connection with an $8 million investment by the Foundation to support a Staphylococcus aureus antibody development program. Read in context.

 If the [Developer] has not developed a Manufacturing process for the Product which will maintain the Cost of Goods for the Product at a level Public Service Agencies agree is affordable for use in the Affected Territories by [date], (i) the [Developer] shall provide Funder with the Cost of Goods and supporting Data and (ii) Funder may in its sole discretion, (a) participate in the negotiations with the Public Services Agency(ies), (b) facilitate introductions for the [Developer] to third parties who may be of assistance in the establishment of a secondary manufacturing facility, (c) audit the [Developer’s] Cost of Goods (and may use a reputable accounting firm to do so in its behalf), or (d) exercise its step-in rights under Clause [x].

Source: taken from an anonymized product development funding agreement. Read in context.

To facilitate achievement of the [equitable access] conditions set out in Clauses [x], [Developer] has agreed to transfer its technology to an LMIC manufacturer […] [Developer] will, within [***] of the signature date of this Agreement, […], sign a Sub-Awardee agreement with an LMIC manufacturer, which […] shall obligate such LMIC manufacturer to manufacture the Product for regular supply in all Non-Traveler’s Market Countries that have a demand for Product and to supply the Product to Non-Traveler’s Market Countries under the conditions of [affordable price clause]. Prior to signing such Sub-Awardee agreement with an LMIC manufacturer and prior to completion of technology transfer to enable such LMIC manufacturer to manufacture and supply the Product to Non-Traveler’s Market Countries, [Developer] shall fulfill manufacturing and supply obligations for Non-Traveler’s Market Countries as set out in the IPDP [integrated product development plan].

Source: taken from a development funding agreement between CEPI (Funder) and Valneva (Developer) for manufacturing and late-stage clinical development of a Chikungunya vaccine. Read in context.  The required agreement for an LMIC manufacturer was subsequently signed between Valneva and Instituto Butantan.

c. Commercial benefit sharing: while not having a direct impact on the product price, a requirement for the developer to share a portion of the profits or other advantages (“commercial benefits”) gained from commercialization of a funded product can extend the public benefit impact of a funder’s investment. Such sharing of commercial benefit can either be directly back to the product funder or to another non-profit cause, and can be in the form of cash payments (for example milestone payments, or a revenue sharing agreement) or in-kind contributions (for example, product donations or time commitments for a developer’s employees to support a different project).

Commercial benefits sharing provisions are most likely to be effective in partnering agreements for products that will have a dual market (i.e. high income and low income countries), so that commercial benefits can be generated through commercialization of a product in high income countries while making the product available at an affordable price where needed.

Examples from the MAPGuide

Licensee agrees that, upon achieving $ X,000,000 in cumulative profits (determined in accordance with GAAP) from sales of Licensed Products, Licensee will commit an amount equal to 1% of Net Sales, in the form of Licensed Products, grants and/or services to governments in underdeveloped regions, not-for-profit charitable organizations such as Doctors Without Borders or The Gates Foundation, or other such organizations for the purpose of treating XXX in patients located in underdeveloped regions.”

Source: taken from a set of examples of clauses from out-license agreements successfully executed by U.S. universities, published by the Association of University Technology Managers. Read document.

The Parties shall agree in good faith how such Commercial Benefits (if any) are to be managed in a fair, equitable and proportionate manner, taking account the financial contribution of each of the Parties to the Background Technology and Project Technology being exploited, the public and philanthropic nature of the CEPI funding, any other non-repayable public or philanthropic financial contribution to the foregoing, the public benefit derived from the Commercial Use, and any private or ancillary benefit that may arise. The Parties shall execute a separate agreement implementing their good faith agreement on how such Commercial Benefits are to be managed in a fair, equitable and proportionate manner as of the Effective Date of this Agreement. For the avoidance of doubt, Commercial Benefits generated outside the Field and […] will not be shared between the Parties.

Related definitions: “Commercial Benefits” means any economically quantifiable benefits that arise from the commercial exploitation of the Project Results other than in preparation for or in response to an Outbreak or Increased Outbreak Preparation Need. Examples of Commercial Benefits include the commercial licensing of Project IP, receipt of government-granted incentives such as Priority Review Vouchers and revenue from the commercialization of combination, derivative or follow-on products (including antibody products, assays and vaccines) or application of production technology.

Source: taken from a development funding agreement between CEPI (Funder) and CureVac (Developer) for the development of CureVac’s mRNA platform for the rapid manufacturing of vaccines against infectious diseases. Read in context.

The Parties acknowledge that both Parties are actively contributing to the Collaboration Programme hereunder. Consequently, in the event that any advantage may be received from any Drug Regulatory Authority resulting from obtaining any Marketing Authorisation hereunder and arising from the classification of the [product] on the WHO essential medicines list the Parties shall discuss in good faith to find a way to share the repercussions of such advantage in an equitable manner.

Source: Taken from a collaboration agreement between DNDi/GARDP and Entasis for the development of Gonorrhea medication. Read in context.

Related Commentaries

In order for purchasing organizations to acquire an affordable product, it must also be available in the relevant territory, meaning both that it is approved for use and that there is a sufficient supply of doses.

Affordable pricing obligations should include sufficient reporting requirements to enable monitoring of their fulfillment. These reporting requirements could include sales reports,  progress on the access plan (particularly ability to meet the affordable price), reaching a trigger for technology transfer to an alternative manufacturer, and the value and type of commercial benefits achieved. Audit rights should also be in place to enable verification of the information reported.

Authors: Bridie Telford, Julia Barnes-Weise

First publication date: November 21, 2022