Master Alliance Provisions Guide (MAPGuide)

Why Do Contracts Matter?

Contracts provide the legal framework that governs a partnership. They set out the rights and obligations that all parties have accepted in order to achieve the objectives of a partnership, as well as providing the mechanisms to manage, enforce, and terminate those requirements. Without the written alignment achieved through the negotiation and signature of a contract, there is an increased risk of misunderstandings as to the intended operation and outcomes of a partnership and how those outcomes will be achieved. Ultimately, this can result in the failure of a global health funder or PDP to achieve their equitable access goals and may have a detrimental impact on the lives of those in need of the medical product.

Different types of contracts

The development, manufacturing, and commercialization of a medical product can involve many different contracts between a number of different parties. Some common types of contracts are explained below:

R&D Funding

The primary purpose of a Research and Development (R&D) funding agreement (sometimes also referred to as a grant agreement) is for one party to provide funds to another party to support the development of a medical product, in exchange for compliance with certain conditions. 

R&D Collaboration

The primary purpose of an R&D collaboration agreement is to enable two or more parties to work together on the development of a medical product. The parties to an R&D collaboration agreement usually share their intellectual property for the purpose of the joint research and/or product development, therefore the agreements often have elements in common with licensing and technology transfer agreements.

Purchase & Supply

The primary purpose of a purchase and supply agreement is for one party to receive a product from another party, usually in exchange for a financial consideration. These agreements may be used for the purchase of finished product, or for components needed to manufacture a finished product (for example, adjuvant for a vaccine).

Licensing

The primary purpose of a license agreement is the grant of rights from an intellectual property (IP) owner (licensor) to a third party (licensee), to allow the licensee to use the licensor’s IP for certain purposes, usually in exchange for a financial consideration. The rights granted under a license agreement usually relate to IP protected by patents, but they sometimes also include a transfer of related knowledge and materials which are not protected by patents and may therefore have some elements in common with a technology transfer agreement.

Contract Manufacturing

The primary purpose of a manufacturing agreement is for a product developer to contract a third party (often referred to as a contract manufacturing organization, or CMO) to manufacture a product on the developer’s behalf. The CMO might then supply the finished product back to the developer, or alternatively sell it to a third party purchaser. Contract manufacturing agreements often require a grant of rights for the CMO to use the developer’s IP, as well as the transfer of sufficient information to enable the CMO to replicate the developer’s production processes, therefore these agreements often have elements in common with both license and technology transfer agreements.

Technology Transfer

The primary purpose of a technology transfer agreement is to transfer the data, materials, documentation, and knowledge needed for the transfer recipient to successfully use the intellectual property of another party for the development and/or manufacture of a medical product. These agreements often include detailed technology transfer plans and success criteria setting out the steps to be taken to complete the transfer. Since technology transfer agreements relate to the use of one party’s IP, they often have elements in common with license agreements.

The above list provides an overview of some of the contracts that can be critical for the development, manufacture, and commercialization of a medical product, but there are many other contracts that support them. These include non-disclosure agreements, clinical research agreements, material transfer agreements, and consultancy support agreements.

Individual contracts should not be considered in isolation, but rather as part of a complex web of contracts which need to work together. Equitable access can and should be built into various points of this web. For example, the terms of funding agreements for early-stage R&D can include equitable access obligations that must be passed through to future partners. This can impact the terms of future license and technology transfer contracts, as well as who receives supplies of the final product.

Development and negotiation of contract terms

When entering into negotiations for a partnership agreement of any kind, each organization should have a clear view of its objectives for the partnership, as well as how and when they should be achieved. Different departments within an organization may have different aims, all of which need to be shared with the negotiating team to enable the identification of non-negotiable points and potential areas of flexibility.

Like contracts themselves, the individual terms of an agreement must work as a whole to achieve equitable access goals. Obligations to make a product affordable and accessible to populations in need are difficult to enforce without clear milestones and governance mechanisms to enable the monitoring and measurement of impact. Similarly, if an agreement is terminated because one party does not meet its obligations, the other party should have the right to continue the project with a new partner in order to achieve its objectives. 

Related Commentaries

GHIAA has developed an infographic providing an overview of the key terms to be included in R&D funding agreements in order to support the achievement of equitable access. This infographic is supported by a set of commentaries that give further insight into potential approaches to different terms and the linkages between them.

Authors: Bridie Telford, Julia Barnes-Weise

First publication date: November 21, 2022