Master Alliance Provisions Guide (MAPGuide)

MSD – MPP, Molnupiravir License Agreement

  • Business model | Payment Structures
  • Equitable Access | Affordable pricing

Definitions

Public Purchasers” shall mean with respect to a country in the Territory (a) the following organizations to the extent that they are not for profit organizations and operate in such countries: (i) Non-Governmental Organizations to the extent that they are recognized by the applicable local government ministries from such country; (ii) UN-related organizations working for or in such country, including but not limited to UNDP and UNICEF; (iii) Not-for-profit organizations including without limitation, Médecins Sans Frontières, Save-the-Children, OXFAM and the International Committee of the Red Cross (ICRC) to the extent that they are recognized by the applicable local government ministries from such countries; (iv) programs funded by funding mechanisms, including without limitation, UNITAID, PEPFAR, USAID, and Global Fund; and agencies based outside of the Territory to the extent that they are supporting implementation of the organisations described in clauses (i) through (iii) above locally in such country, and (b) nominally for profit procurement organisations but only to the extent that such procurements are supporting not-for-profit programs in such country as described in (a) of this definition within the Territory.

Net Sales” shall mean the gross amounts invoiced by Licensee or its Affiliate for sales of Products to Customers, less the sum of the following actual and customary deductions:

(a) Cash, trade, quantity and other discounts, including chargebacks, retroactive price reductions, rebates (whether or not government mandated), and discounts in the form of wholesaler inventory management fees;
(b) Sales, value added (only to the extent of amounts actually paid and not refunded, reimbursed or credited), use, tariff, import/export duties or other excise taxes when included in the gross invoice price, but not value-added taxes assessed upon such sales that are not included in the gross invoice price or income taxes on income derived from such sales;
(c) Transportation and associated insurance, freight, packaging and customs charges when included in the gross invoice price;
(d) Allowances or credits to customers because of rejections, returns, or recalls; and
(e) Deductions for bad debts in accordance with generally accepted accounting principles, provided that such amounts will be included in Net Sales when recovered.

For purposes of calculating Net Sales, a sale to an Affiliate for end use by the Affiliate will be treated as a sale at list price. End use does not include: (a) use in a clinical trial if for no cost or for de minimis value, (b) charitable or compassionate use purposes if for no cost or for de minimis value, or (c) quantities provided for resale where royalties will be paid on the resale. For the avoidance of doubt, Net Sales shall not include consideration paid or owed to Licensee for any sale to MSD, an Affiliate, a MPP Licensee or the Authorized Suppliers that is not for end use by each of such parties. Net Sales and all deductions allowed in computing Net Sales shall be determined on an accrual basis in accordance with generally accepted accounting principles, consistently applied.

Form Sublicense Agreement 

5a. Royalty And Taxes

5A.1 Licensee will pay to MSD an earned royalty at the rate of five percent (5%) of aggregate Net Sales of Products sold by Licensee or its Affiliates to a governmental entity or Public Purchasers in the Territory in each calendar year, and ten percent (10%) of aggregate Net Sales of Products sold by Licensee or its Affiliates to a commercial entity in the Territory in each calendar year and be recorded in the manner further described in Appendix 3 of this Agreement.

5A.2 Royalty Term. On a country-by-country and Product-by-Product basis, royalty payments in the Territory shall commence upon the first commercial sale of such Product in such country in the Territory and would terminate upon the later of: (a) the expiration, invalidation or abandonment date of the last Patent that includes a Valid Claim that covers such Product in such country in the Territory; (b) ten (10) years from first commercial sale of such Product in such country in the Territory; or (c) expiration of regulatory exclusivity of such Product in such country in the Territory (the “Royalty Term”).

5A.3 Royalties accruing to MSD will be paid to MSD quarterly within 45 days after the end of each calendar quarter. Licensee will make all payments under this Agreement by check or wire transfer to an account of MSD designated by written notice from MSD. All royalties due to MSD will be payable in United States dollars. When Products are sold for monies other than United States dollars, the earned royalties will first be determined in the foreign currency of the country in which the sale was made and then converted into equivalent United States funds. The exchange rate will be that rate quoted in The Wall Street Journal on the last Business Day of the reporting period. Licensee shall bear the expense of any bank charges or any other transaction costs incurred in connection with payment under this Section 5A.1 and will effect payment of such amount that will result in MSD receiving the full amount calculated under the first sentence of this Section 5A.1 with no deduction of any type. Each royalty payment shall be accompanied by a statement setting forth the elements and calculation of the royalty amount in the format specified by MSD. It is clarified that any sale of Substance and/or Product between Licensee and Authorized Suppliers or MPP Licensee(s) shall be exempt from any royalty payment.

5A.4 Notwithstanding the aforesaid, the license provided under Section 2 of this Agreement is royalty-free until the end of the month in which the World Health Organization (WHO) declares the end of the Public Health Emergency of International Concern regarding COVID-19.

5A.5 Payments due for sales occurring in any country outside the United States will not be reduced by any fees or other charges imposed by the government of such country on the remittance of royalty income, provided that if laws or regulations require that taxes be withheld with respect to any royalty payments by Licensee to MSD under this Agreement, Licensee will: (a) deduct those taxes from the remittable payment, (b) pay the taxes to the proper taxing authority, (c) send evidence of the obligation together with proof of tax payment to MSD on a reasonable and timely basis following that tax payment, and (d) Licensee will reasonably assist MSD in seeking an exemption to such withholding to the extent available.

5A.6 To comply with contractual obligations that MSD or its Affiliates has with a Third Party, if monies owed to MSD under this Agreement are not received by MSD when due, Licensee will pay to MSD interest charges at a rate of three percent (3%) above the WSJ rate up to a maximum of ten percent (10%) per annum. Such interest will be calculated from the date payment was due until actually received by MSD. Such accrual of interest will be in addition to, and not in lieu of, enforcement of any other rights of MSD related to such late payment. Acceptance of any late payment will not constitute a waiver under Article 10.9 of this Agreement.

9. Statements, Reporting And Right To Audit

9.1 Licensee will keep full, true, and accurate books and records containing all particulars that may be necessary for the purpose of showing the amount of royalties payable to MSD and Licensee’s compliance with other obligations under this Agreement and applicable laws. Said books and records will be kept at Licensee’s principal place of business or the principal place of business of the appropriate division of Licensee to which this Agreement relates. Said books and records and the supporting data will be open at all reasonable times during normal business hours upon at least fifteen (15) days’ advance written notice, for three (3) years following the end of the calendar year to which they pertain, to the inspection and audit (on site if Licensee so requests) by independent certified public accountants hired by MSD and MPP, individually or together and reasonably acceptable to Licensee for the purpose of verifying Licensee’s royalty reports or compliance in other respects with this Agreement and applicable laws. Such certified public accountants will be bound to hold all information in confidence except as necessary to communicate Licensee’s non-compliance with this Agreement to MSD and/or MPP. The fees and expenses of the certified public accountants performing such an examination will be borne by MSD and/or MPP. However, if an error in underpaid royalties to MSD of more than five percent (5%) of the total royalties due for any year is discovered, then the fees and expenses of these representatives will be borne by Licensee.

9.2 After the first sale anywhere in the Territory, within 20 Business Days following the end of each Agreement Quarter, the Licensee shall deliver to MPP a statement accounting for, inter alia, all royalties calculations, Products and/or Substance (in terms of smallest units and patient packs for each formulation) sold or supplied by the Licensee under this Agreement during such Agreement Quarter in the Reporting Template as set forth in Appendix 3. MPP agrees that information contained in quarterly and other such reports shall be treated as Confidential Information, provided, however, that such information may be shared with MSD (with MSD treating such reports as Confidential Information); and that aggregated data may be publicly disclosed by MPP.