The growing public health challenge posed by the COVID-19 pandemic in Israel, and concerns over a worsening of the outbreak, gave rise to an urgent need for large quantities of potentially effective therapies for the virus. One such therapy is Abbvie's antiretroviral drug KALETRA® (lopinavir/ritonavir), indicated for the treatment of HIV.
As it turned out, Abbvie is currently unable to supply Israel's public health system with the required quantities of KALETRA®. At the same time, it transpired that a generic version of KALETRA® is available from Hetero, a generic manufacturer operating in India. However, since KALETRA® is said to be covered by three Israeli patents assigned to Abbvie – IL185390, IL207260 and IL173939 ("the KALETRA Patents"), the last of which is set to expire in 2024 - the importation into Israel of the generic product would constitute patent infringement, and is thus prohibited.
The Israeli Patents Law, 1967, includes several provisions which may be pertinent in the context of the exploitation of inventions in view of public needs. In addition to provisions allowing for the grant of compulsory licenses by the Commissioner of Patents under certain strict conditions (and in timelines that are apparently less relevant to the current crisis), the Patents Law also provides, in section 104, that a minister designated by the government "may permit the exploitation of an invention by Government Departments or by any enterprise or agency of the State, even though a patent has already been granted for it or applied for, if it appears to the Minister that it is necessary so to do in the interests of the defence of the State or the maintenance of essential supplies and services". The Patents Law further provides, in section 105, that "the Minister may, if it appears to him that it is necessary to do so for the purposes mentioned in section 104, grant a permit under that section to a person operating under a contract with the State, with a view to ensuring or facilitating the execution of that contract and for the requirements of the State only".
Under the current unusual and dramatic circumstances, and as a similarly unusual measure, the Minister of health, Mr. Yaacov Litzman, today exercised his power under sections 104 and 105 of the Israeli Patents Law, 1967, and permitted the exploitation of the KALETRA Patents by the Ministry of Health's Emergency Department and a private company, KS Kim International. Since the permit impinges upon Abbvie's exclusive patent rights, it is narrowly defined: the permitted exploitation of the KALETRA Patents is confined to the importation into Israel of generic KALETRA from Hetero, for the sole purpose of treating patients infected with the Corona virus. Accordingly, the permit does not allow for the use of generic KALETRA® imported thereunder, for the indication of KALETRA®, namely the treatment of HIV.
The issuance of the permit does not entail that Abbvie will not be compensated for the exploitation of the KALETRA Patents. According to the Patents Law, once a permit under sections 104 or 105 is issued, the State of Israel must pay the patent owner, or its exclusive licensee, royalties that will be agreed upon between the parties. In the absence of such an agreement, the royalty rate will be determined by the Royalties and Compensations Committee ("the Committee"), a statutory committee acting under the Patents Law and chaired by a former Justice of the Supreme Court, the Patents Commissioner, and a member of the academia.
If the Committee ends up being required to determine the royalty rate, the Patents Law provides that in doing so, the Committee must take into consideration, inter alia, the scope and nature of exploitation allowed under the permit. The Committee may also take into consideration royalty rates stipulated in licenses similar in terms to the issued permit. Notably, however, the Committee's decisions are not subject to an appeal, and can only be challenged by way of a petition to the High Court of Justice (HCJ). The HCJ has already held, albeit in the context of the Committee's decisions in matters relating to compensation for employee inventions, that the scope of the court's intervention in the Committee's decisions is extremely limited, and reserved for exceptional cases.
It therefore remains to be seen whether the unusual permit issued today by the Minister of Health to exploit the KALETRA Patents will also be followed by similarly unusual proceedings before the Committee, to determine the royalties to be paid to Abbvie.
It should be noted that while the permit issued today relates to a specific importer and specific supplier, it stands to reason that if other importers and suppliers of generic KALETRA® are found, the Minister of Health will issue similar permits.