Gates Foundation will provide $120 million to ensure generic production of Merck’s Covid-19 pill

As concern mounts over access to Covid-19 remedies, the Bill & Melinda Gates Foundation is committing up to $120 million to accelerate production of generic versions of an experimental Merck (MRK) pill to treat Covid-19 that would be available to dozens of low-income countries. But the effort was greeted with mixed reactions by patient advocates.

The Gates Foundation plans to provide different types of incentives so that eight generic manufacturers, all of which have already signed voluntary licensing deals with Merck, will be positioned to produce a sufficient quantity of the drug, called molnupiravir, as quickly as possible. The goal is to convince the generic companies to ready their facilities rather than wait to gauge demand for the pill — which early data suggests could reduce hospitalizations and deaths — before ramping up.

“They have the capacity. They can do this,” Trevor Mundel, president of global health at the Gates Foundation. “This is an incentive for them to do it earlier rather than wait to see what the market is like… They want to see (if there will be) enough volume. They (may) want to see who will pay at the end of the day. We don’t want to them to wait.”

Notably, the Gates Foundation will offer volume guarantees over a specified period of time, so the generic manufacturers have confidence their production investments will return acceptable profit margins. So far, the foundation has also awarded $2.4 million in grants to help the generic companies more quickly apply to the World Health Organization for manufacturing prequalification.

As of now, the Gates Foundation has agreed to provide up to approximately $1.9 billion to underwrite various efforts to combat Covid-19. These include the COVAX vaccine distribution program – which is overseen by the WHO, the GAVI vaccine alliance and the Coalition for Epidemic Preparedness Innovations – and guarantees to support at-risk manufacturing of monoclonal antibody treatments for low- and middle-income countries.

This latest move comes after Merck reached a deal with large generic makers such as Cipla, Dr. Reddy’s Laboratories, and Sun Pharmaceuticals to supply its pill to more than 100 low-to-middle-income countries. For the moment, though, it is not clear how many pills each company will produce, the production costs the companies will incur, or the pricing.

The Merck pill has generated excitement because top-line study results indicated it reduced both hospitalization and death compared to a placebo by 50%. In the placebo group, 53 patients, or 14.1%, were hospitalized or died. For those who received the drug, 28, or 7.3%, were hospitalized or died. The data from the study were made public in a press release and have not yet been peer-reviewed.

The findings set off another wave of anxiety, however, over inequitable access to Covid-19 medical products. Last year, wealthy countries quickly reached deals with vaccine makers, leaving low and middle-income countries to largely rely on the World Health Organization to organize programs to purchase and distribute vaccines. So far, the effort has fallen short.

As a result, there has been consistent pressure on the vaccine makers to share their intellectual property and other know-how so that generic manufacturers could more readily produce Covid-19 vaccines and make them available at lower costs to poorer countries. Pope Francis, for instance, urged the vaccine makers to do so in remarks earlier this week.

By striking the voluntary licensing agreements, Merck is hoping to avoid a similar fate. But the company, which developed the pill along with Ridgeback Biotherapeutics, has not indicated any plans to share its intellectual property. However, Merck has said it is in discussions with the Medicines Patent Pool, a United Nations-sponsored organization, to explore the potential for additional licenses.

Consequently, the specter of inequitable access has surfaced.

‘While any initiative to accelerate production and access, especially on the African continent and low income countries, is welcome, the Gates Foundation investment is incomplete. Vaccine and treatment apartheid affect all low and middle-income countries today due to intellectual property barriers,” said Rohit Malpani, a former director of policy and analysis at Doctors Without Borders and now a board member at UNITAID, which backs the Medicines Patent Pool.

“It is necessary also to tackle these patent barriers to ensure access to these medicines. The Gates Foundation should be throwing it’s considerable power and influence behind a waiver of intellectual property rules at the World Trade Organization, as well as pressuring Merck to expand the voluntary license to include all countries.”

The concern has been further fueled by uncertainty over pricing. The U.S. government signed a $1.2 billion deal to purchase 1.7 million doses. That works out to a $712 unit cost for a five-day treatment course, according to the contract. The company has indicated there are plans to produce 10 million doses by the end of this year and 20 million doses in 2022.

So far, other wealthy nations such as Singapore, Australia and South Korea have reached deals with Merck to buy its pill and more countries are clamoring to sign agreements. Terms were not released, but it remains unclear what steps Merck may take to satisfy growing demand, especially if the pill is later approved for a wider patient population.

Meanwhile, the actual manufacturing cost for a five-day treatment course is estimated to be $20. This suggests Merck will profit handsomely from sales to wealthy nations, but its licensing deals will not ensure sufficient access, according to Brook Baker, a Northeastern University professor who specializes in access to medicines and intellectual property and a senior policy analyst for Health GAP.

“There are three positives here: more efficient manufacturing that can lead to a cheaper price, expediting regulatory approval processes in countries, and the WHO prequalification, and the volume guarantees to incentivize production,” he said. “Depending on how contracts are worded, they may encourage companies to start making at risk, which means before regulatory approval.”

But he also noted the licensing deals exclude more than 30 upper-middle and lower-middle-income countries, including Turkey, Malaysia, Mexico and Ukraine, which suffered a large number of Covid-19 deaths and are home to substantial numbers of poor people. And he added that unless Merck pursues tiered pricing and takes a small mark up, the company stands to profit from vulnerable governments.

A Merck spokesperson wrote that “We have been and are currently engaged with numerous governments globally to discuss their interest in supply agreements so that we can provide each government the opportunity to secure timely supply of [the pill] should it be authorized by regulatory authorities. Several governments have recently made statements regarding ongoing discussions or concluded agreements, in addition to those that Merck has announced.”

But Baker estimated that middle-income countries excluded from the licensing deals accounted for 30 million infections in the first half of 2021, and 50% of all infections in lower-middle-income countries. By his calculation, even if the eight generic versions become available and satisfy this demand in the licensed territories, Merck will be unable to meet the remaining 70% of global need.

“Basically, what this announcement says is that intellectual property remains sacred. The Gates Foundation is willing to prime the market – it will take care of the poorest countries, but what Merck wants to keep for itself is fine,” Baker said. “The majority of the world’s poor live in upper-middle-income countries and they are still not going to have a guaranteed supply of a life-saving therapy.”

Such concerns may be mitigated, however, if a WHO program called the Access to COVID-19 Tools Accelerator successfully obtains the Merck pill. Known as ACT-A, the program is reportedly negotiating to purchase a “novel” pill for mild to moderate (Covid-19) patients for $10 a treatment course by November and then supply 28 million treatment courses over the following year.

Whether such a deal occurs and to what extent it helps countries excluded from the Merck deal remains to be seen. In the meantime, Jenny Ottenhoff, senior policy director of global health at the One Campaign, a nonprofit devoted to global poverty, agreed that the incentives are helpful but more may be required. (The nonprofit, by the way, receives funding from the Gates Foundation and Merck.)

“Broader access to intellectual property will probably be needed to scale up production more quickly and more easily,” she told us. “I don’t know if this is the scale of investment needed to make this happen.”