[Ip-health] Are tenders part of the HIF? And how do they compare to open licensing?

[james.love@keionline.org]

Dear Aidan  and Thomas

At the Georgetown event, in response to criticism about the difficulty of
determining long run marginal costs of production, Professor Hollis made
some reference to the use of tenders to generic companies, to help the HIF
determine what the long run marginal cost is.

What is unclear is how this would work, how it would be different from
open licensing of patents to generic suppliers (the approach taken in the
various Barbados/Bolivia and Sanders proposals), and why is it better?

A text search of the HIF reveals that Hollis and Pogge never discuss the
use of tenders from generic suppliers.  So this seems to be a new feature
of the HIF.  Details on this process would be welcome.

For example, are you now saying that the drug developers would be required
to offer periodic tenders to generic suppliers for all of the product they
supply?  For some of the product?   Or would these be "virtual" tenders,
with no real obligation to buy or sell?

An example of the "virtual" tender would be the countless times that CIPLA
is asked to quote a price, only to have a country buy from the patent
owner, at a negotiated price, rather than issue the CL that would allow
CIPLA to compete.   This process has some major limitations.  The generic
supplier get bored of being used, and stops providing useful information.

Are you suggesting that the HIF would manage its own tender process, for
everyone who might buy the drug?

Could the drug developer put non-compete conditions on the tender?
(There are plenty of examples of this now, when big pharma outsources
manufacturing or out-licenses products).

Since cost of goods is only one element of the cost of a delivered
product, will the HIF also be engaged in a comprehensive analysis of
distribution mark-ups?

Are there any details at all?

How does your new tender proposal differ from open licensing?

If you have continual mandated tenders, managed by the HIF, why not make
things simple and just have open licenses for the patents and permit
competition?