Compulsory licensing

5 Reasons to Reject Compulsory Licensing

The COVID-19 pandemic was met with an unprecedented level of innovation and global collaboration, made possible through research, development and partnerships enabled by intellectual property (IP) rights. Yet critics of IP have sought to undermine the very systems that incentivized the development and production of these life-saving medicines, leading to the misguided decision to waive IP rights for COVID-19 vaccines and the ongoing push to expand the waiver.

This waiver is a form of compulsory licensing, which allows governments to override patent protections so that others may produce or use an invention without the patent owner’s consent. Here, we dig into five reasons why compulsory licensing is an ineffective policy choice, especially for medicines.

1. Compulsory licensing does not reduce medicine prices.

Although proponents of compulsory licensing suggest their aim is to lower the cost of medicine, breaking patents doesn’t necessarily reduce prices for patients or health systems. In fact, one study shows that HIV medications manufactured locally under compulsory licenses cost 25% more than those procured through international procurement programs such as The Global Fund to Fight AIDS, Tuberculosis and Malaria.

2. Compulsory licensing does not increase the supply of medicines.

Granting a compulsory license does not necessarily increase a medicine’s supply – and may even decrease it. Researchers found that compulsory licensing and weak IP rights were associated with delays in the launch of new, innovative drugs and disincentivized manufacturers to enter the market. This means compulsory licensing may actually reduce access to medicines in the long run. Instead, modest patent reforms can increase the availability of a wider range of new drugs with limited impact on prices.  

3. Compulsory licensing does not deliver measurable benefits for patients.​

Compulsory licensing does not necessarily improve health outcomes for patients nor increase access. Recent experience suggests that better mechanisms exist to facilitate access to medicines, such as voluntary licensing. For example, Malaysia issued compulsory licenses for hepatitis C virus medicines and saw only 1,501 of the estimated 450,000 people with hepatitis C were treated with the compulsory licensed medicine in 2018. In the same time period, voluntary licensing facilitated the treatment of twice the number of patients in neighboring Cambodia, more than 15,000 patients in Vietnam and more than 18,000 patients in Thailand.

4. Compulsory licensing does not promote local production of medicines.

Some governments have promoted compulsory licensing, in part, in belief that it will benefit domestic generic drug companies. However, studies have shown that undermining IP protections through mechanisms such as compulsory licensing deters foreign investment and threatens economic growth. And given that a compulsory license transfers only patent rights – not the know-how, capacity or product quality – it can often take a significant amount of time for local manufacturers to launch their generic version. In Brazil, for example, it took 2 years to launch an antiretroviral treatment following the issue of a compulsory license.

5. Compulsory licensing does not address systemic barriers to medicine access.

Compulsory licensing does nothing to address the real barriers to medicine access and equity – including supply chain challenges, weak health care infrastructure, low national health care investment, and high taxes and tariffs – that often stand between patients and the medicines they need. Granting a compulsory license in an attempt to lower prices and increase access ignores the actual challenges that need to be addressed to achieve meaningful change for patients.

Compulsory licensing doesn’t necessarily lower prices or speed access in the short-term nor does it provide sustainable, comprehensive solutions to longer-term challenges. Rather than focusing on measures that weaken IP, governments and industry should work together to address the true barriers to access and encourage collaboration through voluntary patent licensing.

Granting a compulsory license in an attempt to lower prices and increase access ignores the actual challenges that need to be addressed to achieve meaningful change for patients.

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