Compulsory licensing

Reasons to Reject Compulsory Licensing

We have previously touched on the issue of compulsory licensing and how it hurts patient access to innovative medicines. But for governments considering breaking patents without the patent holder’s permission by issuing a compulsory license, we dig deeper into why this practice could do more harm than good.

1. Compulsory licensing doesn’t reduce medicine prices.

Breaking patents on innovative medicines does not always deliver the best price for patients and health systems. According to one study, for example, antiretroviral medications produced locally under compulsory licenses can cost 25% more than those acquired through international procurement mechanisms such as The Global Fund to Fight AIDS, Tuberculosis and Malaria. Additionally, the same study found voluntary licensing to be more effective in helping provide access to medicines at affordable prices.

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

Granting a compulsory license does not necessarily address medicine supply issues. For instance, recent research found that compulsory licensing and weak patent rights were associated with significant delays in the introduction of new lifesaving medicines. Moreover, according to a major study in 2014, biopharmaceutical innovators launch new medicines sooner in markets with strong and well-enforced intellectual property protections, which means that compulsory licensing may actually reduce access to medicines long-term.

3. Compulsory licensing undermines local economic growth and investment in R&D

Studies have shown that because compulsory licensing undermines the stability and certainty of intellectual property protections, it deters foreign investment, which plays a critical role in economic growth and development. Moreover, undermining intellectual property protections through the use of mechanisms such as compulsory licensing also threatens economic growth as countries with robust IP systems have a GDP per capita that is on average 21 times greater than those of countries with the weakest protections. By limiting economic growth and deterring investment into research and development, countries pursuing compulsory licensing may actually be further eroding their ability to invest in health systems financing and strong health infrastructures. This makes it all the more difficult for patients to access the treatments they need.

For governments considering breaking patents by issuing a compulsory license…this practice does more harm than good.

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

Compulsory licensing does nothing to address the real barriers to medicine access – such as weak health care delivery systems, low national health care investment and high taxes and tariffs on medicines that often stand between patients and the medicines they need. In India for example, the compounded financial burden of import tariffs and customs inefficiencies on pharmaceutical products was estimated to be as high as $737 million, according to a recent study. Falling back on compulsory licensing in a roundabout attempt to improve access ignores the real and complex challenges that, if appropriately addressed, could lead to meaningful change for patients.

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