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Economic and Procedural Constraints of Compulsory Licences for Medicines

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Compulsory Licensing

Part of the book series: MPI Studies on Intellectual Property and Competition Law ((MSIP,volume 22))

Abstract

The chapter argues that since there is no conclusive evidence for a causal relationship between the issuance of compulsory licences (CL) for medicines and any fall in innovation or foreign direct investment (FDI) inflow, various other factors like predictability and market potential need to be taken into account for understanding the after-effects of a grant of CL. The chapter examines the trends in CLs after the Doha Declaration and carves out a case for adhering to transparent procedures for imparting some predictability to the process in order to mitigate losses from possible repercussions.

Y. Goyal is Associate Professor. Ph.D. Candidate at the University of Hamburg, Germany.

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Notes

  1. 1.

    See, for e.g., Balasubramaniam (2002).

  2. 2.

    See Cahoy (2008), p. 141.

  3. 3.

    Mazzoleni and Nelson (1998), p. 273, show that conventional thinking among economists, lawyers, and many public officials is heavily weighted towards the proposition that ‘patent rights are conducive to economic progress’.

  4. 4.

    For a very interesting study on this, see Reichman and Lewis (2005).

  5. 5.

    Gilbert and Shapiro (1996), pp. 12753–12754, briefly mention how compulsory licence may reduce efficiency.

  6. 6.

    See, for this study, McFetridge (1998).

  7. 7.

    Ibid, p. 84 (McFetridge reports that with the exception of Merck, 1994, Canadian R&D expenditures as a percentage of worldwide expenditures were less than 2 %; e.g. 1.3 % for Glaxo, 1.0 % for Hoffman LaRoche, 0.7 % for Pfizer, 1.2 % for Sandoz, 1.4 % for Ciba, 1.7 % for Eli Lilly, and 6.1 % for Merck).

  8. 8.

    Moser and Voena (2012), p. 404. They also conclude that this increase of 20 % took 8 to 9 years to set in and remained statistically significant throughout the 1930s (p. 409).

  9. 9.

    Foster and Rosenzweig (1995), p. 1205.

  10. 10.

    Chien (2003), pp. 891–892.

  11. 11.

    See, e.g., Banta (2001), p. 2656; see also Kanth (2003).

  12. 12.

    See, generally, Smith et al. (2009); see also Chaves and Oliveira (2007), pp. 51–54 (focus on Latin American and Caribbean countries).

  13. 13.

    Beall and Kuhn (2012), p. 3. Note that through compulsory licensing, countries can threaten pharmaceutical companies to discipline their pricing behaviour. These disciplining strategies have been discussed (for Thailand and Brazil) in Feldman (2009), pp. 151–155.

  14. 14.

    Ibid, p. 4.

  15. 15.

    Ibid.

  16. 16.

    Ibid.

  17. 17.

    Ibid.

  18. 18.

    Beall and Kuhn (2012), p. 3.

  19. 19.

    For a discussion of Egypt’s CL statute in the copyright context, see International Intellectual Property Alliance 2006: Special 301 Report Egypt.

  20. 20.

    Castellano (2006), p. 289.

  21. 21.

    Bird (2009), p. 212.

  22. 22.

    Ibid, p. 214.

  23. 23.

    Reichman (2009), p. 254.

  24. 24.

    Aziz (2003), p. 22.

  25. 25.

    See “Egypt Pharmaceutical and Healthcare Report Q3 2010,” Business Monitor International, May 2010; available at http://www.researchandmarkets.com/research/d4a32f/egypt_pharmaceutic last accessed on 1 June 2013.

  26. 26.

    Ibid.

  27. 27.

    See, for example, Médecins Sans Frontières Campaign for Access to Essential Medicines, background paper, “Examples of the Importance of India as the ‘Pharmacy for the Developing World’,” available at http://www.doctorswithoutborders.org/news/access/background_paper_indian_generics.pdf last accessed on 1 June 2013.

  28. 28.

    For a detailed treatment of Brazil’s history of use of compulsory licensing in expanding access, see Marques et al. (2005).

  29. 29.

    See ibid, pp. 474–476.

  30. 30.

    See, for e.g., Articles 68 and 71. Article 68 requires that, within 3 years of obtaining a patent, the patent holder must manufacture the subject matter of the patent in Brazil, unless the patent holder can show that local production is not economically feasible or reasonable. Article 71 states that, through an act of the Federal Executive Authorities, a compulsory licence may be granted in cases of “national emergency or public interest”.

  31. 31.

    Bird and Cahoy (2008), p. 313.

  32. 32.

    Passarelli and Terto (2002), p. 42.

  33. 33.

    See chapter “The Use of Compulsory Licences in Latin America” by Carlos M. Correa in this volume.

  34. 34.

    Rich (2001).

  35. 35.

    For details of this case, see Bjornberg (2006).

  36. 36.

    Palermo (2008).

  37. 37.

    van Gelder and Stevens (2010), pp. 5–6.

  38. 38.

    There are certain advantages of government use licences over CLs procedurally under the TRIPS Agreement, the most notable of which is the ability to proceed with the issuance of the government use licence in the absence of failed prior negotiations with the patent holder, and they are thus easier to issue in the face of a medical emergency, for example. At the same time, a government use licence would limit the choice of firms that could import or produce using that licence to government ministries and state-owned enterprises.

  39. 39.

    A rough English translation can be found at http://www.citizen.org/documents/PresidentalDecree20121.pdf last accessed on 1 June 2013.

  40. 40.

    “Indonesia generics: a broad license,” The Economist Intelligence Unit, 17 October 2012.

  41. 41.

    Ibid.

  42. 42.

    Ibid.

  43. 43.

    See original decrees available at http://www.cptech.org/ip/health/c/thailand/thai-cl-kaletra_en.pdf; http://www.cptech.org/ip/health/c/thailand/thaicl4efavirenz.html; http://www.cptech.org/ip/health/c/thailand/thai-cl-clopidogrel_en.pdf last accessed on 1 June 2013.

  44. 44.

    See, for greater detail, the chapter “Compulsory Licences: Law and Practice in Thailand” by Jakkrit Kuanpoth in this volume.

  45. 45.

    Fuller (2007).

  46. 46.

    Lybecker and Fowler (2009), p. 234.

  47. 47.

    Stiglitz (2009), p. 364.

  48. 48.

    Abbott and Reichman (2007), pp. 969–981. Also see, generally, Reichman (2009).

  49. 49.

    Ibid, pp. 973–980.

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Authors and Affiliations

  1. Jindal Global Law School., University of Hamburg, Hamburg, Germany

    Yugank Goyal (Honorary Research Fellow)

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  1. Yugank Goyal
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Editors and Affiliations

  1. Max Planck Institute for Innovation and Competition, Munich, Germany

    Reto M. Hilty

  2. Institutum Iurisprudentiae Academia Sinica, Taipei, Taiwan

    Kung-Chung Liu

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Goyal, Y. (2015). Economic and Procedural Constraints of Compulsory Licences for Medicines. In: Hilty, R., Liu, KC. (eds) Compulsory Licensing. MPI Studies on Intellectual Property and Competition Law, vol 22. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-54704-1_21

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