Patents have played a significant role in the tremendous growth of research and development in the pharmaceutical industry. Pharmaceutical development tends to be undertaken by companies from developed countries, whereas developing countries often have serious public health issues, including issues relating to affordability of essential medicines. This topic has generated considerable public debate, and the issue of compulsory licensing of pharmaceuticals is of interest to policymakers around the world.
What is Compulsory Licensing?
The term 'compulsory licence 'refers to a basis upon which a patented invention may be legitimately exercised by someone other than the patentee or the patentee's own licensee. Very simply, patent laws around the world typically include compulsory licence provisions which allow for the authorities (e.g. the courts) to grant patent licences in circumstances where patentees have not granted licences, but where circumstances warrant that licences be granted. For example, where a specific medicine is required to treat an epidemic, but the medicine is not available in the relevant country at an affordable price.
Article 5 (A) of the Paris Convention of 1883 lays down that "Each country of the Union shall have the right to take legislative measures providing for the grant of compulsory licences to prevent the abuses which might result from the exercise of the exclusive rights conferred by the patent, for example, failure to work (the patent)."
Article 31 of the TRIPS Agreement introduces considerations that must be respected when providing for use of a patented invention without the authorisation of the patentee. These may be summarized as follows:
- Authorisation of such use shall be considered on its individual merits;
- Such use may only be permitted if, prior to such use, the proposed user has made efforts to obtain authorisation from the patentee on reasonable commercial terms and conditions and that such efforts have not been successful within a reasonable period of time;
- The scope and duration of such use shall be limited to the purpose for which it was authorised;
- Such use shall be non-exclusive and, basically non-assignable;
- Any such use shall be non-exclusive and, basically, non-assignable;
- Any such use shall be authorised predominantly for the supply of the domestic market of the Member authorising such use.
TRIPS has laid down certain exceptions to the above conditions wherein governments are exempted from seeking voluntary licence from the patent holder in cases of emergency, public non commercial use of the invention and to thwart any kind of anti competitive practices. A special case of compulsory licensing is 'Government use', wherein the government authorises itself to use a patented invention without the permission of the patent holder.
The UAE Patent Law reflects the provisions of the TRIPS Agreement. Specifically, Article 24 of the UAE Patent Law states that, if the owner of the patent has not made use of the patented invention, then any interested party may obtain a compulsory licence upon fulfillment of certain conditions. Those certain conditions reflect the TRIPS considerations set out above. Article 29 of the Patent Law enables the responsible Minister to approve the issue of a compulsory licence, without meeting the aforementioned conditions in times of general emergency, highly urgent public need or for non commercial purposes.
Compulsory Licensing under the Doha Decision of 2003
The dilemma faced by poor countries in relation to accessibility to drugs for treating epidemic diseases such as malaria, HIV/AIDS and cancer was addressed in the Doha Ministerial Conference of 2001. The lesser developed countries cannot afford to fund research and development, and may not have the facilities for the manufacture of patented drugs in their own countries. Because of this, it was decided in the Doha Conference to allow compulsory licences to be issued in certain countries for the manufacture of patented drugs for export to eligible countries that have no capacity to manufacture these drugs. A number of countries, including the UAE, took the approach that they would import drugs using this system only in the case of a national emergency.
The ongoing debate
In the past, one way in which developing countries could ensure that affordable medicines were available to their citizens was by keeping pharmaceuticals outside the scope of patentable subject matter. Prior to the TRIPS Agreement, many countries did not accept the patentability of pharmaceuticals, or they permitted the patenting of pharmaceutical manufacturing processes only (and not the actual pharmaceutical product of such a process). This enabled generic pharmaceuticals to become widely and cheaply available in those countries.
Except in limited circumstances, the TRIPS Agreement now requires signatory countries to ensure that their patent legislation provides for the protection of pharmaceuticals. This requirement has, to a great extent, curtailed the flexibility that many countries had previously been able to rely on to ensure that pharmaceuticals were available and affordable in their own markets.
Compulsory licensing has been one way in which developing countries have been able to make life saving drugs available to their citizens, despite the restrictions resulting from TRIPS. Other policies that have been formulated to safeguard the public in respect of access to affordable pharmaceuticals include those relating to parallel importation and the control of drug prices.
Zimbabwe provides a good case study. In 2003, in accordance with its national laws, Zimbabwe issued a declaration of emergency in respect of HIV/Aids, and a compulsory licence was issued to a local company, Varichem Pharmaceuticals Ltd., to produce anti-retroviral drugs during the emergency period. In accordance with the licence, Varichem was required to supply three quarters of its production to state-owned health institutions, and the medicines produced under the licence were subject to price control.
Malaysia and Indonesia are other examples of developing countries that have effectively invoked the 'government use' provisions to address local needs. While Malaysia applied the mechanism to import generic anti-retrovirals, Indonesia made use of its corresponding provisions for the domestic manufacture of generic medicines.
While developing countries have been battling to secure public health, there has been serious criticism from developed countries who wish to ensure that their pharmaceutical companies are able to benefit from strong intellectual property rights.
The basic argument is that the profits that can be secured by strong intellectual property rights are an incentive for research and development. Pharmaceutical companies need to recoup their costs on such research and development, and profit from their efforts. Compulsory licences interfere with the market. If pharmaceutical companies are unable to make money, they will not invest in research and development, which will hinder the social development. Instead of curbing the patent rights of patentees by issuing compulsory licences, governments of lesser-developed countries should endeavour to reform their economic policies to improve the wealth of their nations, the health of their citizens, and their domestic ability to manufacture and/or distribute the medicines their people need.
Obviously, the suggestion that improvements to domestic economic policies would alleviate the need for compulsory licences does not address the immediate needs of a sick person in a developing country. Pragmatic approaches are required to balance these needs with the needs of pharmaceutical patentees. Collaboration between patent holders and local manufacturers of generic medicines is one possible way of improving the likelihood of supplying the market in a suitable fashion, and thus reducing the need to rely on compulsory licences.
Although compulsory licensing is not healthy for the protection of pharmaceutical patents, the issuance of compulsory licences should be prudently managed to take into account the welfare of those in developing countries.
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