[Ip-health] Excerpts from HIF: compulsory licensing

Tue Nov 18 16:17:01 2008

Aside from all the rest of the total nonsense contained in this and other
excerpts from the Hollis/Pogge book, it is equal nonsense to claim that a
compulsory license is "an overturning of the normal patent right."
Compulsory licensing has always been part of the normal exploitation of
patents--in every country in the world except for the U.S. This book makes
it seem as if history is the opposite of what it is, that compulsory
licenses are a sudden "overturning" when it is only TRIPS in the last
decade or so that has in fact overturned a basic component of a patent
regime: that the government always reserves from the patentee any right to
withold the benefits of his invention from the public which has granted
him the monopoly patent right for a limited time.

Mickey Davis

> http://www.keionline.org/blogs/2008/11/18/excerpts-from-hif-compulsory-li=
censing/
>
> Excerpts from HIF: compulsory licensing
>
> In their recent book on the Helath Impact Fund,* Aidan Hollis and Thomas
> Pogge discuss a number of issues. This is what they say about compulsory
> licensing of patents.
>
> Page 53-54
>
>     Strengthened intellectual property protections in the less developed
> countries burden the poor immediately by pricing vital medicines out of
> their reach. Yet, such protections may benefit only future poor people,
> starting in 2025, when patents on medicines that owe their existence to
> such protections expire. Appealing to this time difference, one might
> then propose to resolve the dilemma in favor of Pre-TRIPS on the ground
> that it is morally impermissible to cause severe harms, including death,
> to poor people now for the sake of protecting millions of poor people
> from similarly severe harms later on. Many endorse such a principled
> stance. Yet, one can not be satisfied with such an outcome in view of
> all the harm that stimulating new drug development could avert from so
> many future lives.
>
>     It may seem as though compulsory licenses =E2=80=94 as envisioned in =
the
> TRIPS Agreement and reaffirmed in the 2001 Doha Declaration =E2=80=94 are=
 a
> practical solution to this dilemma. By issuing a compulsory license, a
> government can force down the price of a patented invention by
> compelling the patent holder to license it to other producers for a set
> percentage (typically below 10 percent) of the latter=E2=80=99s sales rev=
enues.
> Yet, compulsory licenses cannot fully solve the dilemma because, insofar
> as governments actually use them to improve access by the poor to
> patented medicines, compulsory licenses weaken the innovation incentives
> that were supposed to result from the extension of strong intellectual
> property rights into the less developed countries. Pharmaceutical
> companies will understandably discount any such incentive if they are
> uncertain whether and to what extent they will actually be allowed to
> reap the fi nancial reward from inventing a new medicine.
>
> Page 99-100
>
>     Compulsory Licensing
>
>     Compulsory licensing is a mechanism for enabling competitive
> production of a patented product by mandating a license at a set royalty
> rate for a patented innovation, and is in effect an overturning of the
> normal patent right to the exclusive use of the claimed invention. By
> issuing a compulsory license, a government authorizes the production and
> marketing of a cheaper generic version of a patented medicine on
> condition that the authorized generic firm pays a small license fee to
> the patent holder. Such a license, and even the mere threat of one, will
> typically cause the price of the relevant medicine to fall substantially
> in the relevant country. In Canada, compulsory
>
>     licensing applied to pharmaceutical patents from 1923 until 1993.
> Thailand and Brazil have recently imposed compulsory licenses on a
> number of medicines. Compulsory licensing was expressly envisaged in the
> TRIPS Agreement and again prominently endorsed in the 2001 Doha
> Declaration, which stated that "the TRIPS agreement does not and should
> not prevent members from taking measures to protect public health" (WTO
> 2001). Since Doha, compulsory licensing has become popular among many
> NGOs, who see it as an effective mechanism for improving access to
> essential medicines. However, compulsory licensing has important
> limitations.
>
>     First, the scope for increasing access to existing medicines is
> limited. Compulsory licensing is normally only allowed for domestic
> consumption. This does not help the many countries that lack domestic
> generic drug manufacturing capacity, which include almost all developing
> countries other than Brazil, India, and China. According to a 2003 WTO
> General Council decision, exceptions exist for issuing compulsory
> licenses to countries lacking domestic production capacity, but the cost
> of the compulsory license must be borne by the exporting country (WTO
> 2003). Even when the will to export under a compulsory license exists,
> the process is oft en so complex and "riddled with restrictions,
> safeguards, practical hurdles, and red tape that it is
> unworkable" (Johnston and Wasunna 2007, S18).1
>
>     Second, the use of compulsory licenses is limited by the fierce
> opposition of the pharmaceutical industry, which has attempted to
> suppress the use of compulsory licenses or to confine it narrowly to
> cases of acute crisis. For this reason, developing countries are often
> reluctant or uncertain about whether to engage in compulsory licensing,
> lest they provoke political retaliation.
>
>     Third, while systems of compulsory licensing may provide an
> expedient solution to short-term health problems, they discourage
> investment in R&D for diseases whose remedies may become targets for
> compulsory licenses. The welcome relief from the problem of high prices
> compulsory licenses bring thus aggravates the neglect of diseases
> concentrated among the poor. Pharmaceutical companies spend less on the
> quest for vital medicines =E2=80=94 especially ones needed mainly by the =
poor
> =E2=80=94
> when the uncertainties of development, testing, and regulatory approval
> are compounded by the additional unpredictability of whether and to what
> extent successful innovators will be allowed to recoup their investments
> through undisturbed use of their monopoly pricing powers. Compulsory
> licensing may thereby even exacerbate the health crisis facing
> developing countries over the medium and long terms (Pogge 2008b, 240).
>
> =E2=80=94=E2=80=94=E2=80=94
> * Aidan Hollis and Thomas Pogge, The Health Impact Fund, Making New
> Medicines Accessible for All, A Report of Incentives for Global Health,
> 2008
> --
> James Love, Director, Knowledge Ecology International
> http://www.keionline.org | mailto:james.love at keionline.org
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>
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--
Mickey Davis
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