[Ip-health] Excerpts from HIF: compulsory licensing

[Riaz K Tayob]

Without having read the book as such, from the excerpts it is clear that
there is an assumption (much like Wall Street bankers subprime mess)
that patents provide the "market" with appropriate incentives upon which
to make allocative decisions on R&D spend. Like the assumptions that
derivatives distribute risk appropriately, this is a dangerous
assumption to make and which the proverbial 10/90 gap puts paid
to...there is a circular argument here which makes little sense:

"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 po=
or
=E2=80=94 when the uncertainties of development, testing, and regulatory ap=
proval
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.!"



mchael.davis@law.csuohio.edu wrote:
> 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 make=
s
> 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 t=
o
> 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-l=
icensing/
>>
>> 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 ar=
e 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 re=
venues.
>> 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
>> Wk: +1.202.332.2671 | US Mobile +1.202.361.3040 | Geneva Mobile
>> +41.76.413.6584
>>
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>
>
> --
> Mickey Davis
> _________________________________
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