Access to medicines after TRIPS: Is compulsory licensing an effective mechanism to lower drug prices? A review of the existing evidence

Abstract

While Trade-Related Aspects of Intellectual Property Rights (TRIPS) was expected to hike up prices of patented medicines, there was no consensus on its likely final impact on access, because the agreement housed instruments to address this challenge. For instance, compulsory licensing, through the facilitation of price reductions, was considered to be an important countermeasure. However, little is known about the extent to which compulsory licensing has actually been effective in reducing prices of much-needed patented drugs. To fill this gap, this paper undertakes a systematic-review of the existing evidence on the impact of compulsory licensing on drug prices. Retrieval and analysis of 51 observations of pre- and post-compulsory licensing prices indicate that a compulsory licensing event is likely to reduce the price of a patented drug, albeit with some caveats. Moreover, compulsory licensing procurement from the international market is likely to be more effective in reducing drug prices than contracts to local companies. These findings are reconfirmed in the race to improve access to Remdesivir for hospitalized COVID-19 patients. Clearly, the future incidence and impact of compulsory licensing will depend on further possible procedural refinements to ease its implementation, the development of technological and manufacturing capabilities in developing countries, and the importance of biologics among life-saving drugs.

TRIPS to Where? A Narrative Review of the Empirical Literature on Intellectual Property Licensing Models to Promote Global Diffusion of Essential Medicines

“…Yet taken together, there is considerable evidence that VLs, namely through the MPP, lower prices through generic competition and improve uptake of EMs. These findings were overall consistent with the broad literature on the role of generics in improving access to medicines [18][19][20].…”

“…A wide range of studies have looked at the complex impact of implementing TRIPS and newer stringent free trade agreements regimes and the use of TRIPS flexibilities on access to medicines from the perspectives of economics, public health, and law. Key findings from recent studies and three systematic reviews [17][18][19] are outlined below and detailed in Table S1. Trade Treaties and Access to Medicines: Islam and colleagues [17] have recently reviewed 16 studies that evaluated the size of the effect (ex-post studies) or predicted the likely impact (ex-ante studies) of IP frameworks on access to medicines.…”

“…For example, in Thailand, the use of 7 generic drugs produced after CL to treat HIV/AIDS and several types of cancer saved the healthcare system approximately $370 million over 5 years [21]. Another recent systematic review, by Urias and Ramani [19], included 16 pre-post studies covering a total of 24 CL events occurring from 2003 to 2012 in eight countries in three continents, most commonly for patents on small molecule HIV/AIDS drug formulations. Most of the studies looked at generic entry and drug prices in different countries.…”

Ambidexterity's influence on export strategy development—The case of the Indian pharmaceutical industry

“…The companies in question can be classified into the following four main categories, which are a synthesis emerging from the comparative analysis of several studies in the field (Kimura & Nakamura, 2020;Urias & Ramani, 2020).…”

Access to Covid-19 Vaccine: Patents vs. People?

“…pharmaceutical industry). 38 Notwithstanding their benefits, compulsory licenses also have to an extent (unproven) reputation of undermining R&D investments 39 and some countries refrain from invoking this mechanism out of precaution and, perhaps even, fear to discourage foreign investors and create an impression of not respecting IPRs. 40 Hence, although the use of com-pulsory licenses for limiting patent rights has the potential to enhance access to Covid-19 vaccines through generic manufacturing, the past "atmosphere" surrounding this instrument might hinder their invocation.…”