On 24 September, Jeremy Corbyn, leader of the UK Labour party, announced a series of measures to bring medicines pricing in check and to ensure pharmaceutical innovation meets real health needs. He talked about a meeting he had with Luis Walker, a nine-year-old boy with cystic fibrosis who has campaigned for access to cystic fibrosis medication and has called on the government to allow the import of lower-priced medicines for use in the NHS. Luis has been a relentless campaigner for access to treatment and he now has the ear of the Labour leader, who announced his party’s commitment to using compulsory licensing to bring the price of medicines down. The full policy statement can be found here.
Since Corbyn’s speech, a number of journalists and others have approached Medicines Law & Policy asking whether compulsory licensing actually works. The short answer is ‘yes it does’ if the right conditions are in place. The following gives more details.
A compulsory licence is a government body or court decision to allow the use of a patented product or process, without the consent of the patent holder, against the payment of a reasonable royalty. Compulsory licensing is an integral part of patent law, and all countries have such provisions. A government can make use of a patent for its own purposes. This is called ‘government use’ or ‘Crown use’ in the UK and other Commonwealth countries. In that case, the government also will have to pay royalties, but prior negotiations to obtain a voluntary license are not required. However, it is unlikely that a government would resort to compulsory licensing without first engaging in price negotiations with the company.
There needs to be a patent in effect for a compulsory licence or Crown use to be relevant. A compulsory licence or Crown use lifts the monopoly effect of a patent but not of other forms of market exclusivity (see also here for information on other types of exclusivity). Suggesting the use of a compulsory licence for a product that is no longer patented or was never subject of a patent in the country therefore does not make sense (but is not unheard of).
A compulsory licence can be issued to permit the production of equivalent generic products or the importation of generic products from countries where such products are produced because they are not, or no longer patent protected. The effectiveness of a compulsory licence will be significantly enhanced if there is a generic equivalent available. This is indeed the case for lumacaftor/ivacaftor (sold by Vertex under the brand name Orkambi), which is the medicine that Luis needs. A generic manufacturer in Argentina, where patents on the product have not been granted, is making it for about 20% of Vertex’s list price in the UK. Families with children who suffer from cystic fibrosis have organised a buyers club to gain access to these medicines. See here for a recent BBC report on their efforts.
A medicine has to be registered with the relevant medicines regulatory authority before it can be legally marketed in the country. The same is true for a medicine produced or imported under a compulsory licence. An additional intellectual property hurdle may be data exclusivity which prohibits the registration of the generic product based on clinical test data filed by the original company. In the EU, the data exclusivity period is eight years. For more details on data-exclusivity see here. Most countries in the world do not grant data exclusivity or provide for a waiver in case of a compulsory licence is issued. The latter is currently also under discussion in the Swiss parliament.
The threat of a compulsory licence may induce the originator company to offer a better price or to agree to a voluntary licence to prevent non-voluntary measures. The TRIPS Flexibilities database – which contains a regularly updated record of the compulsory licences used in the pharmaceutical field – shows that since 2001, of the 21 announced but not executed compulsory licences, 13 were abandoned because the patent holder offered a voluntary licence or a better price.
There is a growing interest in the use of compulsory licensing in high-income countries, particularly in Europe. The current UK government has publicly stated that it has a ‘moral obligation’ to explore mechanisms, including Crown use licence to provide access to generic versions of Orkambi in the NHS.
Updated on 26 September.
