Compulsory licensing of drug products in developing countries

Abstract

Compulsory licensing of drug products is a very hot issue in today’s pharmaceutical world. Compulsory licensing of a drug product allows the government to issue the license of manufacturing the drug to a third person. The third person has to give some 5–10% royalty to the patent holder (the quantum of royalty is decided by the government and not by the patentee). The issue emerged after developing nations were given TRIPS flexibilities to implement the system when lives of large population are at stake. Compulsory licenses have been given in many countries like Thailand, Brazil, Mozambique, Zimbabwe, Zambia, Rwanda, Malaysia, Indonesia and recently India. India issued compulsory license over Bayer’s anticancer drug Naxaver (Sorafenib) to generic company Natco Pharma Ltd. United States has criticized the Indian decision. United States has also put Thailand on watch list after Thailand has issued compulsory licenses to three antiretroviral drugs. Compulsory licensing of drug products is very beneficial for the patients but is considered a big threat for the pharmaceutical companies. The branded drug makers spend billion dollars to patent a drug product. It is claimed by the pharmaceutical majors that the royalty of 5–10% given by generic drug makers to these companies is not enough to recoup their loss. The present article explores the utilization of “Compulsory Licensing” by several countries, exemplified by India and Brazil in particular, and highlights the patentees’ concerns of losing profits. The authors have attempted to negate the concern of the patentees over the use of compulsory licensing.