Compulsory Licenses Won’t Solve a Healthcare Crisis

From IP Watchdog
By Dr. Kristina Lybecker, Associate Professor of Economics, Colorado College
April 1, 2013

The WTO-negotiated Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS Agreement) was the first international trade agreement to incorporate intellectual property law.  Though the Agreement remains controversial, the TRIPS Agreement struck an important balance between the long term benefits intellectual property rights generate through knowledge creation and short term costs resulting from market exclusivity.  The TRIPS Agreement introduced more predictability into the international trade environment, and also provides a mechanism for the resolution of disputes in a systematic way.  As with many international agreements, however, future viability lies in fair and uniform adherence to the agreed-upon principles.

To date, the most contentious aspect of the TRIPS Agreement is the IP protection surrounding pharmaceutical products.  The debates are vitriolic, pitting the long term incentives to innovate against the immediate public health needs of society.  In particular, innovators and public health advocates disagree on the use of compulsory licensing to address public health emergencies.   The concern over public health emergencies and the periodic need to increase access to existing medications led WTO Member States to adopt the Doha Declaration on the TRIPS agreement and public health. The Doha Declaration emphasizes that the TRIPS Agreement should not be interpreted as preventing countries from taking extraordinary actions relative to intellectual property in the event of a public health emergency. One of the extraordinary measures authorized to give governments more flexibility to address a public health crisis is compulsory licensing.

The compulsory licensing provisions of the Doha Declaration on the TRIPS agreement and public health have the potential to save lives and protect public health.  However, to deliver on this potential the provisions must be used responsibly.  Specifically, the interpretation of ‘national emergency’ should adhere to both the text of the declaration, as well as its intent.

The Doha Declaration states:

“We agree that the TRIPS Agreement does not and should not prevent members from taking measures to protect public health. Accordingly, while reiterating our commitment to the TRIPS Agreement, we affirm that the Agreement can and should be interpreted and implemented in a manner supportive of WTO members’ right to protect public health and, in particular, to promote access to medicines for all. . . Each member has the right to grant compulsory licenses and the freedom to determine the grounds upon which such licenses are granted.  Each member has the right to determine what constitutes a national emergency or other circumstances of extreme urgency, it being understood that public health crises, including those relating to HIV/AIDS, tuberculosis, malaria and other epidemics, can represent a national emergency or other circumstances of extreme urgency.”

The 2001 Doha Declaration confirmed the ability of member nations to utilize the inherent flexibilities in the TRIPS Agreement to safeguard public health in cases of national emergency.  This was negotiated in the shadow of the rampant HIV/AIDS crisis in South Africa.  At the time, national HIV prevalence in South Africa was 11.4% in 2002, truly a national emergency.  (Additional information here on South Africa HIV and AIDS statistics).

Times have certainly changed, yet a recent Reuter’s article describes India’s plans to examine a dozen patented drugs to assess the potential for issuing compulsory licenses and ramp up production of cheap generic versions.  To date, India has issued one compulsory license to Indian producer Natco Pharma Ltd, for Bayer’s Nexavar, an advanced stage kidney and liver cancer drug.  While the situation is alarming to both U.S. authorities and the innovative pharmaceutical industry, the real question is whether this is a responsible and appropriate use of the flexibilities provided by the Doha Declaration.  To answer that, one only need consider the Nexavar case.  Recent estimates indicate that there are “at least 100,000 patients in India suffering from different forms of renal cell and hepatic cell carcinoma and 30000 patients are added to the patient pool every year.  Over 24000 patients die in India every year on account of these diseases.”[1] Given the population of India is approximately 1.2 billion, the incidence of these conditions is 0.0083% of the population.  It hardly seems that this is a national emergency or that issuing a compulsory license for Nexavar adheres to the intent of the Doha Declaration.

India’s Supreme Court is summarily undermining the nation’s intellectual property rights regime, weakening patent protection, and abusing the compulsory licensing provisions of the Doha Declaration.  Over the past two years, India has invalidated or otherwise attacked patents on 15 drugs produced by innovative pharmaceutical firms.[2]  While the claim is that this promotes lower prices and expanded access to medicines, in truth this is industrial policy not health policy.  The clear beneficiaries are local generic manufacturers, not Indian patients.  The majority of Indians do not need Nexavar, or any of the other patented drugs being considered for compulsory licenses.  They need doctors, nurses, clinics, and hospitals.  Put simply, a functioning healthcare infrastructure.  Basic health statistics clearly illustrate the real problem, India currently accounts for one-third of the deaths of pregnant women and close to a quarter of all child deaths.[3] The battle for health in India will not be won with compulsory licenses.  It will be won with investments of resources on the ground in local communities.

[1] Choudhry, Rajiv Kr. “Anatomy of NATCO’s compulsory license application,” SpicyIP.com, September 9, 2011.  Available here:  http://spicyip.com/2011/09/anatomy-of-natcos-compulsory-license.html

[2] Hunter, Rod.  “Intellectual Property and Economic Development,” Project Syndicate, February 17, 2014.  Available here:  http://www.project-syndicate.org/commentary/rod-hunter-emphasizes-the-im...

[3] Desai, Nitin. “India’s right to health,” Business Standard, March 18, 2014.  Available at:  http://www.business-standard.com/article/opinion/nitin-desai-india-s-rig...

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