[Ip-health] Compulsory Licensing vs. International Procurement

Danny Edwards dedwards at atmindex.org
Mon Apr 20 08:20:01 PDT 2015


Hi Justin and IPhealth colleagues,

We would also be interested in other’s views on this paper - apols in advance if there has been a previous discussion which we missed... 

First of all, credit to the researchers of this paper for stimulating a debate about compulsory licensing.  However, we felt that the limitations of the paper’s methodology (which are acknowledged by the authors) meant that robust conclusions about the value of compulsory licensing or otherwise are difficult to draw from it.

Our main concerns were:

One -  Issuing CLs or the the ‘threat' of CLs have been cited many times as a key factor in industry decision-making to issue voluntary licenses or to cut prices.  Simply put - we don’t know what the pricing landscape would look like in the absence of a framework which allows CLs - so its very difficult to suggest that one system is better than the other.  Its much more likely to be the case  that they work synergistically. 

Two - We think the comparison made by the authors is not appropriate.  They compare a CL price reached in a market where there is very little competition (only between the patented drug and the CL-produced competitor) where the CL competitor has - most likely - been manufactured locally - against a global procurement price in ‘peer countries’ - where patents are not necessarily in place.   This only becomes a fair comparison to make when there is a patent also in place in the peer country - in fact the authors note that when they reduced the sample to only include peer country comparators where there was a patent in place they found that CL prices ‘modestly outperformed’ international procurement prices.  

Best,

Danny

Access to Medicine Foundation
Scheepmakersdijk 5A, 2011 AS Haarlem
The Netherlands
www.atmindex.org

On 20 Apr 2015, at 14:19, Justin Mendoza <justin.mendoza at yale.edu> wrote:

I stumbled upon this interesting piece the other day while researching for 
a project I'm working on. Thought I would share it here, and see if anyone 
had put out a response to it, or had any thoughts on the data. 

I found this line from the discussion most interesting: "The compulsory 
licensing price disadvantage was worst for those countries that were less 
well off in terms of Human Development Index score—the very countries that 
most need to save money."

Link (apologies for the pay wall, they didn't publish open source): 
http://content.healthaffairs.org/content/34/3/493.full.pdf+html

Compulsory licensing often did not produce lower prices for antiretrovirals 
compared to international procurement.
Beall RF 
<http://www.ncbi.nlm.nih.gov/pubmed/?term=Beall%20RF%5BAuthor%5D&cauthor=true&cauthor_uid=25732501>
1, Kuhn R 
<http://www.ncbi.nlm.nih.gov/pubmed/?term=Kuhn%20R%5BAuthor%5D&cauthor=true&cauthor_uid=25732501>
2, Attaran A 
<http://www.ncbi.nlm.nih.gov/pubmed/?term=Attaran%20A%5BAuthor%5D&cauthor=true&cauthor_uid=25732501>
3.

ABSTRACT Compulsory licensing has been widely suggested as a legal 
mechanism for bypassing patents to introduce lower-cost generic 
antiretrovirals for HIV/AIDS in developing countries. Previous studies 
found that compulsory licensing can reduce procurement prices for drugs, 
but it is unknown how the resulting prices compare to procurements through 
the Global Fund to Fight AIDS, Tuberculosis, and Malaria; UNICEF; and other 
international channels. For this study we systematically constructed a 
case-study database of compulsory licensing activity for antiretrovirals 
and compared compulsory license prices to those in the World Health 
Organization’s (WHO’s) Global Price Reporting Mechanism and the Global 
Fund’s Price and Quality Reporting Tool. Thirty compulsory license cases 
were analyzed with 673 comparable procurements from WHO and Global Fund 
data. Compulsory license prices exceeded the median international 
procurement prices in nineteen of the thirty case studies, often with a 
price gap of more than 25 percent. Compulsory licensing often delivered 
suboptimal value when compared to the alternative of international 
procurement, especially when used by low-income countries to manufacture 
medicines locally. There is an ongoing need for multilateral and charitable 
actors to work collectively with governments and medicine suppliers on 
policy options.
-------------------------------------------------------
Wishing the best,

Justin Mendoza
Yale | School of Public Health
MPH Candidate *2015* | Health Policy
E: justin.mendoza at yale.edu 
C: 269-762-2073 | @justindmendoza <https://twitter.com/JustinDMendoza>
Linkedin Available Here <http://linkd.in/1o9jLDn>
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