[Ip-health] Compulsory Licensing vs. International Procurement

Dean Baker dean.baker1 at verizon.net
Mon Apr 20 08:31:44 PDT 2015

the meaning of the comparison is also not clear since this obviously a 
truncated sample where we only have data when companies offered drugs at 
low prices. Sometimes (often?) they refuse to make concessions. A full 
sample would include those instances as well.

On 4/20/2015 11:20 AM, Danny Edwards wrote:
> 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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Dean Baker
Co-Director, Center for Economic and Policy Research
1611 Connecticut Ave, NW
Washington, DC 20009
202-293-5380 (ext 114)

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