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Compulsory License: A lifeline from Patent to Patient

Origiin IP Solutions > Blog  > Compulsory License: A lifeline from Patent to Patient

Compulsory License: A lifeline from Patent to Patient

Patents of pharmaceutical products provide a limited term of protection and prevent the generic companies to access the patented drugs without authorization. However, this monopoly should not prevent the reasonable access to the patented products and to address the health issues of the public. The exception to this monopoly is provided by the ‘Compulsory License’ under the Patent Act, which allows the generic manufacturers to use or manufacture the patented drug upon fulfillment of certain conditions.

The concept of Compulsory license is provided by many countries and under The Paris Convention 1883, which provides that each contracting State may take legislative measures for the grant of compulsory licenses.

The price of Patented drugs for certain diseases such as cancer and rare diseases such as hemophilia, thalassemia etc has been increased drastically and is not affordable by a certain class of patients especially in developing countries. This has been an unaddressed issue in the medical field and a high-level government panel has made a series of recommendations including granting “compulsory license” to any Indian pharma company to produce drugs without the consent of the patent holding firms.

It is observed that the Indian Pharmaceutical market with an annual turnover of INR 2.3 Lakh includes the majority of revenue from generic drugs in contrast to only 30% of revenue from the Patented products.

In order to provide a moderate cap of prices and to encourage that the patent claiming companies to entertain voluntary licenses to other pharma companies, the inter-ministerial Committee formed by the Department of Pharmaceuticals (DOP) has recommended the provision to fix the pricing issue.

The committee formed by Feb-March 2018 and by Jan 2019, it recommended to bring the patented products under price control by granting compulsory license after analyzing the Purchasing Power Parity (PPP) of different countries, which is a standard followed in the majority of the western world to fix medicine prices.


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