What is a Compulsory License?
In developing countries like India, where AIDS is spreading widely, access to lifesaving medicines is a dire need. The Indian Pharmaceutical industry is mainly involved in producing generic drugs and there are very few R&D centers in the country that invent new drugs. Thus we mainly depend upon importing those valuable medicines from the developed nations. Several multinational pharmaceuticals use this opportunity to hike up the prices of their drugs when it is being sold to the markets of the developing nations. This prevents the easy access of medicines to the needy patients. Compulsory licensing is one such tool to prevent such dominance of monopoly exhibited by the multinational industries. A compulsory license (CL) to a patented product is granted when the government allows someone to produce the patented product without the consent of the patent owner. It is an involuntary act between a willing buyer and an unwilling seller, enforced by the state.
Patents are granted to encourage the inventors to disclose their inventions and also to grant them monopolistic right to exploit the invention. The objective of patent grant in india is to ensure that the inventions are worked in India on a commercial scale and to the fullest extent without any undue delay. If the patentee is not commercializing the invention and as a result, the reasonable requirements of the public are not met or the patented product is not available to public at reasonable price, the compulsory license is available as a remedy against abuse of patent right.
Many patent law systems provide for the granting of compulsory licenses in various situations. The Paris Convention of 1883 provides that each contracting state may take legislative measures for the grant of compulsory licenses. The Article 5A (2) of the Paris Convention reads:
"Each country of the Union shall have the right to take legislative measures providing for the grant of compulsory licenses to prevent the abuses which might result from the exercise of the exclusive rights conferred by the patent, for example, failure to work."
Compulsory licensing is one of the flexibilities on patent protection included in the TRIPS (Trade Related Aspects of Intellectual Property Rights) agreement. Article 31 of TRIPS lists a number of conditions for issuing a CL. India joined the TRIPS agreement in 2005 thereby providing stronger provisions for CL. Today, many countries such as Canada, France, UK, USA, Australia, Zimbabwe, Ghana, Brazil, Equador, Malaysia, and Thailand have provisions for granting CL. Section 84 of Indian Patents (Amended) Act, 1970 states the provisions for granting CL. It mainly deals with three major conditions for granting a CL: a) Reasonable requirements of the public with respect to the patented invention have not been satisfied, b) The patented invention is not available to the public at a reasonably affordable price and c) The patented invention is not worked in the territory of India.
The first Compulsory License in India was granted recently on 9 th Mar 2012, to Natco Pharma for the manufacture of its patented anti-cancerous drug, Nexaver. Natco would sell the drug at 97% lesser rate of its original cost. The grant of the first CL in India has been welcomed with mixed reviews. Undoubtedly, the CL would ease the suffering of the needy patients by getting cheaper access to valuable medicines. However, the pharma giants had to swallow a bitter pill. It takes around 2 billion dollars to innovate a single drug and launch it in the market, grant of such compulsory licenses would shake their product pipeline as the ROI (Return of Investment) for such expensive drugs would not be met. Experts say that such events will also reduce the innovations happening in the pharma sector. Nevertheless, the main notion of inventing new drugs is to meet the needs of the patients, hence it would be wise for pharmaceutical companies to come up with new price slabs while launching their product to respective countries. |
