Some comments on compulsory licensing of patented pharmaceutical products

Compulsory licensing of patents could be considered some sort of “expropriation” mechanism pursuant to which the State, for public policy, emergency or national security reasons, which should be previously declared, authorizes third parties to produce or import generic versions of a patented product against the will of the patent owner and in exchange for adequate compensation.

The countries’ authority to grant compulsory licenses has been acknowledged by the World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) to promote access to medicines. As far as Peru is concerned, this authority is also contemplated in Chapter VII of Decision 486 of the Andean Community.

The above regulation intends to achieve a balance between two basic objectives: promote access to all medicines and guarantee conditions that ensure investment in innovation to secure the future availability of medicines.

However, we should be aware of the fact that the inadequate use of compulsory licenses can have an adverse impact on the proper operation of pharmaceutical markets and curtail investment in the countries where patents are developed.

Compulsory licensing is an exception mechanism which should be used only as a last resort given its nature, by virtue of the aforementioned applicable rules. That’s why policies should be adopted first to cope with the public health crisis before resorting to compulsory licensing.

For example, in the case of HIV/AIDS, education and prevention policies (like those that show how to reduce risky sexual behaviors and distribute healthcare packages and free HIV/AIDS detection tests) have proved to be very effective to create awareness among people about the risks of the disease to thus reduce HIV/AIDS infection rates. A successful example of this type of policy can be found in Uganda.

Compulsory licensing of patented pharmaceutical products for public health reasons should be an exceptional remedy to be used only in exceptional cases which are only justified if acceptable results have not been achieved through other mechanisms.

Within the legal framework which provides legal certainty to investment, we should consider the possibility of issuing clear regulations on compulsory licensing of patented pharmaceutical products for reasons of public health; otherwise, the lack of these regulations in Peru could result in the undue use of the mechanism, which could have damaging effects on our economy.

Said regulations should establish that compulsory licensing of patented pharmaceuticals should be used only as a last resort in critical public health circumstances when the State is not capable of coping with a real crisis. There’s no doubt that a compulsory licensing regime should not simply be used to reduce public spending in the health sector. The private sector should not be considered a tool available to the State to remedy deficient management policies or strategies in order to be able to cope with a public health problem.