Access to medicines after TRIPS: Is compulsory licensing an effective mechanism to lower drug prices? A review of the ex
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Access to medicines after TRIPS: Is compulsory licensing an effective mechanism to lower drug prices? A review of the existing evidence Eduardo Urias1,2,3 Shyama V. Ramani1 1
and
UNU-MERIT, Maastricht, The Netherlands; Athena Institute, VU Amsterdam, Amsterdam, The Netherlands; 3 Elabora Consultoria, ˜ o Paulo, Brazil Sa
2
Correspondence: E Urias, UNU-MERIT, Maastricht, The Netherlands e-mail: [email protected]
Abstract While Trade-Related Aspects of Intellectual Property Rights (TRIPS) was expected to hike up prices of patented medicines, there was no consensus on its likely final impact on access, because the agreement housed instruments to address this challenge. For instance, compulsory licensing, through the facilitation of price reductions, was considered to be an important countermeasure. However, little is known about the extent to which compulsory licensing has actually been effective in reducing prices of muchneeded patented drugs. To fill this gap, this paper undertakes a systematicreview of the existing evidence on the impact of compulsory licensing on drug prices. Retrieval and analysis of 51 observations of pre- and post-compulsory licensing prices indicate that a compulsory licensing event is likely to reduce the price of a patented drug, albeit with some caveats. Moreover, compulsory licensing procurement from the international market is likely to be more effective in reducing drug prices than contracts to local companies. These findings are reconfirmed in the race to improve access to Remdesivir for hospitalized COVID-19 patients. Clearly, the future incidence and impact of compulsory licensing will depend on further possible procedural refinements to ease its implementation, the development of technological and manufacturing capabilities in developing countries, and the importance of biologics among life-saving drugs. Journal of International Business Policy (2020). https://doi.org/10.1057/s42214-020-00068-4 Keywords: compulsory licensing; access to medicines; intellectual property protection; systematic review; pharmaceutical industry
Received: 10 January 2019 Revised: 3 July 2020 Accepted: 28 July 2020
INTRODUCTION Patent protection gives market exclusivity to inventors. Such a monopolistic position usually translates into higher prices as compared to those that would prevail under competitive market settings. Consequently, the patented commodity becomes unaffordable to more consumers. Moreover, when the product in question is essential to human health, such as medicines, the issue
A review of the impact of CL on drug prices
of patenting itself becomes contentious. This debate with respect to medicines has been further intensified since 1995, when the international agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) became effective. While it was universally acknowledged that TRIPS would hike up the prices of patented medicines, there was no consensus on its likely final impact on access. This was because TRIPS also included multiple instruments to promote acces
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