COVID-19 Pandemic: Should Nations Resort to Compulsory Licensing of Drugs and Vaccines? An Analysis of the Effect of Such Pervasive Steps and Non-Market Price-Setting on the Economics and Political Economy of Creative Industries

81 Pages Posted: 27 Oct 2021

Date Written: October 26, 2021

Abstract

A license, in the context of a patent, stands for a contract by which the licensor (patentee) authorizes the licensee to exercise defined rights over the patent. The effect is to give to the licensee a right to do what he/she would otherwise be prohibited from doing. A license may be voluntary or compulsory.

Compulsory licensing has been defined to be a governmental grant to someone to produce a patented product without having the patent- holder's consent . It is a balance between the needs of technology consumers and producers- between a governmental grant and preservation of patent holder rights . It implies a waiver to patents, at least during the persistence of a crisis and can step in whenever there is a potential conflict- for instance between health and medical patents rendering the availability of some medicine scarce due to an exclusive right or an extremely high price.

Under a compulsory license, the licensee is per force required to offer his intellectual property for a predetermined royalty or for a royalty to be decided by the authority on a case to case basis. The provisions for grant of compulsory license are aimed at making best use of the patented invention - not to restrict the rights of the patentee, but to stop abuse and misuse and to safeguard the interests of the public.

Public health principles, in the context of access to medicines, are supported by a range of national and international legal and policy instruments. The TRIPS agreement is a milestone in this. It provides patent protection, for a minimum of 20 years, for products in almost all fields of technology including pharmaceuticals. One of the most debated provisions of the TRIPS Agreement is compulsory licensing, its meaning, purpose and application. Article 31 of the TRIPS Agreement, read along with the Paris Convention and Doha Declaration on Public Health and the August 2003 Waiver Decision of the WTO (concerning the para 6 mechanism) largely govern the international legal regime concerning ‘use without authorization’ of the right holder. Although not specifically worded, it includes compulsory licenses in the public interest as a judicial remedy and for government use of patented inventions. It is also worth mentioning here that many countries have historically allowed ‘use without authorization’ within their patent laws - for causing general inconvenience, affecting trade, unreasonable prices or for nonlocal ‘working’ among other reasons – or under the competition law regime – for abuse of patent rights which may be price related or otherwise. However TRIPS does not specify grounds for the issue of compulsory licenses but does prescribe conditions for grant and use. The WTO members are left with considerable leeway in providing in their national laws grounds concerning compulsory licenses. Many developing countries have issued compulsory licenses in the post- TRIPS context primarily to address public health concerns.

The study examines the pros and cons of compulsory licensing as a possible way for developing countries to overcome patent protection and in that way facilitate - among other things- access to drugs at affordable prices especially in the backdrop of the pandemic. The hypothesis “Compulsory licensing of essential drugs/vaccines in the backdrop of the COVID-19 pandemic will only backfire and cannot be a panacea to achieve the felt need of increasing production of essential drugs/vaccines to meet the surging demand “ is proved statistically. The paper concludes with the finding that the best course would be to embark on a path of voluntary licenses and that any exercise of statutory powers can only prove to be counter-productive at this stage.

Keywords: patent, compulsory licensing, TRIPS agreement, COVID-19 pandemic

Suggested Citation

Narayana Swamy, Raju, COVID-19 Pandemic: Should Nations Resort to Compulsory Licensing of Drugs and Vaccines? An Analysis of the Effect of Such Pervasive Steps and Non-Market Price-Setting on the Economics and Political Economy of Creative Industries (October 26, 2021). Available at SSRN: https://ssrn.com/abstract=3950237 or http://dx.doi.org/10.2139/ssrn.3950237

Raju Narayana Swamy (Contact Author)

Govt of Kerala, India ( email )

Secretariat
Govt of Kerala
Thiruvananthapuram, Kerala 695001
India
9447010602 (Phone)

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