Compulsory Licensing: A Double-Edged Sword in the Fight for Access to Cancer Medications in Low- and Middle-Income Countries

Compulsory Licensing: A Double-Edged Sword in the Fight for Access to Cancer Medications in Low- and Middle-Income Countries

Gilberto Lopes, MD, FASCO, MBA

May 07, 2014

In the 16th century, Portuguese navigators, after reaching India, continued to sail east looking for the Spice Islands and their lucrative namesake commodities. They reached Malacca, a wealthy Malay trading port in 1509—and took it in 1511, bringing the first era of worldwide trade routes into peninsular Malaysia and Southeast Asia. A small community of Portuguese descendants still lives in the city and many Lusophone words have made it into the local language, a couple of reasons why I have always felt quite at home when visiting this tourist town.

Today, Malaysia is an industrialized nation well on its way of reaching high-income status in the next decade or so. In April 2014, the regional and world cancer communities convened at the Asian Oncology Summit in Kuala Lumpur, barely an hour away from Malacca, where I had the opportunity to reconnect with many local friends and the privilege of lecturing on the issue of access to cancer care in low- and middle-income countries. One of the most controversial topics we discussed was that of compulsory licensing. 

In January 1995, the World Trade Organization (WTO) Trade-Related Aspects of Intellectual Property Rights agreement (TRIPS) went into effect, enabling countries to issue compulsory licenses allowing the production of generic medications on grounds of public interest—without consent of a patent holder while intellectual property rights are still in effect. In November 2001, the Doha Declaration introduced provisions allowing the least-developed countries (and those that do not have drug-production capabilities) to import medications produced under compulsory licensing. The pharmaceutical company that owns the patent still holds the rights to its invention and is entitled to compensation under TRIPS; governments will usually request a voluntary license before issuing a compulsory one. Several countries, including Brazil and South Africa, have issued compulsory licenses to increase access to HIV medications at the height of the AIDS epidemic. A less well-known fact is that the U.S. government threatened to use compulsory licenses to help stockpile ciprofloxacin during the anthrax scare that followed the terrorist attacks on September 11, 2001. 

In oncology, a well-studied example comes from Thailand. The Thai government issued compulsory licenses for docetaxel, letrozole, erlotinib, and imatinib in 2008 (the latter was cancelled after an access program was agreed on with Novartis, which manufactures imatinib as Gleevec). A budget-impact study suggested significant savings in the use of these three anticancer medications over a five-year period. Recently, India has followed suit and issued a compulsory license for sorafenib, an anti-liver cancer drug, making its cost drop from several thousand to a few hundred dollars per month. 

Although some critics have suggested that failing to uphold intellectual property rights will decrease incentives for innovation and, therefore, lead to fewer new medications in the future, evidence in support of this notion is scant; especially when one realizes that more than 80% of financial gains from cancer drugs comes from high-income countries, in which the use of compulsory licensing is highly unlikely.

Countries that do issue compulsory licenses, however, might be subject to pressure from industry and trade partners. For example, in 2002 when Egypt issued a compulsory license for sildenafil (a phosphodiesterase type 5 inhibitor used to treat erectile dysfunction), Pfizer announced it would rethink its investment in a modern production facility in the country. Despite this isolated case, the use of compulsory licenses does not seem to lead to an overall decrease in foreign direct investment in countries that adopt the scheme. For example, Brazil and South Africa have benefited from considerable investments despite their issuance of compulsory licenses for HIV medications. In Thailand, even though the Office of the U.S .Trade Representative withdrew duty-free, preferred access to the U.S. market for several Thai products in response to the compulsory licenses issued for docetaxel, letrozole, and erlotinib, a net economic benefit was still observed (with savings of $140 million over five years). Furthermore, no relationship could be found between the use of the compulsory licenses and foreign direct investment inflows in the country between 2002 and 2008.

Compulsory licensing is clearly an important instrument for resource-constrained countries and health care systems to improve access to medications. When used adequately, it can prevent or minimize abuses of the international intellectual property system. Despite the controversies associated with its use, countries are increasingly using the threat of compulsory licensing as a negotiating “chip” when discussing drug prices with industry. Indeed, the pharmaceutical industry has responded with a series of price-discrimination and market-access strategies to increase sales as well as access to medications in low- and middle-income countries. GSK, for instance, has a formal policy of decreasing prices for their cancer drugs in less-developed economies, and Roche has launched trastuzumab and rituximab with different trade names and a lower price in India. Greater use of strategies such as these would go a long way to decrease the likelihood of new compulsory licenses for cancer medications and greatly increase access to cancer treatments around the world.


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