Cost-Containment Mechanisms for Essential Medicines, Including Antiretrovirals, in China - Health Economics and Drugs Series No. 013
(2003; 30 pages) [French] [Spanish] View the PDF document
Table of Contents
View the documentAcknowledgements
View the documentTerms of reference
Close this folderIntroduction
View the documentCost-effective medicine selection
View the documentPrice information
View the documentInternational open tendering
View the documentVoluntary discount agreements
View the documentVoluntary licensing
View the documentCompulsory licensing
View the documentLocal state production
View the documentGovernment price controls
View the documentReduction of import and other taxes for essential medicines, and rational dispensing practices
View the documentPublic investment in R & D for new medicines: A mid- to long-term strategy
View the documentBackground and experiences with voluntary agreements
View the documentCountry rights to be protected in voluntary agreements for reduction of prices of medicines
Open this folder and view contentsCompulsory licensing - practical aspects and procedures
View the documentConcluding comments
View the documentList of persons contacted
View the documentFurther reading

Voluntary licensing

Voluntary licensing arrangements between a patent holder and another party in a country, or serving the country's market, may afford opportunities for significant cost-containment. As with negotiated discounts, the benefits of voluntary licensing arrangements depend crucially on the terms of the licence. For voluntary licences, the capacity of the licensee is also critical.

Patent holders may at their discretion, license to other parties, on an exclusive or nonexclusive basis, the right to manufacture, import, and/or distribute a pharmaceutical product. Depending on the terms of the licence, the licensee may act entirely or effectively as an agent of the patent holder; or the licensee may be free to set the terms of sale and distribution within a prescribed market or markets, contingent on payment of a royalty. Either option, or arrangements in between, may allow for substantial price reductions. However, terms in a voluntary licence may set price ranges, or include other terms, that maintain prices at or near the same level as those offered by the patent holder. Or terms may limit how many patients or which categories of patients are eligible to benefit from the lower prices provided by the licensee. Again, such matters turn on the terms of the licence contract. Voluntary licensing arrangements, at the discretion of the patent holder, are usually made for strategic reasons (e.g. market entry) rather than as price gestures and they may not entail any price reduction at all.

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