- Medicine Access and Rational Use > Financing
- Medicine Access and Rational Use > Pricing
- Public Health, Innovation, Intellectual Property and Trade > Intellectual Property (IP) and Trade
- Keywords > antiretrovirals
- Keywords > compulsory licences
- Keywords > cost containment
- Keywords > cost/effectiveness - medicines
- Keywords > EDM series
- Keywords > health economics
- Keywords > licensing system
- Keywords > price - control
- Keywords > prices / pricing policy
- Keywords > Trade Related Aspects of the Intellectual Property Rights (TRIPS)
(2003; 30 pages) [French] [Spanish]
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.