Voluntary Licensing Practices in the Pharmaceutical Sector: An Acceptable Solution to Improving Access to Affordable Medicines?
(2007; 19 pages)

Abstract

For the past eight years at least, civil society and health groups have consistently demanded that pharmaceutical companies should issue voluntary licenses (VLs) on patented medicines to generic manufactures more readily. This is in order to bring more competition into the marketplace and make access to medicines more affordable. The South African competition cases of 2002 resulted in a settlement and a handful of VLs being given by GlaxoSmithKline (GSK) and Boehringer Ingleheim (BI) to generic companies in South Africa. The subsequent years also saw the beginning of a sharp reduction in the price of ARVs. Since the period 2002, we have not seen pharmaceutical companies issuing a flurry of VLs as might have been expected. This may be due to a number of factors – such as waiting to see how the patent regimes develop in countries like India, which is home to one of the largest generic pharmaceutical industries. Rather, originator companies have adopted other strategies in the face of continued public pressure by going into philanthropic over-drive, developing differential price mechanisms or donation programmes in developing countries.

Of particular concern to the access to medicines debate and the ability of generic companies to play a continued role has been India’s implementation of the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) on 1 January 2005 and amendment of its patent law to protect pharmaceutical product patents. There has been considerable debate as to whether affordable generic medicines will now come to a stop should patents start being granted for many of the mailbox applications that have been waiting to be examined in India since 1995. In amending its Patents Act, India utilised some of the flexibilities available within TRIPS and inserted a number of provisions to protect its domestic industry and public health. These include more stringent patentability standards and the opportunity for any person to challenge a patent application before it is granted. The amendment also inserted a ‘grandfather’ clause which allows companies that have made a significant investment, were producing and marketing a pharmaceutical product prior to 1 January 2005, to be able to continue to do so provided a reasonable royalty is paid to the patentee. Indeed, the right to challenge patents before their grant has led to some successes with Novartis’s anti-cancer drug Gleevec being rejected and GSK’s application for Combivir (Lamivudine and Zidovudine) being withdrawn. This has also led to some sections of civil society to encourage patent challenges before considering VLs as an option. Moreover, since India’s amendment of its Patent Act, there has been a renewed push to encourage other developing countries to utilise TRIPS flexibilities as a first measure towards ensuring IPRs do not unnecessarily block public health. However, despite implementing such safeguards, the threat of patents being granted remains. Recent events such as the threat of the bird-flu pandemic and Gilead Science’s unusual step to offer non-exclusive VLs to eleven generic companies to manufacture and sell Tenofovir Disoproxil Fumarate (TDF) prior to a patent being issued in India has, yet again, raised the question – are VLs an acceptable option to ensuring access to medicines?

The research set out here looks to provide answers to the above question by:

  1. Defining a VL;
  2. Mapping VLs that are currently in operation and whether they have helped to make medicines more accessible;
  3. Looking at the pros and cons of VLs and generic industry views;
  4. Suggesting best practices for VLs and conclusions.

The above research has been conducted through internet searches, interviews with generic companies, the researcher’s experience in reviewing various VLs, practices of the generics industry in India and the nature of IPRs there.

 
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