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  Myths & Facts of Pharmaceutical Industry : Episode4 - Patent and Compulsory Licensing Bookmark and Share

Table of Contents

  Episode 1: Drug Price
  -  Myth: Medicines are expensive in Thailand
  -  Myth: Multinational Pharmaceutical companies can set their own prices

 Episode 2: Industry Profits
  -  Myth: The pharmaceutical Industry is the most profitable industry
  -  Myth: A member of the pharmaceutical industry participated in a THB 1 million per head dinner

 Episode 3: Drug Research & Development
  -  Myth: The pharmaceutical industry invests only 5% in R&D while marketing expenditure was as high as 13%

 Episode 4: Patent and Compulsory Licensing
  -  Myth: Patent prevents access to medicine and results in the high prices of medicine
  -  Myth: CL can be declared in non emergency situations
  -  Myth: The USA, Canada and Italy have all declared CL

Myth: Patent prevents access to medicine and results in the high prices of medicine


Patents lead to new medicines which is the first step of access


  • Access to medicine is multifactorial, possession of medicine without the requisite knowledge by clinicians, without the appropriate supporting medical tools and infrastructure through to the absence of adequate funding can lead to more obstacles than to achieving access to medicine
  • Intellectual Property Protection creates the fertile environment for pharmaceutical innovation; engenders researching advances and promotes technology transfer all of which will benefit the domestic industry while stimulating international trade[20] 
  • Patent offers a total period of 20 years for protection starting from the moment of discovery of the candidate agent; from then a period of 10-15 years[21]of research and development is required to produce the first usable medicine, of the original 20 years only 5 years remain for the investing company to recoup its average investment cost of USD 13,000Million [22] The inherent risk is high with 1 usable medicine resulting from 10,000 potential candidate.
  • In Japan, the number of novel medicines reaching the public rose markedly as a result of the introduction of strong Intellectual Property protection.


Myth: CL can be declared in non emergency situations


The spirit of the TRIPS Flexibilities is the commitment by all members of the WTO to protect member states intellectual property rights whilst being able to accommodate extemporaneous situations as and when required


  • Article 31 clearly indicates that such use may only be permitted if, prior to such use, the proposed user has made efforts to obtain authorization from the right holder on reasonable commercial terms and conditions and that such efforts have not been successful within a reasonable period of time. In addition, the right holder shall be paid adequate remuneration in the circumstances of each case, taking into account the economic value of the authorization[23]
  • CL is a short term measure which can not provide long term benefit to the nation[24]


Myth: The USA, Canada and Italy have all declared CL


The US has never declared CL on pharmaceutical products whilst Canada had utilized CL to promote its export in the past but had since revoke such practices and Italy exercised CL on pharmaceutical products for anti-competitive practices


  • To the present, the US has not exercised CL on pharmaceutical products. Only, in 2001 during the height of the anthrax scare was there contemplation of exercising CL which never materialised
  • Canada did exercise CL in 1923 but since 1992 following the legislation of formal Intellectual Property Laws, the Canadian Government rescinded former practices applying case by case considerations in support of least developed countries unable to produce their own medicines. Local Canadian use of pharmaceutical products produced under CL is prohibited under the present laws.[25]
  • Italy exercised CL in 2008 against a pharmaceutical product for reasons of anti-competitive practice and not as a public health policy[26]
  • None of the objectives of the three nations cited included cost containment in healthcare expenditure.


 [21] J. A. DiMasi, New Drug Development in U.S. 19631999, Clinical Pharmacology & Therapeutics 69, no. 5 (2001): 286296; M.Dickson and J. P. Gagnon, Key Factors in the Rising Cost of New Drug Discovery and Development, Nature Reviews Drug Discovery 3 (May 2004): 417429; and J. A. DiMasi, R. W. Hansen, and H. G. Grabowski, The Price of Innovation: New Estimates
of Drug Development Costs, Journal of Health Economics 22 (2003): 151185.
 [22] J. A. DiMasi and H.G. Grabowski, The Cost of Biopharmaceutical R&D: Is Biotech Different?, Managerial and Decision Economics 28 (2007): 469479.
 [25] Compulsory Licensing in Canada and Thailand: Comparing Regimes to Ensure Legitimate Use of the WTO Rules, Kristina M. Lybecker and Elisabeth Fowler: P. 225-226



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