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Access to medicines after TRIPS: Is compulsory licensing an effective mechanism to lower drug prices? A review of the existing evidence

Author

Listed:
  • Eduardo Urias

    (UNU-MERIT
    VU Amsterdam
    Elabora Consultoria)

  • Shyama V. Ramani

    (UNU-MERIT)

Abstract

While Trade-Related Aspects of Intellectual Property Rights (TRIPS) was expected to hike up prices of patented medicines, there was no consensus on its likely final impact on access, because the agreement housed instruments to address this challenge. For instance, compulsory licensing, through the facilitation of price reductions, was considered to be an important countermeasure. However, little is known about the extent to which compulsory licensing has actually been effective in reducing prices of much-needed patented drugs. To fill this gap, this paper undertakes a systematic-review of the existing evidence on the impact of compulsory licensing on drug prices. Retrieval and analysis of 51 observations of pre- and post-compulsory licensing prices indicate that a compulsory licensing event is likely to reduce the price of a patented drug, albeit with some caveats. Moreover, compulsory licensing procurement from the international market is likely to be more effective in reducing drug prices than contracts to local companies. These findings are reconfirmed in the race to improve access to Remdesivir for hospitalized COVID-19 patients. Clearly, the future incidence and impact of compulsory licensing will depend on further possible procedural refinements to ease its implementation, the development of technological and manufacturing capabilities in developing countries, and the importance of biologics among life-saving drugs.

Suggested Citation

  • Eduardo Urias & Shyama V. Ramani, 2020. "Access to medicines after TRIPS: Is compulsory licensing an effective mechanism to lower drug prices? A review of the existing evidence," Journal of International Business Policy, Palgrave Macmillan, vol. 3(4), pages 367-384, December.
  • Handle: RePEc:pal:joibpo:v:3:y:2020:i:4:d:10.1057_s42214-020-00068-4
    DOI: 10.1057/s42214-020-00068-4
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    References listed on IDEAS

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    1. Guennif, Samira & Ramani, Shyama V., 2012. "Explaining divergence in catching-up in pharma between India and Brazil using the NSI framework," Research Policy, Elsevier, vol. 41(2), pages 430-441.
    2. Ramani, Shyama V. & Urias, Eduardo, 2015. "Access to critical medicines: When are compulsory licenses effective in price negotiations?," Social Science & Medicine, Elsevier, vol. 135(C), pages 75-83.
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    4. Samira Guennif & Shyama V. Ramani, 2012. "Explaining divergence in catching-up in pharmaceuticals between India and Brazil using the National System Innovation framework," Post-Print hal-01345868, HAL.
    5. F. M. Scherer & Jayashree Watal, 2002. "Post-TRIPS Options for Access to Patented Medicines in Developing Nations," Journal of International Economic Law, Oxford University Press, vol. 5(4), pages 913-939, December.
    6. E. Richard Gold & Jean-Frédéric Morin, 2012. "Promising Trends in Access to Medicines," Global Policy, London School of Economics and Political Science, vol. 3(2), pages 231-237, May.
    7. Ramani, Shyama V. & Urias, Eduardo, 2018. "When access to drugs meets catch-up: Insights from the use of CL threats to improve access to ARV drugs in Brazil," Research Policy, Elsevier, vol. 47(8), pages 1538-1552.
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    Cited by:

    1. Shiri Mermelstein & Hilde Stevens, 2022. "TRIPS to Where? A Narrative Review of the Empirical Literature on Intellectual Property Licensing Models to Promote Global Diffusion of Essential Medicines," ULB Institutional Repository 2013/337220, ULB -- Universite Libre de Bruxelles.
    2. Damien Besancenot & Samira Guennif, 2024. "Compulsory license threats in a signaling game of drug procurement," Theory and Decision, Springer, vol. 97(2), pages 261-298, September.
    3. Bustamante, Juana & Oughton, Christine & Pesque-Cela, Vanesa & Tobin, Damian, 2023. "Resolving the patents paradox in the era of COVID-19 and climate change: Towards a patents taxonomy," Research Policy, Elsevier, vol. 52(9).
    4. Su Jung Jee & Kerstin Hotte & Caoimhe Ring & Robert Burrell, 2024. "Making intellectual property rights work for climate technology transfer and innovation in developing countries," Papers 2408.12338, arXiv.org.

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