Compulsory licenses for expensive medicines: new report published in Belgium | Allen & Overy LLP

The Report was commissioned by the Health and Equal Opportunities Committee of the federal House of Representatives in the context of its review of a Belgian legislative project proposal to facilitate the granting of compulsory licenses in the interest of public health. However, its importance goes beyond Belgium. The European Commission Announced earlier this year that it would favor compulsory patent licensing as one of the potential tools to expand the production of vaccines and treatments against covid-19. The Report assesses the feasibility and effectiveness of compulsory licensing of overpriced medicines and treatments and highlights related legal and practical challenges. Ultimately, the Report presents a set of cautious policy recommendations.

The starting point of the Report is that there are concerns around the world about the availability and affordability of medicines and that these concerns will only increase in the future, given the increasing personalization of medicines, the complementarity of diagnoses and treatments, and the complexity of new drugs, including biologics

To address the problem of overpriced medicines, the KCE has recommended in the past that a transparent, robust and consistent policy on medicine pricing and reimbursement be developed and coordinated with other EU countries.

Compulsory licenses allow the government, under certain circumstances, to authorize a third party to make a product or use a method covered by a patent without the consent of the patent owner (for example, due to a national emergency, anti-competitive behavior of the patent owner the patent, etc). In effect, a generic company can imitate a drug under patent to make it available at a lower price. The patent holder receives compensation for this.

Compulsory licensing by governments is often mentioned as a possible legal tool to market expensive medicines at a lower price. However, the KCE study finds that compulsory licenses have certain limitations. First, there are other mechanisms (in addition to the patent regime) that protect medicines from competition in the market, such as data and market exclusivity; compulsory licenses should take them into account. Second, patents are intended to encourage innovation: intervening in that system by allowing compulsory licenses therefore risks negatively affecting investment in research and development. Third, it remains a challenge to define what constitutes an excessive price for medicines and what is reasonable remuneration for the patent holder.

In light of these observations, the Report makes the following policy recommendations:

  • Compulsory licensing should be seen as one of the tools to ensure the affordability of medicines and should be used in exceptional circumstances. The procedure for the actual use of compulsory licenses in Belgium needs to be adjusted.

  • EU Member States must collaborate and coordinate initiatives to impose compulsory licenses in specific cases. This seems particularly logical in the context of unitary patents, where a unitary patent title will provide uniform protection in all participating EU Member States, but where compulsory licenses will still be granted at the national level.

  • Careful consideration should be given to whether European data and market exclusivity rules should provide exceptions/exemptions from these regulatory exclusivities in cases where compulsory licenses are granted. This should include consideration of alternative regimes to offset competitive advantage with respect to medical data (e.g. schemes that provide for mandatory disclosure and usability of data in exceptional circumstances, subject to reasonable compensation for the investment made). and data generation). There should be more cooperation and knowledge sharing between the pricing and reimbursement authorities in Belgium and, for example, the Belgian Competition Authority.

  • The creation of a more robust, transparent and consistent pricing and reimbursement policy in the EU would be beneficial. Initiatives can be taken at European level, inter alia, through the exchange of information on price negotiations and agreements with the pharmaceutical industry, and through better coordination and harmonization of health policies in all EU Member States. Collaborations between EU Member States (as in the context of BeNeLuxA) can help improve procedures, which can be particularly valuable when dealing with expensive medicines.

  • In national legislation, patent exemption for pharmacists should be optimized. In this way, the availability and affordability of expensive, life-saving drugs can be ensured. However, it is recognized that, due to practical and legal restrictions, the production of medicines in pharmacies at a lower price is only possible for certain medicines (for example, those that are not too complicated to prepare), in specific circumstances (production non-industrial) and depends on the availability of raw materials.

  • Universities and public research institutions should be encouraged to impose “socially responsible license conditions” when licensing inventions and research results to pharmaceutical companies for drug development. This could include ensuring that the price of the final product does not jeopardize its affordability.

  • Collaborative models for patent licensing, such as patent pools and clearinghouses, should be encouraged as they can be an interesting alternative to exclusive production. Therefore, the role that such models can play in cases of excessive prices needs further study. In addition, other initiatives at the international level, such as public-private partnerships to negotiate with patent owners on joint licenses geared towards public health, could be more sustainable than compulsory licenses.

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