This is what keeps Big Pharma up at night, the nightmare scenario that pharma execs tell their kids about on Halloween. If another country actually forced a license onto a pharma company in the face of a health crisis, heads would explode, the dead would rise, there would be a disturbance in the Force — you know, real Old Testament type stuff.
And it’s a lot more likely than it’s ever been before:
China has overhauled parts of its intellectual property laws to allow its drugmakers to make cheap copies of medicines still under patent protection in a move likely to unnerve foreign pharmaceutical companies.
The Chinese move comes within months of a similar move by India to effectively end the monopoly on an expensive cancer drug made by Bayer AG by issuing its first so-called “compulsory license”.
Similar action by China will ring alarm bells in Big Pharma, since the country is a vital growth market at a time when sales in Western countries are flagging.
The amended Chinese patent law allows Beijing to issue compulsory licenses to eligible companies to produce generic versions of patented drugs during state emergencies, or unusual circumstances, or in the interests of the public.
I’m not sure whether to be amused, angry or concerned about all this. Not only is this not really a new issue in Chinese law (I remember having this conversation in ’99/’00 and then again in 2008), but this is a very well-traveled issue internationally. Not only have I been hearing horror stories about this in China since 1999, but I also got my hands dirty on the topic in grad school.
Indeed, the WTO Trade-related Aspects of Intellectual Property Rights Agreement (TRIPs) already took into account the balance between IP protection and the broader needs of society. In other words, while Member States need to enforce their patent laws, there are some exceptions, such as for public health emergencies, where the rules need to be flexible. Sounds reasonable, right?
Big Pharma didn’t exactly agree with that sentiment of course. They were, and are, scared that compulsory licensing will be used as a tool by governments looking to prop up domestic generics companies. So they take this very seriously. Anytime that a country made a move in the direction of granting a compulsory license in the past, lawsuits flourished. You may remember this being a big deal about a decade ago when certain countries like South Africa were being deluged by tens of millions of AIDS cases and did not have the financial means to fight the disease.
Despite the law being on the side of public health, it was so difficult for countries to actually utilize these provisions in TRIPs that WTO had to issue the Doha Declaration on the TRIPs Agreement and Public Health in 2001, in effect saying that while patent protection is really a cool thing, saving lives is also a good idea. Sad that the Doha Declaration was even necessary, but at least the organization was able to clearly address the subject.
As you might expect, even with the Doha Declaration, we haven’t seen a deluge of compulsory licenses over the years, and the drug companies (along with the U.S. government) have done what they can to slow down or halt this process. In China, every time a government official opens his mouth and even talks about compulsory licensing, the lobbyists are sent in, the Op/Ed columns are written, and things quiet down for another couple years.
But times are changing, and China now has several legal provisions, including recent patent rules, that suggest it might finally be looking to follow in India’s footsteps. I suppose they might be thinking that if nations with public health crises are now able to solicit manufacturing under compulsory licenses, then why should China miss out on such an opportunity?
Twelve years ago, I brushed aside speculation that said compulsory licenses were coming to China. Today I’d give it a 50/50 chance. It’s a real possibility, although I never like to bet against Big Pharma. Those guys don’t mess around. Then again, neither do their State-owned China competitors.