If compulsory licensing is the answer, what's the question?

  • by: |
  • 04/10/2015

A new article in Nature Medicine challenges one of the biggest myths of the global healthcare debate. The title says it all:

Questions raised about whether compulsory licenses get best prices

For those who follow the facts rather than the rhetoric, the findings are not surprising -- he use of compulsory licenses by developing countries to obtain cheaper drugs for HIV and AIDS by circumventing patents has not been the best strategy for achieving the lowest prices over the past decade. Instead, the best prices were regularly obtained by countries that procured their drugs through voluntary negotiations, often facilitated by third parties such as UNICEF or the Global Fund to Fight AIDS, Tuberculosis and Malaria.

The facts are indisputable.

Amir Attaran, who studies law and population health at the University of Ottawa in Canada, compared the prices of antiretroviral medications obtained through compulsory licenses in several countries with the median price achieved by peer countries for the same drugs through international procurements in the same year. Compulsory licensing did result in lower drug prices compared with the price on offer before the license was issued, but of the 30 cases of compulsory licensing from 2003 to 2012 for which reliable data was available, the median price achieved through international procurement was lower for 19 of them—in the majority of cases by more than 25% (Health Aff., 34, 493–501, 2015). The effect was strongest in the poorest countries, where in six out of seven cases the procurement price was more than 25% lower than the compulsory license price.

Attaran says the results suggest that countries should not rush into using compulsory licenses until they have exhausted all other options. “Countries can save money using compulsory licenses, but they can save more by negotiating and using international procurement channels,” he says. “If saving money is paramount, then compulsory licenses may not be the optimal strategy.”

Myth: Technology transfer as sound healthcare policy

The price differential was highest when countries issued a compulsory license to manufacture the drug locally. The largest disparity was seen in 2012, when Ecuador licensed the production of a combination treatment of the drugs abacavir and lamivudine. The median price achieved by other countries for that drug combination was ten times cheaper. This is because to produce the drug locally a country may need to build up a manufacturing base from scratch, and economies of scale are lost. Attaran says there are valid reasons a country may want to do this, for example to ensure a secure supply or to address concerns about manufacturing processes, but then price can no longer be the driving force for the decision. “If they want local production, it's going to cost them,” he says.

According to Attaran “This is not an indictment of compulsory licenses, but a question of judgment,” he says. “It's not in anyone's interest to advocate for something that is not supported by evidence.”

The complete article, worthy of careful examination, can be found here.


Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

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