The report was commissioned by the Committee for Health and Equal Opportunities of the federal Chamber of Representatives in the context of the revision of a Belgian legislative proposal to facilitate the granting of compulsory licenses in the interest of public health. However, its importance extends beyond Belgium. The European Commission announced earlier this year that it would favor compulsory patent licensing as one of the possible tools to expand production of Covid-19 vaccines and treatments. The report assesses the feasibility and effectiveness of compulsory licensing of drugs and treatments sold at excessive prices and highlights the associated legal and practical challenges. Ultimately, the report makes a series of cautious policy recommendations.
The report’s premise is that there are global concerns 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 diagnostics and treatments and the complexity of new medicines, including biologics. medicines.
To tackle the problem of overpriced medicines, the KCE has recommended in the past to develop and coordinate transparent, robust and coherent medicines pricing and reimbursement policies with other EU countries.
Mandatory licensing allows the government in certain circumstances to authorize a third party to manufacture a product or use a method covered by a patent without the consent of the patent holder (e.g. due to a national emergency, anti-competitive behavior of the patent holder, etc. ). In fact, a generic company can then 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 bring expensive drugs to the market at a lower price. However, the KCE study establishes that compulsory licenses entail certain restrictions. First, there are other mechanisms (besides the patent regime) that protect drugs from market competition, such as data and market exclusivity – compulsory licensing should take this into account. Second, patents are intended to encourage innovation – intervening in that system by allowing compulsory licensing risks negatively impacting investment in research and development. Third, it remains a challenge to determine what constitutes an excessive price for medicines and what constitutes a reasonable compensation for the patent holder.
In light of these observations, the report makes the following policy recommendations:
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Mandatory 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 refined.
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EU Member States should work together and coordinate initiatives to impose compulsory licensing 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 licensing will still be granted at national level.
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Careful consideration should be given to whether European data and market exclusivity rules should provide for exceptions / waivers from these legal exclusivities in cases where compulsory licenses are granted. This includes the study of alternative regimes to counter the competitive advantage in 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 must be more cooperation and exchange of expertise between price and reimbursement authorities in Belgium and, for example, the Belgian Competition Authority.
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The creation of a more robust, transparent and coherent pricing and reimbursement policies in the EU would be beneficial. Initiatives can be taken at European level, including by exchanging information on price negotiations and agreements with the pharmaceutical industry and by better coordinating and harmonizing health policies in the EU Member States. Collaborations between EU Member States (such as in the context of BeNeLuxA) can help to improve procedures, which can be especially valuable for expensive medicines.
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The patent exemption for pharmacists should be optimized in national legislation. In this way, the availability and affordability of life-saving expensive medicines can be guaranteed. However, it is recognized that, due to practical and legal constraints, the production of medicines in pharmacies at a lower price is only possible for certain medicines (e.g. medicines that are not too complicated to prepare), in specific circumstances (non-industrial production) and is dependent on the availability of raw materials.
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Universities and public research institutions should be encouraged to impose “socially responsible licensing terms” when licensing inventions and research results to pharmaceutical companies for drug development. This could include ensuring that the pricing of the end product does not endanger accessibility.
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Collaborative models for patent licensing, such as patent pools and clearinghouses, should be encouraged as they can represent an interesting alternative to exclusive production. The role that such models can play in cases of excessive pricing should therefore be further studied. In addition, other initiatives at the international level, such as public-private partnerships to negotiate joint public health licensing with patent holders, could be more sustainable than compulsory licensing.