European Commission Says Compulsory Licensing can Only Happen at National Level

Posted 26 June 2015 | By Michael Mezher 

European Commission Says Compulsory Licensing can Only Happen at National Level

After being questioned by a member of the European Parliament, the European Commission (EC) says neither it nor the European Medicines Agency (EMA) have the power to acquire patents or issue a compulsory license.

Background

In the past two years, drugmakers have launched several drugs to treat hepatitis C (HCV), a disease which left untreated can lead to cirrhosis or liver cancer.

The new generation of HCV treatments, led by Gilead's Sovaldi and Harvoni, are highly effective compared to previous generation treatments, boasting sustained virologic response (SVR) rates of more than 90% in some patient groups, milder side effects and shorter treatment times.

However, payers around the world have struggled to absorb the cost of these new treatments. Payers are not only confronted with higher priced drugs, but with an influx of patients, encouraged by the drugs’ high success rate, seeking treatment.

In the US, Gilead sells Sovaldi and Harvoni for $84,000 and $94,500, respectively, and has negotiated lower prices in several EU countries, including the UK, France and Germany. The company has also set up licensing agreements with seven generic manufacturers in India which allow generic versions of Sovaldi to be sold in India and 90 other low- and middle-income countries at around 1% of the drug's US price.

While the licensing agreements are good news for many around the world, the company has come under fire from advocacy groups such as Médecins Sans Frontières (MSF) and the Initiative for Medicines, Access & Knowledge (I-MAK), which want to see Sovaldi become more accessible to patients in many middle-income countries left out of Gilead's licensing agreements. Additionally, I-MAK has filed patent challenges against Sovaldi in Argentina, Brazil, China, India, Russia and Ukraine, hoping to erode Gilead's patent protection for the drug.

EU-Wide Compulsory License?

In March, Ernest Urtasun, a member of the European Parliament (MEP) from Spain, sent a formal inquiry to the EC asking about the possibility of using issuing compulsory licenses to get around paying the industry's asking price for the drugs.

A compulsory license is a legal provision that allows for the licensing of intellectual property rights without the rights holder's consent.

Urtasun points to Article 31 of the Trade-Related Aspects of Intellectual Property (TRIPS) agreement, which allows countries to issue compulsory licenses without the rights holder's permission with some limitations. Under TRIPS, compulsory licenses should only be granted after reasonable efforts to negotiate voluntary licensing agreements have failed, except in cases of national emergency or extreme urgency. Additionally, the agreement states that compulsory licenses should primarily be for domestic use, and rights holders should be remunerated for the license, based on the "economic value of the authorization."

In response to Urtasun's question, the EC replied that "substantive patent law today is predominantly covered in the national laws … [which] deal also with compulsory licenses. It is for each member state to ... assess whether the applicable conditions for exceptions and limitations apply."

The commission also stated neither it nor EMA has "a mandate to acquire individual patents for general public objectives."

 

Parliamentary Question, Answer


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