Pharma groups slam EU’s compulsory licensing proposal

US, EU and Japanese pharmaceutical industry associations lambasted the European’s Commission proposal to establish a compulsory licensing (CL) scheme for drugs and vaccines in an emergency, asserting that the EU has failed to demonstrate why such compulsory licensing is needed and how it will provide better access to medicines. Further they assert that the proposal is incompatible with the World Trade Organization’s TRIPS agreement and with “well-established” principles of EU law.

These comments were in response to the EU’s proposal to establish an EU-wide compulsory licensing mechanism that allows the use of a patented product without the patent holder’s consent. (RELATED: EU patent reform proposal addresses compulsory licensing and SPCs, Regulatory Focus 28 April 2023)

These licenses are used in emergency situations, such as for medical products during the COVID-19 pandemic and aims to replace the “patchwork” of different licensing schemes that are in place in EU member states.

EU received 38 comments on the proposed compulsory licensing framework, with many pharmaceutical industry trade groups, individual manufacturers and non-profit groups expressing opposition to the proposal.

Pharmaceutical groups say proposal is misguided

Worldwide, industry groups voiced their misgivings about the proposal, and said the EU has not demonstrated a compelling reason as to why the current IP licensing system needs to be changed.

The US-based Biotechnology Innovation Organization (BIO) said it is “deeply concerned” with the proposal. The group said that “the proposal of a revised CL regime suggests that the envisioned new framework remedies a dysfunctional system despite no objective evidence that the existing regime is inadequate. Lacking justification for the introduction of this legislation, the proposal accomplishes nothing else than to breathe oxygen to a global debate which misguidedly characterizes IP rights as a barrier to access rather than as an enabler of innovation.”

BIO added that “the Commission fails to provide a single example of how a Union compulsory license would have allowed the EU to better cope with the COVID-19 crisis or how patent rights have interfered with the cross-border management of COVID-19 within the Union.”

The European Pharmaceutical Industries and Associations (EFPIA) concurred. The group stated that “not only would such a Union-wide license significantly weaken innovator IP rights, but the framework itself represents a significant expansion of the role of the EC on a mandate that has long been firmly within the Member States’ remit, and where there already exist sufficient compulsory license provisions at both the international and Member State level.”

The Pharmaceutical Research and Manufacturers of America (PhRMA) raised “serious concerns” with the proposal. “At a time when IP rights are being opportunistically challenged by certain countries – often to support their own industrial policy goals – this unjustified, unprecedented and impermissible proposal to create another CL mechanism in the EU is incredibly counterproductive,” the group wrote.

The Japan Pharmaceutical Manufacturers Association (JPMA) also expressed its misgivings about the plan. “We are concerned that the Proposed Regulation would suppress innovations and essential and effective medicines” required for future crises or emergencies. The group also has “concerns regarding the effectiveness, necessity, transparency, and fairness of Union compulsory licensing in addressing crises and emergencies.”

Pfizer similarly expressed its concerns. The proposal “would undermine the legal certainty provided by the IP system by introducing a broad-reaching, vague, ambiguous and unclear CL framework. As shown by the COVID-19 crisis, IP incentives enabled Pfizer to build an infrastructure that allowed us to quickly mobilise and devote the resources and know-how required to help combat the pandemic.”

Pfizer also said the proposal fails to clearly define what constitutes a crisis that would trigger the CL mechanism. The proposal “fails to state that a CL should be used only as a last resort and only after attempts to negotiate voluntary licenses have failed.”

Access to medicines

Further, groups asserted that compulsory licensing will not help improve access to medicines.

JPMA stated that during the COVID-19 pandemic “the issue of vaccines was not vaccine production shortages but how to deliver vaccines to people who need them. Its immediate and essential issues were elimination of trade/regulatory barriers, enhancement of medical personnel in low/lower-middle income countries, improvement of public awareness to healthcare including the prevention of vaccine hesitancy and dissemination of misinformation on vaccines due to lack of medical information or healthcare education, and improvement of distribution processes.”

IP Europe, a coalition of R&D organizations, states that “compulsory licensing would not have made any difference during the recent Covid pandemic. Whereas there was indeed a delay in rolling out production and distribution of vaccines, this was not due to any refusal to licence but was rather a result of a lack of capacity and capability.”

TRIPS

EFPIA also asserted that the proposal is incompatible with the TRIPS agreement and with “well-established principles of EU law.”

The group said the compulsory licensing provision is not aligned with Articles 31(a) and 30(b) of the TRIPS agreement, which addresses the identification of the rights-holder, allows for an assessment of alternative solutions, and the need to negotiate with the rights-holder.

EFPIA said imposing an EU-wide CL “is a clear interference” with the EU’s Right to Property provision under Article 17 of the Charter of Fundamental Rights which specifies that legislation in the EU must include “minimum safeguards” to limit that interference to what is “proportionate and strictly necessary.”

PhRMA said that it “endorses” the EFPIA submission. “Separate from the question of the EC’s competency to implement a pan-EU CL that would override patents granted at the member state level … the proposed regulation is inconsistent with the WTO TRIPS Agreement.”

Voluntary licensing

Groups instead said that instead of pushing for compulsory licensing the Commission should instead work to improve voluntary licensing agreements.

“We firmly maintain that voluntary licensing agreements present the most effective approach to tackle health crises,” said Medicines for Europe, a group representing the EU’s generic manufacturers, which also noted an increase in the number of voluntary licensing agreements during the Covid-19 pandemic.

Instead, the group “strongly advocate for the reinforcement of mechanisms that promote voluntary licensing agreements in such scenarios. In this context, the use of compulsory licensing systems for domestic and export purposes should remain very exceptional, to be employed as a last-resort measure or exceptionally to remedy misuses of patents that delay or hinder generic/biosimilar market entry, impeding patient access.”

PhRMA said the COVID-19 pandemic has demonstrated that “how voluntary arrangements between innovators and other manufacturers enabled rapid responses to produce and distribute medical countermeasures.”

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Pharma groups slam EU’s compulsory licensing proposal

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