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Compulsory Licencing

Even high-income countries are now increasingly expressing concerns about high-priced medicines because of the great strain they put on health budgets.The current pharmaceutical pricing model, reliant on patent-based monopolies, undermines universal health coverage. By allowing competition in a monopoly market, a government use licence is likely to reduce medicine prices, and restore the balance between public and private interests. Yet, Swiss authorities voluntarily overlook this legal mechanism, even though it could significantly help them in negotiating the prices of medicines.

Public Eye

According to the World Health Organization (WHO), at least half of the world’s population still lacks access to health services, and an estimated 2 billion people have no access to essential medicines. “These people will not enjoy the right to health”, said former WHO Director General Margaret Chan at a session of the Human Rights Council in June 2017.

The lack of access to medicines has historically been a poor country issue, but in the last few years it has become a worldwide problem as high-income countries also start to encounter major barriers to guaranteeing universal access to medicines. Indeed, since the progressive implementation of a global patent system, with the adoption in 1995 of the World Trade Organization’s Agreement on Trade-Related Aspects of Intellectual Property Rights (WTO TRIPS Agreement), prices of new medicines have significantly increased and are putting a staggeringly high burden on health budgets. By conferring a monopoly, and thereby creating pricing power, patents are the backbone of the business model used today by pharmaceutical companies and have the potential to drive the price of medicines to very high levels.

At the same time, high-priced medicines do not necessarily add significant value and their claimed benefits are not always supported by scientific evidence. Governments, payers, doctors, civil society and patients regularly demand that pharmaceutical companies disclose the cost of developing a new drug, so as to facilitate the setting of affordable prices. However, the cost of research & development (R & D) remains one of the best-kept secrets in this very profitable industry, or is subject to highly-inflated estimates when used by commercial entities.

As a result, most governments, including Switzerland, are toothless and forced to accept tremendously high prices for new medicines that have no proven correlation with actual R & D and production costs. These spiraling prices are threatening the sustainability of universal health coverage systems.

This is particularly the case for cancer medicines, the prices of which are skyrocketing despite the fact that cancer is one of the leading causes of death worldwide. If we do not stop this trend, only the most privileged will be able to afford these drugs. Millions will die and millions will be left behind.

Yet solutions do exist. Whilst the WTO TRIPS Agreement has globalised a minimum standard for patent protection – including on pharmaceuticals for which exceptions existed in several of its 164 member states – it also includes some important public health safeguards. These so-called TRIPS flexibilities are intended to mitigate the adverse effects of patent protection and achieve a sound balance between public and private interests.

Among them, compulsory licensing is considered an effective government tool to ensure affordable access to life-saving medicines, as it allows a third party (i.e. a generic producer) to use a patented product or process without the consent of the patent owner. But it has also been the subject of intense debate and misleading information because it supposedly threatens the financial interests of transnational pharmaceutical companies.

Compulsory licenses are legitimate legal tools to protect and promote public health. Although evidence shows that they significantly improve access to affordable medicines, many countries wanting to issue compulsory licenses have faced strong pressure and opposition from some governments and pharmaceutical companies. Switzerland in particular, despite its recurrent statements in favor of human rights and access to affordable medicines, has put undue diplomatic pressure on some countries, such as Thailand and Colombia, not to issue compulsory licenses. Further it regularly negotiates agreements with low- and middle-income countries which can potentially deter them from using tools such as compulsory licencing to protect public health.

When our societies can no longer afford unsustainable drug prices, an imbalance between private and public interests has been created. Public Eye considers that the current pharmaceutical pricing model, reliant on patent-based monopolies, works against the public interest, threatens the sustainability of all health systems around the world, and undermines universal health coverage even in a rich country like Switzerland. We believe that every person should have access at all times to quality, safe, efficacious and affordable medicines – regardless of where they live.

Many Swiss and international experts "prescribe" compulsory licencing to solve the problem of high-priced medicines. They also ask Swiss authorities to take action. Here is what they have to say.

Expert opinions: