Monday, March 14, 2011
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Recent Developments in the Political Front Regarding Compulsory Licensing

Monday, March 14, 2011
Brand name pharmaceutical companies may want to keep themselves abreast of recent developments in respect of compulsory licensing of patented medicines for humanitarian aid. Bill C-393, a private member’s bill, is currently working before the House of Commons and appears, at least on paper, intended to ease the requirements under Canada’s Access to Medicines Regime (“CAMR”) in order to facilitate compulsory licensing of patented medicines for export to developing countries.

The CAMR authorizes compulsory licensing of patented medicines, under specific prescribed circumstances, to manufacturers who wish to export patented medicines to developing countries. The CAMR was successfully used once, when Apotex Inc. received a compulsory license to export their drug, TriAvir, to Rwanda. Under the CAMR, every potential order is taken on a case-by-case, drug order-by-drug order, country-by-country basis and a company seeking a compulsory license under the CAMR must have unsuccessfully sought a voluntary license on reasonable terms from the patentee. A product exported under the CAMR must meet the same requirements for safety, efficacy and quality as those intended for Canadians and, as an anti-diversionary measure, the products exported under the compulsory license must have specific marking features to make them distinguishable from the patented versions available on the Canadian market to ensure that the drugs are not being diverted to unintended markets.

Proponents of Bill C-393 argue that the CAMR is filled with red tape making the process for generic manufactures unnecessarily cumbersome, expensive, and time-consuming, thereby needlessly restricting the ability of humanitarian groups and generic pharmaceutical companies to respond to the needs of developing countries. They argue that Bill C-393 will remove some of the red tape by introducing a one-license approach, thereby allowing applicants to obtain a compulsory license first, and that license would allow a company to supply drugs to any of the countries already covered by the existing legislation. The one-license approach would not allow countries to be disclosed in advance.

Opponents of Bill C-393, however, argue that it is unnecessary given that the CAMR has been successfully used and works. There is concern that the proposed changes under Bill C-393 will remove the necessary safeguards to mitigate the potential for corruption. There is also a concern that if Canada passes legislation that attempts to circumvent the brand name pharmaceutical industry’s control in the issuance of compulsory licensing relating to its patented products, in effect circumventing its patent protection, Canada will be viewed as a less desirable place to do business. There is also a concern that if brand name companies feel they are losing revenue through loosened requirements on the issuance of compulsory licensing, they might transfer that loss to the cost of their drugs.

Whether Bill C-393 has any teeth and passes into law is yet to be seen. One thing is, however, clear. The CAMR was developed in view of the delicate balance between having brand name pharmaceutical companies investing in research and development of new drugs and supporting humanitarian efforts through the accessibility to vital drugs at reasonable prices in developing countries. Similar to the development of the CAMR, Bill C-393 is likely to be hotly debated.

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