Is Compulsory Licencing an Effective Mechanism for Lowering Drug Prices After Trips: A Research from the Available Evidence

Abstract

While Trade-Related Aspects of Intellectual Property Rights (TRIPS) was expected to raise the prices of patented medicines, there was no agreement on the agreement's likely final impact on access because it contained instruments to address this issue. Compulsory licencing, for example, was viewed as an important countermeasure due to the facilitation of price reductions. However, little is known about how effective compulsory licencing has been in lowering the prices of much-needed patented drugs. To address this gap, this paper conducts a systematic review of the existing evidence on the impact of mandatory licencing on drug prices. The retrieval and analysis of 51 observations of pre- and post-compulsory licencing prices show that a compulsory licencing event is likely to lower the price of a patented drug, with some caveats. Furthermore, compulsory licencing procurement from the international market is likely to be more effective than contracts to local companies in lowering drug prices. These findings have been confirmed in the race to improve Remdesivir access for hospitalised COVID-19 patients. Clearly, the future prevalence and impact of compulsory licencing will be determined by further procedural refinements to facilitate implementation, the development of technological and manufacturing capabilities in developing countries, and the importance of biologics among life-saving drugs.