Letter to Colombian President Encourages Grant of Compulsory License for Imatinib

By Donald Zuhn --

Last month, we reported on letters sent by two Senators and fifteen Representatives to the U.S. Trade Representative, seeking clarification regarding the Administration's position on compulsory licenses.  The letters were prompted by reports that representatives of the U.S. government may have pressured the Colombian government not to issue a compulsory license for Imatinib, marketed by Novartis as Gleevec® or Glivec.  We also reported on a letter sent by three Colombian organizations (the IFARMA Foundation, Misión Salud, and CIMUN) to a World Health Organization (WHO) working group, alleging that "enormous pressure" had been applied by developed countries and pharmaceutical companies to block Colombia from issuing the compulsory license for Imatinib, and resistance to the compulsory license had combined "inaccuracies, distortions of international trade rules and even threats of trade claims under the dispute settlement mechanism."  Finally, we reported on a letter sent to President Obama by 28 organizations "concerned with access to medicines and U.S. aid to support peace in Colombia" that echoed the comments of the letters from Senate and House legislators.

In a letter sent to Colombian President Juan Manuel Santos in May, 122 "lawyers, academics and other experts specializing in fields including intellectual property, trade and health" wrote to "encourage [his] administration, the Ministry of Health and the Superintendency of Industry and Trade to proceed with the public interest declaration" and grant a compulsory license for Imatinib.  The group of experts also wrote to "affirm that international law and policy support Colombia's right to issue compulsory licenses on patents in order to promote public interests including access to affordable medicines."

With respect to reports that representatives of the U.S. government had pressured the Colombian government not to issue a compulsory license, the group "condemn[ed] any pressure levied against Colombia for its use of lawful policies such as compulsory licensing to promote public health," adding that "[i]f the reports are accurate, those officials have acted inappropriately, and contravened U.S. government policy, which supports trading partners' rights to issue compulsory licenses."  The group also noted that:

Article 31 of the World Trade Organization's Agreement on Trade-Related Aspects of Intellectual Property (WTO's TRIPS) permits all WTO members, including Colombia, to issue compulsory licenses at any time on grounds of their choosing.  The only compensation due to patent-holders in instances of compulsory licensing is a reasonable royalty, which governments may determine at their discretion.

Contending that "[h]igh prices for any important medicine impose a burden on the public health system responsible for providing it, and lead to the rationing of treatment and other health services," the group stated that "[w]hen a pharmaceutical company uses a patent to exclude competition, it can charge much higher prices."  The group concluded the letter by stating that:

Issuing a compulsory license does not expropriate the property rights of the patent holder.  Rather, the right of a government to authorize other uses of a patented invention is embedded and reserved in the grant of a patent.  Furthermore, a license does not prevent the patent holder from continuing to sell its product, prohibit non-licensed uses of the invention, or prohibit non-licensed parties from using the invention.

Comments

[Paul Cole]

Until the Patents Act, 1977 the UK had a regime for compulsory licensing of pharmaceuticals, and the Reports of Patent Cases contain numerous decisions dating from the 1960's and 1970's. Disputes as to license terms and especially royalty rates were prolonged and acrimonious, as I remember from personal involvement.

What came out from the evidence was the substantial expense firstly for research and secondly for promotion of the particular medicament to the medical profession (as opposed to the promotion of a particular brand of that medicament, which was not an allowable expense). Royalty rates in the range 20-30% were typical, and the price on which the royalty was calculated was defined so that the compensation to the patentee was not undermined by price competition.

Anyone who thinks that compulsory licensing is a simple or fair way out from this kind of situation should read up the UK cases and the way in which fair compensation was fixed. It is not a simple matter.