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August 07, 2016


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.

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