As pharma races to develop a COVID-19 vaccine, researchers and governments are working in parallel to pinpoint strategies to secure its widespread access.
To that end, many countries plan to seek refuge in a long-existing strategy: compulsory licensing.
In the European Union (EU), however, compulsory licensing is not as self-evident as it might seem. This blog post focuses on four specific challenges that come with compulsory licensing in the EU and potential alternative solutions.
Licensing at its quickest
A compulsory license is an authorization granted by a government to a third party to produce a patented product or process without the express consent of the patentee. It thus allows a government to override the patentee’s exclusive right to keep others from using its patented inventions.
Although compulsory licensing hampers the patentee’s rights drastically, the public interest might necessitate this intrusion, for instance, when life-saving medicines are concerned. To further safeguard against misuse of this opportunity, Article 31 of the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement lays down twelve conditions for compulsory licensing schemes.
In the EU, compulsory licensing has been around for decades. Yet, while nearly all EU Member States have adopted legislative provisions that allow for granting compulsory licenses, in practice, compulsory licensing is rarely applied within the context of public health. However, the COVID-19 pandemic seems to have given compulsory licensing a chance to come to the fore – for example, France and Germany both recently announced refinements of their compulsory licensing regimes.
But, not so fast…
That being said, the impact of these measures remains to be seen. Several requirements and circumstances make compulsory licensing in the EU a particularly complex endeavor.
First, the requirements of Article 31 of the TRIPS Agreement have to be met, since the EU is a Member of the World Trade Organization (WTO), under the auspices of which the TRIPS Agreement was established.
Of particular importance is Article 31 (f), which states that the authorization should predominantly be used for the supply of the domestic market of the country authorizing the use of the license. The EU has not yet adopted the competence to grant EU-wide compulsory licenses. Article 3 of the EU Regulation on compulsory licensing relating to pharmaceuticals prescribes that, within the context of pharmaceuticals, the authorities competent to grant a compulsory license are those that have the competence to do so under national patent law. Therefore, compulsory licenses can, in principle, only be granted by individual EU Member States and – importantly – only for their individual territories.
A second stumbling block is found in Article 31bis of the TRIPS Agreement. In order to alleviate the burdensome requirement of Article 31 (f), Article 31bis adds that, when the compulsory license concerns a pharmaceutical product, the product can also be exported to an eligible importing country. The notion of ‘eligible importing country’ includes any least-developed country and those countries that have made a notification to the Council for TRIPS of its intent to use this importing system. At the time of the adoption of Article 31bis, the EU opted out as an eligible importing country. As a result, according to Article 31bis, the EU cannot import pharmaceutical products produced under a compulsory license in a third country – and an EU Member State cannot import pharmaceuticals produced under that license in another EU Member State (see also Article 13 EU Regulation on compulsory licensing relating to pharmaceuticals). Hence, EU Member States have to rely on their own domestic production of pharmaceuticals and vaccines. Importantly, EU Trade Commissioner Phil Hogan has stated that the EU might revisit its decision to opt-out as an importer. It has not done so as of yet.
Third, EU law on data exclusivity hinders the effective use of compulsory licensing. The EU Regulation on the authorization and supervision of pharmaceuticals covers the requirements for the regulatory approval of pharmaceuticals. To obtain a market authorization, applicants must supply the European Medicines Agency (EMA) with the necessary data on the safety and effectiveness of a pharmaceutical (see inter alia Article 17). Afterwards, authorized pharmaceuticals benefit from an eight-year period of data exclusivity (Article 14 (11)). As this paper rightly points out, third parties cannot reference this exclusive data in their applications for eight years, unless the originator’s data and market exclusivity are waived. A waiver is provided in the EU Regulation on compulsory licensing relating to pharmaceuticals (Article 18).
Finally, questions arise with regard to who can take the initiative of granting a compulsory license, since several EU Member States do not foresee a right of initiative for their governments. An explanation might be found in Article 6 of the Regulation on compulsory licensing related to pharmaceuticals, which provides that: “Any person may submit an application for a compulsory license […] to a competent authority.” In Belgium, for instance, the Minister of Health does not have a right of initiative for compulsory licenses, but relies on bona fide applicants (Article XI.38 Code on Economic Law).
Companies can, of course, still opt for voluntary licensing. All eyes are currently on patent pools, such as the COVID-19 patent pool established by the WHO, or non-profit initiatives such as the Open Covid Pledge. Patent pools compile voluntarily supplied data on clinical trials, technologies, and other information essential for the development of a treatment. Once a company places its patented invention in the pool under an open license, other companies and governments can legally rely on the knowledge provided. Since COVID-19 does not stop at borders, why should a vaccine?
The choice of participating in the pool is, nevertheless, up to companies. Compulsory licensing itself cannot be used to provide the pool with additional data. Nonetheless, if the EU refines its compulsory licensing policy, it might one day become more of an opportunity for public health.
Caranina (Nina) Colpaert is a Ph.D. researcher at the Institute for Consumer, Competition & Market of KU Leuven Law. Her research focuses on the legal framework for medicine shortages in the EU. Caranina has completed various internships in the field of EU Economic Law (Allen & Overy, Linklaters).