Patents & Licensing

What we measure

Trade Aspects of Patents

Index Country markets can be as large or larger than developed-nation markets, but the typical customer has lower ability to pay. Consequently, to succeed in such markets, Index Countries require an approach that is based on selling higher volumes of products based on lower prices. This is in contrast to the price-based approach, used in the Western markets, that is based on higher prices and recuperation of fixed costs such as research (through patents) and marketing.

Following the introduction of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) in 1994, the issue of patent protection in lower income countries has been a topic of great debate, conflicts and litigations.

The Doha Declaration on the WHO TRIPS and Public Health, agreed in 2001, was important for clarifying exceptions to the IP protections outlined in the TRIPS agreement. These exceptions (or flexibilities) include countries’ ability to use compulsory licensing and parallel importation, as well as the right of LDCs not to grant or enforce pharmaceutical product patents until 2016.

Pharmaceutical company approaches to patent related issues can have far-reaching influence on ATM in the Index Countries. Under “Trade Aspects of Patents” some of the key areas that are analyzed are:

  • The companies’ stance on TRIPS flexibilities and the Doha Declaration on TRIPS and Public Health
  • The level of transparency on status of product patents in different countries
  • The level of transparency with regard to controversial patent-related issues, controversies and litigations relevant to ATM and  in the Index Countries
  • Whether companies refrain from applying for or enforcing product patents in the LDCs, as called for by the Doha Declaration on TRIPS and Public Health
  • Whether companies have been supportive of the concept of patent pools (such as the UNITAID patent pool) which could be an effective mechanism to decrease the cost of patented products for the ICs, especially for the high priority need areas                                               

 

Non-Exclusive Voluntary Licensing: An important mechanism that can help overcome the ATM burden associated with patents and increase affordability of medicines is issuance of more non-exclusive, voluntary licenses to multiple generic manufacturers. This spurs competition, lowering prices and increasing supply, while the patent holder receives its license fee.  The impact of voluntary licenses depends on the license territory (number of the countries covered by the license) and the number of licensees.

Non-exclusive voluntary licensing can help the originator companies focus on their competitive advantage of innovative research while benefiting from the low cost and increasingly high quality production capacity and distribution channels of the generic manufacturers. In addition, such business models can shift the originator-generic relationship to a more constructive and collaborative one with potential positive consequences for access.

For this topic, the Index analyzes the following policies and practices of drug originators:

  • Whether companies engage in non-exclusive voluntary licensing across their Index Disease-related market portfolio
  • The number of products for which companies have granted non-exclusive voluntary licenses to international generic manufacturers
  • Whether companies commit to charging moderate license fees
  • Whether voluntary licenses are accompanied by comprehensive technology transfer from the originator companies to their licensees
  • The geographical scope of the license.
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