What is Compulsory Licensing?

Compulsory licensing currently allows a government to temporarily override a patent. A compulsory license allows a company, other than the original patent holder of a medicine, to produce a generic version of the drug locally, but on the payment of a royalty to the patent holder. Under the Doha TRIPS regulation, a government may issue a compulsory license to manufacture generic drugs in case of a national public health emergency.

TRIPS agreement mandates products made under compulsory licensing must be “essentially for the domestic market”. This applies directly to countries that have the competence to fabricate drugs. However, this arrangement limits the quantity these countries can export when the drug is prepared under compulsory licence. In addition to this, it has a veiled impact on countries unable to manufacture medicines and therefore necessitating generic drug imports. These unfortunate nations would find it difficult to locate countries that can furnish them with drugs made under compulsory licensing.

In August 2003 a decision was made designed to address this particular concern among many others and outlined in Paragraph 1 of the Doha Declaration on TRIPS and Public Health. The resolution materialises in the shape of an interim waiver, which allows countries producing generic copies of patented products under compulsory licences to export the products to eligible importing countries. However, this waiver would expire when WTO’s intellectual property agreement is amended.