Expanding developing nations' access to brand name drugs by understanding impediments to compulsory licensing

The high price of brand name drugs in developing countries severely inhibits vulnerable populations' access to lifesaving medications. Patents restrict competition, allowing drug manufacturers to set profit-maximizing prices to serve elite markets. When developing countries gained access to global trade markets for their wares, they agreed to institute patent protections for drugs manufactured outside their borders--but they also presciently retained the right to issue compulsory licenses on patented drugs. Compulsory licensing is an important humanitarian mechanism designed to protect public health by permitting generic manufacturers to produce brand name drugs at affordable prices. Despite the public health promise, compulsory licenses are rarely issued and only occasionally leveraged for access to discounted drugs. Reasons why licenses are infrequently issued have not been fully explored. This paper identifies and evaluates logistical barriers to issuing and implementing licenses and unintended adverse consequences, or secondary effects, that may dissuade nations from licensing. Potential barriers and secondary effects can range from governmental coordination challenges to adverse international responses such as trade sanctions, litigation and decreased direct foreign investment. Additionally, unfavorable economic effects such as parallel importation and shadow pricing may diminish the public health benefit of licensing. Secondary effects can also function as barriers, when nations forgo licensing based on their perceptions of other nations' adverse experiences with licensing. This paper identifies the most significant barriers that, when addressed, could greatly improve developing nations' access to essential medications.