It for compulsory licenses should be developed and

It can solve the controversial issue of granting compulsory licenses
and prevent them from happening, and also provide drugs at a low cost. Unlike
a compulsory license, a single patent buy-out can apply to multiple drugs and
countries.  Since it can be manufactured and sold to a number of
countries, it reduces the transaction costs. Also, the purchaser, who can be
any entity from a government or a philanthropic foundation, would have
exclusive rights to market and license the drugs in the negotiated region.1 The
purchaser can then offer multiple non-exclusive, no-royalty licenses to generic
drug manufacturers in order to generate a competitive market. Moreover, unlike
compulsory licensing which requires royalty payments to be paid to the patent
holder, the patent-buyout price would be determined by “the net present value
of expected future profit”.2
It enhances flexibility in financing the buy-out. It can also attract
pharmaceutical companies who, under compulsory licensing, would have had to settle
the number of drugs actually manufactured and sold in order to receive the
royalty payments.3

However,
patent buy-outs may bring a loss of profit to pharmaceutical companies,
increase risks of arbitrage to OECD nations, and encourage counterfeit drug manufacturing. 4 
Yet, profit loss result in a decrease in incentives for innovation is
unavoidable. Thus, cautious design of patent buy-outs and safeguards against
arbitrage should be implement in order to provide adequate incentives for
pharmaceutical companies to engage in negotiations. 5Patent
buy-outs seem to be one of the most appropriate alternatives to compulsory
licensing, but more research should be conducted on the financing system and terms
and clauses for the buy-out mechanism.

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

On the other hand, some may doubt the usefulness of the patent
buy-outs as it has not been adopted or tested in the market and may argue that
we should focus on what we have already developed in the market instead of
searching for new alternatives. A more determinate terms in compulsory
licensing provision should be introduced in order to clarify the ambiguities in
the compulsory licensing scheme. It can hence improve the efficiency of the
scheme, and also encourage nations to issue compulsory licence without the fear
of political pressure. An official list of universally recognized disease which
are considered to be a threat to public health and a list of drugs that can be
automatically be allowed for compulsory licenses should be developed and
maintained6. It
will hence, reduce the tension and unnecessary conflicts between countries and
reduce time for government to debate whether issuing compulsory licence for
certain drug is fair or not. Secondly, the WTO can adopt a unified “socio-economic
model”7
to decide whether a nation is allowed to grant compulsory licenses. By doing
so, developing countries can no long suffer from the political abuses from
developed countries. It can also ensure that not every nation can take
advantage of the system. It is also suggested that the WTO can conduct a “benefit-detriment
analysis to compare the profit loss suffered by each of the pharmaceutical firm
with the aggregate social benefit”8.  The WTO should also created a set of
socio-economic indicators related to the pharmaceutical industry in order to
identify nations, drugs and disease which are qualified for compulsory
licensing9.

 

Related Posts

© All Right Reserved
x

Hi!
I'm Melba!

Would you like to get a custom essay? How about receiving a customized one?

Check it out