ScienceDaily: Study Urges Compensation-based Approach To Drug Patent Compulsory Licensing

ScienceDaily: Study Urges Compensation-based Approach To Drug Patent Compulsory Licensing: "Under complex World Trade Organization rules, governments are permitted to issue patent compulsory licenses, which allow countries to manufacture cheaper versions of patented pharmaceuticals for non-commercial use or in cases of health care emergencies. Just recently, Brazil and Thailand have invoked these rules simply to lower the cost of expensive AIDS and heart medications-a strategy that Cahoy argues should be more controlled. In his paper, Cahoy identifies three myths that have typically obscured workable remuneration rules:"

Myth No. 1:Equitable compulsory licenses must offer savings from the market. Cahoy argues that it is possible for patent holders to be compensated at market prices even when compulsory licenses are invoked. At the very least, he writes, market compensation should be integrated into the debate.

Myth No. 2:Pharmaceutical companies should be indifferent to compulsory licensing so long as "reasonable" remuneration is available. Compulsory licensing supporters say that pharmaceutical companies should be satisfied with payments that allow them to break even or turn a small profit, but Cahoy argues that the equity in such a payment scheme is far more elusive than many suggest.

Myth No. 3:Antitrust compulsory licenses provide a reliable royalty benchmark. Cahoy argues that the low royalties attached to remedial compulsory licenses for antitrust violations should not be used to set remuneration levels in non-punitive cases in which the patentee has done nothing wrong.

Taking these myths into account, Cahoy's proposed licensing regime keeps innovation incentives intact, but also ensures that developing countries have access to pharmaceuticals.