Access to medicines after TRIPS: Is compulsory licensing an effective mechanism to lower drug prices? A review of the existing evidence

While Trade-Related Aspects of Intellectual Property Rights (TRIPS) was expected to hike up prices of patented medicines, there was no consensus on its likely final impact on access, because the agreement housed instruments to address this challenge. For instance, compulsory licensing, through the facilitation of price reductions, was considered to be an important countermeasure. However, little is known about the extent to which compulsory licensing has actually been effective in reducing prices of much-needed patented drugs. To fill this gap, this paper undertakes a systematic-review of the existing evidence on the impact of compulsory licensing on drug prices. Retrieval and analysis of 51 observations of pre- and post-compulsory licensing prices indicate that a compulsory licensing event is likely to reduce the price of a patented drug, albeit with some caveats. Moreover, compulsory licensing procurement from the international market is likely to be more effective in reducing drug prices than contracts to local companies. These findings are reconfirmed in the race to improve access to Remdesivir for hospitalized COVID-19 patients. Clearly, the future incidence and impact of compulsory licensing will depend on further possible procedural refinements to ease its implementation, the development of technological and manufacturing capabilities in developing countries, and the importance of biologics among life-saving drugs.