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DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: Twitter: Dereklowe

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June 11, 2012

China's Compulsory Licensing

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Posted by Derek

The Chinese government recently amended its intellectual property law to allow for compulsory licensing. Similar measures are on the books in many other companies, and it's allowed under international patent law (WIPO) in cases of emergency or threats to public health. India recently did this to Bayer's Nexavar. Thailand has used this provision more than once, and other countries (such as Brazil) have threatened it during negotiations with drug companies.

Pharmalot has more on the story, particularly with respect to Gilead and their dealings with the Chinese government over their HIV therapy Viread. As that piece says, China is particularly well suited (as is India) to follow through on such moves, since both countries have robust pharma manufacturing and generic drug business sectors.

I'm actually surprised that the Chinese government didn't have these provisions in place before, though. It's a useful negotiating tool, and I would expect them to avail themselves of everything available, since they are in such a good position to play hardball. Of course, they also have a huge amount of investment from multinational companies on the other side of such considerations - but they also have that huge market that the companies want access to. My guess is that last factor will, in the end, trump everything. There are many drugs, and many drug companies, but there's only one Chinese market. And the only way to that market is through China's one government, which means that companies (and not just drug companies) will continue to smile through gritted teeth and put up with pretty much anything.

Comments (11) + TrackBacks (0) | Category: Business and Markets | Patents and IP


1. pete on June 11, 2012 8:09 AM writes...

First thought: Yet another reason that drug prices keep increasing for you & me (-- here in N America / Euro)

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2. PPedroso on June 11, 2012 8:15 AM writes...

My question is:

In a few years when the first innovative drugs start coming out of China and India, how will this problem will be handled on the other way around?

Will, for instance, European Countries be able to do compulsory licensing for China new Drugs?

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3. SP on June 11, 2012 8:32 AM writes...

I always laugh when people who complain about Obama being a socialist run into the real thing.

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4. darwinsdog on June 11, 2012 10:54 AM writes...

If the shoe is ever on the other foot - I say hey we can't be expected to pay the debt AND pay for their drugs

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5. Anon on June 11, 2012 11:17 AM writes...

@2 My bet is not. If so they will threaten to tax pharma activity in their county. Which by that time, Companies outsourcing will be dependent on them.

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6. CMCguy on June 11, 2012 12:21 PM writes...

My contention is this is only putting a legal stamp on the long known practices of Chindia companies that already produce illegitimate Patented drugs fro "black market". It probably more about presenting an image of International compliance and opens door so they can sell such products cheaply to nations that do not have capabilities to make the drugs but also wish to obtain by Compulsory Licensing.

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7. Anonymous on June 11, 2012 3:27 PM writes...

China-India bashing topic? c'mon guys, where is everybody today?

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8. jackgg on June 12, 2012 12:07 AM writes...

Re@7:bbq on the beach, bla bla in the bars whiling taking 2 months off at this season.

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9. simpl on June 12, 2012 3:59 AM writes...

Not just China: From 1969, the Commissioner of Patents in Canada could issue compulsory licences to import/manufacture and set royalties for drugs.

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10. Andy S on June 12, 2012 8:26 AM writes...

This article's ( opinion is that the amendments are procedural clarifications rather than substantive changes to the law. Time will tell if the new procedures will facilitate/encourage compulsory licensing in China (or whether Reuters are sensationalising the issue).

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11. Anonymous on June 17, 2012 10:26 AM writes...

The Chinese IP amendments add to the dangers of relying on the country's fast-growing drug sales to make up for sluggish growth elsewhere. Big Pharma has been investing hundreds of millions at a time in new Chinese facilities, plus hiring thousands of new sales reps to take their products to the Chinese masses.

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