Netherlands is latest country considering compulsory licensing to lower drug costs

By Ed Silverman STAT 

Responding to rising concerns over drug prices, the Netherlands health minister wants to explore compulsory licensing in order to obtain certain medications at a lower cost.

By putting this on the table, the Netherlands becomes at least the fourth country in little more than a year to consider this option, which typically riles the pharmaceutical industry over concerns that such moves may eviscerate patent rights.


In remarks made to the Dutch House of Representatives last week, Health Minister Bruno Bruins warned that he will “explore extensively” the possibility of compulsory licenses if drug makers do not lower their prices.

Such sentiments are increasingly being voiced by cash-strapped governments seeking to combat rising prescription drug costs. And patient advocacy groups argue that industry efforts to enforce patent rights may come at the expense of patients who cannot afford increasingly costly medicines.

The anger in the Netherlands was precipitated, in part, by a flap involving the Orkambi cystic fibrosis drug, sold by Vertex Pharmaceuticals Inc., of Boston. After months of talks during which the government initially criticized the price — roughly $202,000 per patient annually — and then refused to offer coverage, a reimbursement agreement was reached late last month, although terms have not been disclosed.

Meanwhile, Vertex undertook an extensive lobbying campaign that included patient groups. But the effort was widely criticized for appearing surreptitious, especially after a lobbying trade group apologized that a lobbying firm, which worked on behalf of the drug maker, “carelessly communicated” requested financial data to the government.

Licensing was one of several suggestions that were recommended in a report issued earlier this month by the Council for Health and Society, an independent advisory body, which argued that the Dutch government needs a “different approach” to working with drug makers over pricing. A Dutch opposition party made a similar proposal last week amid growing clamor over medicine costs.


Countries may grant these licenses to a generic drug maker, allowing it to copy a patented medicine without the consent of the company that owns the patent. This right was memorialized in a World Trade Organization agreement known as Trade-Related Aspects of Intellectual Property Rights, or TRIPS, although European Union regulation of clinical test data protection may interfere with licensing.

“We see increasing calls for compulsory licensing of medicines patents in high-income countries that struggle to deal with high medicines pricing. The Dutch minister seems to be serious about taking action. This is encouraging for the Dutch people and important globally. After all, low and middle-income countries that use these patent flexibilities for public health reasons are still challenged by the European Union and the US,” Ellen ‘t Hoen, a public health advocate and former policy director at Doctors Without Borders, wrote us.

A spokesman for the European Federation of Pharmaceutical Industries and Associations wrote us that by focusing on specific medicines, licensing can drive up other health care costs. “Experience and recent research demonstrates that compulsory licensing is not an effective way to improve access or achieve other public health objectives. It does not lower prices necessarily, speed access, or improve health outcomes,” he wrote.

“Referring to patent laws as a way for bargaining to set prices does not adequately recognize the importance of intellectual property rights as a vital part of incentivizing innovation and ensuring that new medicines are developed to address patient needs. Recommending that countries use radical measures, such ‘compulsory licensing,’ will have a chilling effect on future innovation.”

There have been few instances in which a country has issued a license, due to concerns about trade repercussions. Thailand issued licenses several years ago, as did India. Generally, the pharmaceutical industry has worked hard to thwart such moves, which is what happened last year when Colombia’s health minister threatened to issue a license for a Novartis cancer drug.

In that instance, the company and government haggled over the price of Gleevec. Failing to reach agreement, the health minister issued his threat. Fearing that such a move might embolden other countries to quickly take similar steps, the industry turned to Washington for backing.


Last year, staffers from both the Senate Finance Committee and the US trade representative met with Colombian embassy officials and suggested that Washington might withdraw support for a free-trade agreement and $450 million in backing for a peace initiative between the Colombian government and Marxist rebels. Colombia, instead, later moved to unilaterally cut the price. Novartis is appealing.

More recently, Malaysia announced it would follow through on plans to issue a license to generic companies to make a version of the Sovaldi hepatitis C pill sold by Gilead Sciences. The country had previously signaled plans to do so, which apparently prompted Gilead to then expand a 2014 licensing deal to allow seven large generic drug makers to sell copycat versions in Malaysia and three other middle-income countries: Ukraine, Belarus, and Thailand.

Last spring, Peru’s Congressional Health Commission voted in favor of pursuing a compulsory license for an HIV medicine sold by Bristol-Myers Squibb. The move came after patient advocates pushed the government to issue a license for the drug, which they argued is more expensive in some neighboring countries, and accounts for an outsized share of government spending on HIV medications.

Ed Silverman can be reached at
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