Compulsory Licensing of Pharmaceuticals in High‐Income Countries: A Comparative Analysis

Abstract

Policy Points

• Pharmaceutical trade organizations and media outlets in the United States regularly point to compulsory licensing—or even its threat—as the mechanism that peer countries use to control the price of prescription drugs.

• Our comparative analysis shows that compulsory licensing is not frequently employed in high‐income countries outside the United States as a direct response to drug prices. When its use is threatened, a license is rarely issued and even less often does it lead to a price discount. Accordingly, compulsory licensing is unlikely to contribute to price discrepancies between the United States and other developed nations.

• In fact, of the 21 compulsory licensing petitions we identified outside the United States, over one‐third were made by pharmaceutical companies themselves and only three were threatened by a government authority.

Context

Compulsory licensing is a practice whereby national authorities can license a third party to produce a patented product, such as a pharmaceutical drug, effectively enabling the production of a generic before the original patent expires. The policy was designed—and has historically been used—to improve access to essential medicines in low‐income countries and during public health crises. Although it was not intended to impact drug prices directly, the threat of compulsory licensing may indeed contribute to lower drug prices in high‐income countries outside the United States. Our study sought to determine the plausibility of this claim.

Methods

We compiled a comprehensive database of compulsory licensing episodes in the United States and 17 comparator nations over the 20 years following the 2001 Doha Declaration, and we recorded the motivation and outcome of each instance. Our search began with publicly available reports compiled by organizations specializing in pharmaceutical intellectual property, expanded to a query of legal proceedings in Westlaw, and concluded with a comprehensive literature review on PubMed.

Findings

This strategy yielded 45 unique episodes of compulsory licensing, 24 in the United States and 21 outside. A minority (24%) of petitions outside the United States were motivated by high prices, and in all countries, only three cases were clearly associated with a price discount.

Conclusions

We found no evidence to suggest that compulsory licensing is either frequently threatened or successfully implemented by countries outside the United States to secure price discounts for the most expensive pharmaceuticals, those that are newly patented and just entering the market.

While the significant gap between drug prices in the United States and those in other high‐income countries is well established, ¹ there is little consensus on the reasons for this discrepancy. ² , ³ , ⁴ One of the arguments occasionally presented by the popular American media and pharmaceutical trade organizations is that the threat of compulsory licensing keeps prices in check outside the United States. Consistent with this logic, the Wall Street Journal staff opined in an October 2018 editorial that “the reason European countries pay less for drugs is because they run single‐payer health systems and dictate the prices they're willing to pay. Don't like it? They'll then vitiate your patents and make a copycat.” ⁵

The technical term for such an action is compulsory licensing. Compulsory licensing is when a government or other legal authority such as a court allows a third party to use the subject matter of a patent without the authorization of the patent's owner. The practice of compulsory licensing was defined in many countries’ patent laws before being codified by the World Trade Organization (WTO) in Article 31 of the landmark Trade‐Related Aspects of Intellectual Property Rights (TRIPS) agreement of 1994. TRIPS established uniform standards for intellectual property (IP) protection while simultaneously affirming member states’ flexibility to grant compulsory licenses on a case‐by‐case basis. ⁶ While the WTO did not delineate specific instances in which compulsory licensing might be appropriate, it recommended that certain requirements for granting a compulsory license be waived “in the case of a national emergency or other circumstances of extreme urgency.” ⁷

The subsequent Doha Declaration of 2001 explicitly emphasized the applicability of compulsory licensing to medicines. ⁸ This agreement declared that national authorities should not avoid issuing a compulsory license if doing so would be likely to improve access to essential medicines in the developing world or otherwise benefit public health. Neither TRIPS nor Doha specifically lists compulsory licensing as a negotiating tool for pharmaceutical pricing and market access discussions.

Even so, the Pharmaceutical Research and Manufacturers of America (PhRMA), one of the country's largest pharmaceutical trade organizations and lobbying groups, has specifically called out the threat of compulsory licensing in foreign nations, arguing that it forces Americans to pay more than their peers. ⁹ Throughout former president Donald Trump's administration—and then again in February 2021—PhRMA submitted multiple special reports to the Office of the US Trade Representative (USTR) requesting that the government respond to these “damaging price controls” on its products outside the United States. ¹⁰ More recently, the author of a Forbes article suggested that compulsory licensing be used to limit increases in the price of the COVID‐19 vaccines. ¹¹

Methods

To examine this disconnect between the agreed‐upon parameters for compulsory licensing and test the assertion that it is routinely used to obtain low prices for new pharmaceuticals in high‐income nations outside the United States, we analyzed the actions and threats of compulsory licensing in the 16 countries included in the International Pricing Index (IPI) model proposed by the Centers for Medicare & Medicaid Services (CMS) in 2018, ¹² as well as in South Korea, a common target of PhRMA's criticism not already included in the IPI list. The majority of other countries cited by PhRMA were low‐ or middle‐income and thus not included in our analysis as CMS's proposal involved benchmarking prices only to those of US peers.

We considered an “episode” to be either (1) a request or petition made by any third party to the government to grant a compulsory license or (2) a legal or government authority announcing that it was threatening, granting, or requiring a compulsory license. Though we expected episodes to be related primarily to new pharmaceuticals, which are generally the highest priced, we did not narrow our analysis to include any specific drug types as compulsory licensing can theoretically be issued for any patented product.

Our first priority was to determine which parties most commonly petitioned for compulsory licenses. Although any party can theoretically request that a compulsory license be issued, only government actors and courts can approve these petitions. Furthermore, pharmaceutical manufacturers are presumably more likely to respond with a price discount if the initiating party participates in or directly influences pricing and market access discussions. Next, we sought to clarify whether these petitions were truly driven by the high cost of prescription medicines or if they instead were used to address other concerns such as pharmaceutical monopolies or urgent public health needs. Last, we aimed to identify the outcome of each request to determine whether it resulted in the granting of a compulsory license or a drug discount.

We then replicated this analysis to qualitatively characterize the role and extent of compulsory licensing in the United States compared with other countries. The objective of this secondary analysis was to evaluate a claim that is implicit in the arguments made by the Trump administration, PhRMA, and select media outlets: that compulsory licensing is either not used at all in the United States, or it is not used for the same price‐related motivations as it is in other developed countries.

Our identification of compulsory licensing episodes began with a publicly available database compiled by Medicines Law & Policy, an independent research group specializing in intellectual property related to pharmaceuticals. ¹³ We supplemented this with reports published by Knowledge Ecology International (KEI), a nongovernmental organization concerned with the societal impact of current policies and practices related to knowledge sharing. These reports include a 2007 publication ¹⁴ listing compulsory licensing episodes throughout the world, as well as a 2014 update of the same document. ¹⁵ , ¹⁶ Since KEI frequently posts on its blog new instances of compulsory licensing or developments in earlier cases, we conducted a site‐specific search in August 2021 to review entries since the last formal publication in 2014. Because this search did not permit wild cards, we simplified it to pulling up any pages posted after January 1, 2014, containing the term “compulsory” AND one of the target countries; we reviewed each of these entries to identify new episodes. Next, we queried Westlaw, a database of legal documents and reports primarily focused on American law.

We supplemented these sources with a literature review conducted on PubMed, most recently run in August 2021, to identify publications containing the terms “compulsory licen*” AND (“drug*” OR “pharm*” OR “medic*”). Since the Doha Declaration was adopted in 2001, we excluded entries published before 2001. We then manually screened all titles and abstracts to verify that the study was in some way addressing compulsory licensing of pharmaceuticals and not, for instance, genetic information or other technologies. If the title or abstract was explicitly focused on compulsory licensing episodes outside one of the high‐income countries in our analysis, we excluded it. We then scanned the texts of all remaining articles to find either a table of compulsory licensing episodes or a discussion of specific instances in the countries of interest (Table 1).

Table 1.

Summary of Compulsory Licensing Episodes by Geography

	United States	Outside United States
Total Number of Petitions	24	21
Petitioning Group
Government or regulatory body	15	3
Nonprofit organization or patients/advocacy group	8	9
Pharmaceutical company	1	9
Stated Reason for Petition
High price	12	5
Public health need or supply issues	4	11
Competition/antitrust	7	0
Patent dispute	1	1
Generic distribution in another developed country	0	4
Outcome
Compulsory license issued	7	6
Request declined	7	8
Drug discount secured	1	2
Voluntary license granted	1	1
Case pending	8	4

For each episode, we recorded the drug, company, country, and year, as well as the entity initiating the compulsory licensing action, its motivation for doing so, and the eventual outcome.

Limitations

First, despite this comprehensive search strategy, a key limitation of our study was that we were able to capture only those compulsory licensing episodes that were discussed publicly, whether through open government meetings, media coverage, formal legal proceedings, or other venues. While we could not account for threats of compulsory licensing that were contemplated only privately (for instance, in closed‐door meetings at a regulatory agency, informal petitions from community organizations that were not picked up by the media, or draft suits that were ultimately not filed in court), these instances are unlikely to represent threats to which a pharmaceutical company would respond with a drug discount. However, it is certainly plausible that a payor may reference compulsory licensing during private negotiations with a manufacturer to help secure favorable pricing or rebates. Such episodes cannot be identified through publicly available sources.

Second, our inability to systematically search legal documents outside the United States prevented us from directly comparing US data and other countries’ data. Such an analysis, however, was not essential to our characterization of how compulsory licensing is used in pharmaceutical pricing and market access negotiations across high‐income countries outside the United States.

Since our study question necessitated a narrow focus on high‐income countries, we cannot generalize on the motivations for and outcomes of compulsory licensing actions in low‐ and middle‐income countries. However, it is in these countries where compulsory licensing has had the greatest impact on public health, in particular through increased access to antiretroviral therapy for HIV/AIDS. ¹⁷ , ¹⁸ , ¹⁹ , ²⁰

Results

We identified 45 compulsory licensing episodes in the United States and 17 target countries (Box 1). Fourteen were unconvered in our initial review of the Medicines Law & Policy database, an additional 21 were found in Knowledge Ecology International (9 in the reports from 2007 and 2014, and 12 from our later site‐specific search), and 10 in our Westlaw search. The final two episodes were incidentally found by hand search of contemporary trade news sources.

Box 1.

Countries Included in Our Comparative Analysis

Austria Belgium Canada Czech Republic Finland France Germany Greece Ireland

Italy Japan Portugal Slovakia South Korea Spain Sweden United Kingdom United States

Our literature search yielded 151 publications (Figure 1). Before our review, we excluded 19 with publication dates before 2001. Based on their title and abstract alone, we excluded 7 because they focused on the compulsory licensing of nonmedication patents and 69 because they studied actions outside our target countries. Of the 56 we selected for the full article review, 18 did not cite specific examples of compulsory licensing but instead provided general public health, economic, and legal commentary. Nearly half (n = 27) reviewed cases that we had identified earlier in our review, and another two addressed instances before 2001. We unfortunately could not access nine full articles either because PubMed had no working link or the publication was behind an inaccessible paywall. In sum, we uncovered no unique instances of compulsory licensing through our literature review.

Figure 1.

Schematic of Literature Review

Compulsory Licensing Outside the United States

Using a broad definition of compulsory license episodes to capture petitions and other types of compulsory licensing requests from any party, we identified only 21 such episodes occurring in any of the 17 included countries outside the United States during our 21‐year observation period (2001‐2021; Table 2a). Of these, eight (38%) took place in Canada, four (19%) each in Italy and South Korea, three (14%) in the United Kingdom, and two (10%) in Germany.

Table 2a.

Compulsory Licensing Episodes in Select High‐Income Countries Outside the United States

Country	Year	Drug	Motivation a	Outcome b	Brief Description of Event
Canada	2001	Ciprofloxacin	N	D	Amid concerns of anthrax bioterrorism, Canada entered negotiations with Apotex to have the company produce ciprofloxacin in spite of Bayer's patent. The goal was to ensure an adequate supply of the antibiotic and a lower price. The deal was ultimately scrapped after Bayer agreed to a lower price.
Canada	2004	ACE inhibitors	G	R	Torpharm and Brantford Chemicals, both subsidiaries of Apotex, requested compulsory licenses from Merck to produce enalapril formulations and lisinopril primarily for export to the United States. Multiple petitions were brought forward, but none resulted in a successful compulsory license.
Canada	2004	Imatinib mesylate	N	R	Essential Inventions, a private nonprofit company, requested the rights to manufacturing and exporting imatinib mesylate to Chile. There was no response from the government.
Canada	2006	Oseltamivir	N	C	Biolyse Pharma sought rights to produce and export oseltamivir to developing countries in preparation for a possible flu outbreak. When Roche declined the request, the government issued a compulsory license.
Canada	2007	TriAvir (HIV combo)	N	C	In collaboration with Médecins Sans Frontières, Apotex committed to producing an antiretroviral combination for export to developing countries but could not secure a compulsory license because no importing country was named on the application (required under the Canadian Patent Act). Rwanda agreed to be the recipient and a license was issued.
Canada	2021	COVID‐19 vaccine	N	P	Biolyse Pharma, a generics manufacturer, publicized in March 2021 its plan to apply for a compulsory license on the Johnson & Johnson COVID‐19 vaccine. They later reached an agreement with the government of Bolivia to export 15 million doses once a license is issued. As part of this process, the company formally requested a voluntary license from the original patent holder.
Canada	2021	COVID‐19 vaccine	N	P	A group of scientific and policy experts wrote to the government requesting that the COVID‐19 vaccine be added to Schedule 1 of the country's Patent Act to allow for a compulsory license and subsequent export to developing countries.
Canada	2021	Various COVID‐19 products	N	P	The People's Vaccine Alliance sent a letter to Canadian prime minister Justin Trudeau urging that all medications and vaccines used for COVID‐19 be made more readily available for export via compulsory licensing.
Germany	2010	Fabrazyme (agalsidase beta)	S	V	Because of Genzyme's manufacturing issues, global supply of fabrazyme was severely limited. Shire petitioned the German courts for a compulsory license to increase availability, but the primary patent owner (Mount Sinai) ultimately agreed to grant a nonexclusive license for European production.
Germany	2016	Isentress (raltegravir)	D	C	Shionogi, which owned a Japanese patent on raltegravir (but did not produce it), filed infringement suits against Merck in Germany and the United Kingdom. A compulsory license was granted and later upheld in a 2017 ruling.
Italy	2005	Imipenem/ cilastatin	G	C	ACS Dobfar, an Italian generic antibiotic manufacturer, requested a license from Merck to produce the drug for export to European countries where the patent had already expired. Authorities granted a compulsory license for production in June 2005.
Italy	2006	Sumatriptan	G	C	Generic manufacturer Fabbrica requested a voluntary license from GSK to export sumatriptan to European countries where the patent had expired. GSK initially refused but then a compulsory license was issued after an investigation by the Italian Competition Authority (ACGM).
Italy	2007	Finasteride	G	C	Similar to previous cases in Italy, Merck declined requests for generic manufacturing but a compulsory license was issued following ACGM investigation.
Italy	2017	Sovaldi (sofosbuvir) and Harvoni	P	P	Ministry of Health Undersecretary Vito de Filippo brought up the possibility of a compulsory license for Gilead's expensive hepatitis C drugs, and the idea was publicly supported by politicians in multiple parties. No action has yet been taken.
South Korea	2002	Imatinib mesylate	P	R	Owing to an impasse in market access negotiations after Novartis rejected the price proposed by South Korean regulators, there was concern that patients may not be able to receive the drug in a timely manner. In response, a group of concerned citizens with expertise in patent law petitioned for a compulsory license.
South Korea	2005	Oseltamivir	N	R	The Korea Food and Drug Administration (KFDA) publicly stated it would consider issuing a compulsory license for the influenza medication (oseltamivir), but ultimately did not act on the proposal.
South Korea	2008	Fuzeon (enfuvirtide)	N	R	The group Intellectual Property Left asked Korean authorities to issue a compulsory license for the HIV medication (fuzeon) since pricing negotiations had failed and it was not being distributed in the country. While the petition was declined, Roche agreed to make the drug available via a compassionate use program.
South Korea	2009	Oseltamivir	N	R	Chong‐kun‐dang Pharmaceutical Corporation sought authorization to produce a generic oseltamivir as a way to increase the supply during the avian flu pandemic. The application was denied.
United Kingdom	2015	Kadcyla (trastuzumab‐emtansine)	P	R	The Coalition for Affordable T‐DM1 (a group of physicians, breast cancer patients, IP experts, and activists) wrote to the secretary of state for health requesting cheaper access to kadcyla through domestic manufacturing, importation, or use of biosimilar versions. The request was refused.
United Kingdom	2018	Perjeta (pertuzumab)	P	R	After the Scottish Medicine Consortium rejected pertuzumab on the basis of its high price (and resulting poor cost‐effectiveness) in December 2016, Just Treatment (a patient‐led organization) wrote to the government requesting that a “Crown use license” be issued. The drug was later approved for NHS funding, but the petition was not acted upon.
United Kingdom	2018	Orkambi	P	D	Just Treatment wrote to the British prime minister and secretary of state for health to consider a compulsory license for orkambi, an expensive cystic fibrosis drug that had not yet been approved for national funding due to failed price negotiations between Vertex and the NHS. Under Secretary of State for Public Health and Primary Care Seema Kennedy stated in parliamentary discussions that the government had “moral obligation” to consider a Crown license. Vertex ultimately agreed to a deal in October 2019.

^a Motivation key: N = public health need, G = generic distribution in other developed country, S =supply issues, D = patent dispute, P = high price.

^b Outcome key: D = discount on drug, R = request declined, C = compulsory license issued, P = pending, V = voluntary license granted.

Just under a quarter (n = 5) of these episodes had high drug prices listed as the motivation for the compulsory license petition, but none of these requests were granted. Compulsory licensing requests by manufacturers seeking rights to export already marketed products outside the country in which the license was requested were similarly common (n = 4). Three of these four petitions resulted in a compulsory license being granted for exporting the drug to other high‐income countries.

The most frequently cited reasons for petitions outside the United States were public health need (n = 11), high price (n = 5), and requests for generic distribution in another high‐income country (n = 4). For instance, ACS Dobfar, an Italian manufacturer of generic antibiotics, requested a voluntary license from Merck to produce imipenem/cilastatin for export to European countries in which the patent had already expired. After Merck declined the request, the Italian competition authority (AGCM) forced Merck to comply via a compulsory license in June 2005, nine months before the drug's patent was scheduled to end in Italy. ²¹ Overall, pharmaceutical companies were responsible for the largest share of compulsory license petitions in this set of countries, requesting nine compulsory licenses (43%), five of which led to the license being granted.

Compulsory licensing was threatened by a national authority only three times. In 2001, Canada negotiated with the manufacturer Apotex to produce ciprofloxacin through the compulsory licensing of Bayer's patent. The government's intent was to stockpile the medicine in case of an anthrax attack, not to interfere with Bayer sales of ciprofloxacin in the context of routine clinical care. Similarly in South Korea, the country's food and drug administration (KFDA) publicly expressed interest in pursuing compulsory licensing for oseltamivir in light of the influenza pandemic. An Italian health secretary also expressed support for the compulsory licensing of expensive Hepatitis C drugs in 2017, but no definitive action was taken.

Nonprofit organizations and patient advocacy groups initiated an additional nine episodes. Governments typically do not act on these groups’ compulsory license petitions in response to high prices, with two exceptions, one of which led to a price discount. In 2018, the British advocacy group Just Treatment asked the government to consider a compulsory license for Orkambi, a costly cystic fibrosis drug that had not yet been made available through the National Health Service (NHS) because of failed price negotiations with its manufacturer, Vertex. In response, a member of Parliament called for a formal debate early in 2019, and with market access negotiations stalled, the company ultimately accepted a discount to become reimbursable by the NHS in October of that year. ²²

The other exception is the aforementioned Canadian ciprofloxacin case. This license, however, did not pertain to national sales of the drug but to export. Moreover, it was not made solely by a nongovernmental organization (NGO), but in collaboration with the pharmaceutical company Apotex, which had already committed to producing the antiretroviral combination drug TriAvir for distribution in Rwanda and other developing countries. ²³

Compulsory Licensing in the United States

Our search yielded 24 distinct compulsory licensing episodes in the United States since 2001 (Table 2b). High drug prices motivated 12 (50%) of all the petitions, representing a markedly greater share than in the sample of countries outside the United States. Six of these requests were initiated by nonprofit organizations and so would not have any role in pricing negotiations. All five brought forward by government actors were in the form of letters from state representatives, senators, or departments of health asking national agencies to consider exercising march‐in rights or issuing compulsory licenses. As an example, US Representative Dennis Kucinich (OH) wrote to Health and Human Services Secretary Michael Leavitt petitioning for a compulsory license for Avastin in February 2006. ²⁴ No license was granted in any of the government‐initiated cases.

Table 2b.

Compulsory Licensing Episodes in the United States

Year	Drug	Motivation a	Outcome b	Brief Description of Event
2001	Ciprofloxacin	N	D	Multiple media reports suggested the US government was considering compulsory licensing of ciprofloxacin in the aftermath of an anthrax scare. Former Department of Health and Human Services (HHS) Secretary Alex Azar publicly stated he was involved in the Bayer negotiations, and a compulsory license was in fact never threatened. Regardless, no license was granted and a price discount was secured instead.
2002	Multiple biologics (anti‐TNFs, IL‐1 inhibitor, neutrophil stimulating factors)	C	C	The Federal Trade Commission (FTC) required Amgen to cede certain IP, particularly in the TNF inhibitor market, to Serono as part of its acquisition of immunex.
2002	Tiazac (diltiazem)	C	C	The FTC required that Biovail divest its diltiazem IP after discovering that the company had illegally acquired a patent for the drug in order to delay the entry of generics.
2004	Norvir (ritonavir)	P	R	The manufacturer significantly raised the price of ritonavir, prompting the nonprofit Essential Inventions to formally request that the government consider a compulsory license to reduce the price and increase patient access to the drug. A license was not granted.
2004	Xalatan (latanoprost)	P	R	Essential Innovations again petitioned for a compulsory license, this time for glaucoma therapy. No license was issued.
2004	Camptosar (irinotecan) and Arixtra (fondaparinux)	C	C	In its acquisition of Aventis, Sanofi was required by the FTC to cede certain IP and ongoing clinical studies to Pfizer and GSK.
2004	Actiq (fentanyl)	C	C	A compulsory license was issued as condition for the merger of Cephalon and Cima labs, which the FTC determined would lead to a monopoly in the market for treatment of breakthrough cancer pain.
2005	Tamiflu (oseltamivir)	N	V	Amid concerns that Roche would not be able to meet the demand for its antiviral therapy during the avian flu epidemic, US Senator Charles Schumer wrote to the company multiple times requesting a licensing agreement. While HHS did not threaten a compulsory license, Roche ultimately agreed to allow select companies to manufacture the drug.
2006	Avastin (bevacizumab)	P	R	US Representative Dennis Kucinich wrote to HHS Secretary Mike Leavitt petitioning for a compulsory license on avastin. A license was not granted.
2010	Fabrazyme (agalsidase beta)	S	R	Genzyme encountered manufacturing challenges that raised concerns about a product shortage. A law firm called for a compulsory license on behalf of affected patients in order to increase supply. The request was formally declined in December 2010.
2012	Norvir (ritonavir)	P	R	A group of organizations including Knowledge Ecology International, Universities Allied for Essential Medicines, and the US Public Interest Research Group petitioned the National Institutes of Health (NIH) to exercise its march‐in rights to bring down the price of the HIV/AIDS therapy. The request was declined.
2012	BenzaClin (clindamycin/benzoyl peroxide)	C	C	A compulsory license was required as a condition for Valeant's acquisition of Dermik Laboratories.
2012	Refissa (tretinoin)	C	C	A compulsory license was required as condition for Valeant's acquisition of Ortho Dermatologics.
2015	Hepatitis C drugs	P	P	Concerned that the high cost of HCV drugs from Gilead and AbbVie was resulting in undertreatment of eligible patients, US Senator Bernie Sanders wrote to the US Department of Veterans Affairs, suggesting compulsory licensing as a mechanism to enable lower pricing.
2016	Xtandi (enzalutamide)	P	R	Biolyse Pharma wrote to the Centers for Medicare & Medicaid Services requesting a compulsory license with the promise that it would provide the drug at a lower price.
2016	Xtandi (enzalutamide)	P	R	Citing the drug's high price relative to other countries, a group of more than 50 nongovernmental organizations petitioned the HHS to issue a compulsory license and grant the previous request from Biolyse Pharma.
2016	No specific drug	P	P	A coalition of more than 50 US Congress members petitioned HHS and the NIH to consider the use of compulsory licensing to curtail rising drug prices.
2017	Zinbryta (daclizumab)	P	P	Knowledge Ecology International wrote to the White House and HHS, requesting that the government force a price reduction by terminating Biogen's exclusive license or exercising its royalty‐free or march‐in rights on the patent.
2017	Synacthen Depot (tetracosactide hexaacetate)	C	C	The FTC determined that Mallinckrodt had illegally obtained the rights to a competitor's drug to maintain its monopoly. In return, the company had to grant a license and pay a fine of $100 million.
2018	Hepatitis C drugs	P	P	The Louisiana Department of Health publicly considered the feasibility of requesting a compulsory license for HCV therapies, asking for input from former FDA Deputy Commissioner Joshua Sharfstein. No evidence of a formal request could be found.
2018	Naloxone	P	P	The Baltimore City Health Department, Public Citizen, and Knowledge Ecology International (KEI) wrote to the White House requesting compulsory licensing of naloxone treatments and delivery systems. No formal response was identified.
2018	Rydapt (midostaurin)	D	P	Noting that the primary patent holder had failed to disclose federal funding as required by law, KEI asked HHS to investigate, suggesting that one option would be for the NIH to take over the patents.
2019	Xtandi (enzalutamide)	P	P	Two patients with prostate cancer petitioned the US government to exercise its “royalty‐free rights” to produce a more affordable version of the drug. In July 2021, a third patient wrote to the Secretary of Defense to support this initial request.
2021	COVID‐19 vaccines	N	P	In May 2021, USTR Ambassador Katherine Tai issued a statement signaling the Biden administration's support of compulsory licensing to improve access to COVID‐19 vaccines outside the United States.

^a Motivation key: N = public health need, G = generic distribution in other developed country, S =supply issues, D = patent dispute, P = high price.

^b Outcome key: D = discount on drug, R = request declined, C = compulsory license issued, P = pending, V = voluntary license granted.

Overall, governmental actors accounted for a much larger proportion of compulsory licensing actions in the United States than in the surveyed high‐income countries, initiating 15 (63%) requests in our sample time period (compared to 14% of other countries). Nonprofit organizations and patient advocacy groups in the United States made up a comparable fraction of petitions relative to their counterparts abroad, citing high cost as their motivation in six of eight cases. Antitrust concerns were the next most frequently stated goal of compulsory license requests (n = 7, 29%) in the United States; these episodes were driven by attempts to avoid pharmaceutical monopolies in therapeutic areas with existing competition, primarily in the form of requirements by the Federal Trade Commission during manufacturers’ mergers and acquisitions.

In all countries, we identified a total of 13 episodes in which a compulsory license was granted: four in the European Union, two in Canada, and the remaining seven in the United States. None of the licenses for countries outside the United States were motivated by high price, nor were any of them initiated by a government entity; instead, all of them were the result of petitions spearheaded or supported by the pharmaceutical companies themselves (as in the ACS Dobfar example). In contrast, all seven licenses granted in the United States were exclusively in response to competition‐related petitions brought forward by regulatory authorities.

Discussion

Although compulsory licensing was designed to ensure access to essential medicines and not to directly impact drug prices, these intentions do not necessarily mean that the threat was not a powerful tool in pricing and market access negotiations. To explore this further, we examined the frequency, motivation, and outcomes of compulsory licensing episodes in the United States and 17 other high‐income countries. We were unable to find support for the claim that other countries threaten or employ compulsory licensing to obtain lower prices for new prescription drugs entering their markets. Rather, we found no episodes of a compulsory license being issued or even credibly threatened during entry negotiations for a new product. We identified only one plausible threat of compulsory licensing related to pricing in the past 20 years, an action related to Canada's efforts to build a stockpile of a Bayer product, not to interfere with the market price of the product. ²⁵

Of the compulsory licenses actually issued, the predominant motivations were to address anticompetitive practices or obtain access for distributors into other markets. Pharmaceutical companies were the most frequent petitioners, and the licenses were typically for products that had already been on the market for long periods of time. The pattern in the United States was similar to that in other countries, although our search strategies were not parallel, and so comparisons should be viewed cautiously.

While it is true that parties outside of government, including patient advocacy groups and other nonprofit organizations, occasionally request compulsory licenses when pharmaceutical firms demand high prices when entering the market, these petitions are generally unsuccessful and thus unlikely to be taken seriously by manufacturers. In fact, to date no requests for a compulsory license originating from a nonprofit or patient advocacy group have been granted. Moreover, our analysis looked at dozens of examples of deadlocked price negotiations between pharmaceutical firms and countries. Even though these often high‐profile discussions are associated with delays in access that can be politically costly to governments, to date none have been resolved by issuing a compulsory license.

For example, both the United Kingdom ²⁶ and France ²⁷ have had highly publicized disagreements with Vertex over the price of Orkambi, the company's novel cystic fibrosis drug. At no point, however, has the French price regulator (CEPS) publicly agreed to pursue a compulsory license. While the possibility was brought up by a minister in the United Kingdom, the country's Department of Health and Social Care instead stood by its “approach [of] urging Vertex to accept NHS England's generous offer,” despite being “aware there may be other avenues open to resolve this issue.” ²⁸ Vertex ultimately acquiesced, but because UK authorities in the past have explicitly rejected the use of compulsory licensing, the legitimate threat of a compulsory license was unlikely to be at play. When declining a 2016 patient advocacy group request for Crown use licensing of the breast cancer therapy Kadcyla, ²⁹ for instance, health ministers explained that “the potential costs involved in doing so . . . are over £1 billion” and that compulsory licenses could “weaken the future incentives for development of new medicines.” ³⁰ Furthermore, British legal experts confirm that compulsory licensing is fundamentally not a mechanism to enable cheaper access to drugs; rather, it is designed to address “emergencies where a particular patented product is not available in the UK at all.” ³¹

Across the pond, a 2015 study that reviewed legal proceedings related to Bayh‐Dole legislation and conducted qualitative interviews of experts in the field came to a similar conclusion about the likelihood of TRIPS flexibilities being used to combat high drug prices in the United States. Although focused on march‐in rights rather than compulsory licensing, the authors suggested that there was “little prospect [the] NIH will ever invoke march‐in rights” and that these policies were “unlikely to serve as a counterweight to lower the prices of medical products.” ³²

Conclusions

Even if compulsory licensing were more commonly employed, the assumption that it would naturally lead to lower prices may not be accurate in the first place. One study examining the effect of compulsory licenses on antiretroviral prices in the developing world found that in 63% of cases, the prices of drugs manufactured through these patent authorizations were higher than the median procurement price. ³³ Further, there are costs associated with executing a compulsory license that may offset potential savings—for instance, royalties must be paid to the patent holder, and a generic manufacturer must be found to produce and market the product.

The fact that compulsory licensing actions are also common in the United States itself suggests that the threat of a compulsory license does not provide a unique advantage to authorities outside the United States in pricing negotiations for new drugs. It also runs counter to the USTR's position of regularly discouraging compulsory licensing at home and abroad. ³⁴

Even when compulsory licensing is threatened or exercised, the majority of actions focus on approved drugs: all but 3 of the 30 episodes in our sample concerned drugs already being marketed in the country where the petition originated. At the time of its compulsory license in Canada, ciprofloxacin had been on the market there for more than a decade. The compulsory license of Merck's imipenem/cilastatin in Italy was similarly issued many years after the company first brought that product to market. As such, these petitions cannot be intended to influence market access and entry‐pricing negotiations.

The current COVID‐19 pandemic has re‐energized public discussion of compulsory licensing, particularly as it relates to vaccines. Beginning in March 2021, for instance, multiple scientific experts and advocacy groups in Canada petitioned the government to exercise compulsory licensing and allow domestic generic manufacturers to export their doses to the developing world. ³⁵ A few months later, the Biden administration voiced support for intellectual property waivers, implying this strategy could improve vaccine access for countries outside the United States now that the “supply for the American people is secured.” ³⁶ These examples underscore our conclusion that compulsory licensing is rarely used as a lever to affect pharmaceutical prices; instead, it is more commonly utilized for its original purpose of improving access to essential medications outside of high‐income countries.

Overall, while the disparities in drug pricing between the United States and the rest of the world are persistent and well established, we were ultimately unable to find evidence supporting the claim that the threat of compulsory licensing plays any meaningful role in price negotiations for new drugs entering markets outside the United States.

Funding/Support: None.

Conflict of Interest Disclosures: All authors completed the ICMJE Form for Disclosure of Potential Conflicts of Interest. Dr. Bach reports personal fees and nonfinancial support from United Rheumatology, personal fees from Foundation Medicine, personal fees from Grail, personal fees from Morgan Stanley, personal fees from NYS Rheumatology Society, personal fees and nonfinancial support from Oppenheimer & Co, personal fees from Cello Health, personal fees, nonfinancial support, and other support from Oncology Analytics, personal fees from Anthem, personal fees from Magellan Health, personal fees and nonfinancial support from Kaiser Permanente Institute for Health Policy, personal fees and nonfinancial support from Congressional Budget Office, personal fees and nonfinancial support from America's Health Insurance Plans, grants from Kaiser Permanente, grants from Arnold Ventures, personal fees and nonfinancial support from Geisinger, personal fees from EQRx, personal fees from Meyer Cancer Center of Weill Cornell Medicine, personal fees from National Pharmaceutical Council, and personal fees from University of New Mexico Comprehensive Cancer Center outside the submitted work.