EU’s compulsory licensing proposals, patents and crisis preparedness – Some steps in the right direction but more to do for future pandemic preparedness

By Aisling McMahon.

Patents are intellectual property rights (IPRs) which allow rightsholders to stop others using the patented technology – e.g. a medicine – without the rightsholders permission (via a license) for the patent term (usually 20 years). Rightsholders can develop an income stream from the technology, as licenses are granted in return for compensation. However, patents also give rightsholders control over how patented technologies, including elements of diagnostics/medicines/vaccines are accessed, by what states and at what price. Under the international legal system, patents must be granted in all fields of technologies, including for health, and states cannot issue blanket refusals on patents over e.g., all medicines, even for access issues. Patents, and other IPRs can act as barriers to healthcare delivery, as brought into sharp focus during COVID-19, as IPRs enabled COVID-19 health-technologies to be allocated based on private agreements where rightsholders decided which countries gained access first and on what terms.

Proposals around compulsory licensing in the EU  –  key elements and benefits

On 27th April 2023, the European Commission published a proposal for a regulation setting up an EU wide compulsory license (CL) ‘for crisis management’ to alleviate such issues in the EU. A CL allows a state to issue a license for a patented technology – without permission from the rightsholder – provided certain conditions are met. Ordinarily, such CLs must be granted on a state-by-state basis within the EU, and this can be a long and protracted process. The Commission’s proposal, if adopted, would allow for an EU-wide CL in crisis/emergency contexts, which is an important step. It could apply to patents granted, patent applications under consideration, utility models and supplementary protection certificates (article 2). Notably, the proposal under Art 8 requires that the CL shall specify the rights for which the licence is granted or, “where the identification of those rights would significantly delay the granting of the licence, the non-proprietary name of the products which are to be manufactured under the licence”. This is a useful element given the difficulties that can arise in identifying which IPRs apply over emerging technologies.

Alongside this, in its proposed pharmaceutical legislation, the Commission also proposes to allow a suspension of data and marketing exclusivity protections when a CL is issued to “address a public health emergency”(Art 80(4), Proposal for a Directive 2023/192). This is an important proposal as such protections mean that a manufacturer who wished to produce a generic version of, e.g. a medicine, using a CL would be unable to use the original regulatory test data (such as the clinical trial data) from the patented product to support the generic’s approval. This can make it difficult, if not impossible, to achieve timely approval of generics produced under a CL. Such issues have deterred the use of CL in the EU previously, including, deterring the Romanian government’s use of a CL in 2016 for sofosbuvir to treat Hepatitis C. Thus, this aspect of the CL proposal is a vital step in making CLs more effective in health emergencies.

What are the limits of this proposal and what more can be done?

However, the Commission’s proposals around CLs are not without flaws and several issues arise in the IP/health context.

First, the proposal for a Union CL will only apply in EU for a ‘crisis-relevant product’ defined by the proposal as “products or processes that are indispensable for responding to a crisis or emergency or for addressing the impacts of a crisis or emergency in the Union” (Art 3). The term ‘indispensable’ sets a high bar and this may exclude certain products/processes from its remit, depending on how this term is interpreted, if adopted in this form, in future.

Second, a CL may be particularly useful in the health contexts for single molecule medicines and diagnostics which are easier to replicate/reproduce. However, for vaccines, access to trade secret protection and know-how, alongside CL and the suspending of data/marketing exclusivity protection is often vital to ensure more expedient production of vaccines and other complex molecule medicines. Despite this, the Commission proposal for a Union CL does not address this issue.

Third, the Union CL will end at the end of the crisis/emergency (Art 5(b), Art 14) – how this is defined could mean that states lose access to products made under CL after a relatively short period of time or in an abrupt manner – even if the crisis continues at a national level. This may also reduce incentives for generic producers to make products under CL in such cases.

Fourth, the proposal for a Union CL states it is designed only to “be granted exceptionally” and in crisis/emergency contexts (Recital 16). This misses an opportunity to allow for a Union CL to be used in broader contexts if the proposal has adopted a lower threshold. For example, it could have allowed for a Union CL when this is needed in the broader public interest, including where public health access issues arise but the situation is not at the level of a declared Union crisis/emergency.

Fifth, a Union CL can only be used for a crisis affecting the whole Union – it does not appear to apply for an emergency/crisis affecting a specific national state (or several national states). In such contexts, the only avenue for a CL would be for a CL to be applied for in each national EU member state.

Sixth, and relatedly, under the TRIPS framework, CLs can be used by national states in a range of circumstances not confined to a crisis/emergency context. Yet, many states have complex, bureaucratic systems with higher standards than required under the international framework for CLs. As the Union CL applies only in Union crisis/emergency contexts, it is thus, vital that each EU member state would  review their national CL laws to ensure the national process and criteria to apply for a CL in each state is effective and does not adopt criteria that go beyond those required by the international legal framework applicable. Such measures are vital given the increasing costs of medicines, and the potential for opportunity costs arising for public health systems. Moreover, the threat of a CL can be a useful tool to negotiate better voluntary licensing terms; however, this is only effective if the likelihood of an issuance of a CL is plausible which depends on having an effective national CL system.

Finally, seventh, the Commission’s proposal, whilst laudable as a measure to alleviate some of the issues around the use of CL in crisis contexts, is applicable to EU states only. Given this EU focus, this proposal does not address how IPRs, more generally, can affect low-middle income countries’ (LMICs) access to health-technologies. Despite the vast inequities which emerged between high income countries (HICs) and LMICs around access to COVID-19 vaccines, the EU Commission was one of the main blockers of measures proposed by LMICs including the TRIPS waiver aimed at alleviating these. Thus, alongside these proposals on CLs within the EU, it is vital that the EU and other high-income regions, engage fully with the WHO Pandemic Treaty process or other relevant processes, and work together to adopt meaningful measures which enable LMICs to also access vital health-technologies for their populations. Such measures include taking steps to enable technology transfer and sharing of know-how/data etc between HICs and LMICs to enable the scale up of health-technology production within LMICs, to safeguard the ability of LMICs to use CLs where needed, and to alleviate obstacles around the production and export of health-technologies under CL from HICs to LMICs where needed in public health emergency contexts.

Put simply, whilst these EU proposals around CLs take important steps that will alleviate some obstacles around the use of CLs in crisis contexts in the EU, broader measures around IPRs must also be considered for future pandemic preparedness. Crucially, beyond considering how to strengthen CLs in the EU, it is vital that the Commission take active steps at an international level to enable technology transfer with LMICs, and to create a better international system which ensures LMICs can produce and access health-technologies during pandemic contexts. It is critical that we take steps now, to ensure that we do not repeat the vast inequity that IPRs enabled – and which continues – around COVID-19 health-technologies between HICs and LMICs, for when we face the next pandemic.



Author: Aisling McMahon

Affiliations: School of Law and Criminology, National University of Ireland Maynooth, Maynooth, Ireland.

Competing interests:  AM is a member of Access to Medicines Ireland (AMI), a voluntary membership group of Comhlámh. The views expressed here represent the author’s views only, and are not representative of AMI.

Social media accounts of post author(s): @AislingMMcMahon @MaynoothLaw

Funding Declaration: AM gratefully acknowledges the funding by the European Union (ERC, PatentsInHumans, Project No. 101042147). Views and opinions expressed are however those of the author only and do not necessarily reflect those of the European Union or the European Research Council Executive Agency. Neither the European Union nor the granting authority can be held responsible for them.

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