Weiteres Forschungsprojekt
Immaterialgüter- und Wettbewerbsrecht

Voluntary Licensing for Life-Saving Drugs: Innovative Access Oriented Buisness Model or Diluting Trips Flexibilities?

The study will evaluate key voluntary licenses negotiated between the innovator companies and the generics for blockbuster HIV and Hepatitis–C drugs from the standpoint of competition law and dilution of TRIPS flexibilities.

Last Update: 04.09.17

Pharmaceutical patent licensing between innovator companies and generics has always been looked with skepticism both by industry experts and healthcare advocates. This is primarily due to the fact that patent licensing can be used to expand the monopoly right granted to the patent holder and can easily be disguised as a mutually beneficial business model for licensor, licensee and public at large. Traditionally, the generics would either wait for the term of the patent to expire or challenge the validity of the patent in order to introduce a generic version of the drug into the market. However, this practice is now evolving in favor of voluntary licenses (VLs). Within the context of pharmaceutical industry, voluntary licenses are granted by the innovator drug companies to the generic manufactures in lieu of royalty payments, giving them the right to manufacture, market and distribute the drugs without infringing the innovator company’s patent.  For many HIV and Hepatitis-C blockbuster drugs, the innovator companies have signed non-exclusive licenses with numerous Indian generics to facilitate early entry of drugs in developing countries at an affordable price. The generics, instead of utilizing the TRIPS flexibilities for challenging the grant of the patent or filing for a compulsory license, perceive VLs as a preferable business model, giving them early access to the markets and an escape from engaging in expensive litigations. On the other hand, the originator drugs companies can control the manufacturing and distribution of the drug and avoid the risk of patent invalidation by the generics through patent oppositions and litigations. The licenses are negotiated either bilaterally amongst the generics and innovator companies or more transparently through an aid of a third party such as Medicines Patent Pool. At the outset, voluntary licenses seem to be the most effective solution for access to medicines in the middle and lower income countries and also propose a win-win situation for both the innovator drug companies as well as the generics. However, a closer look at the terms and conditions of the clauses governing the licenses needs to be speculated. Although VL’s might ease early access to essential medicines, it can be mischievously used to settle pre-grant oppositions which ultimately deters competition and undermine safeguards in patent laws designed to prevent non-meritorious patents being granted. Also, by restricting the geographical scope of the license and keeping the more lucrative high burden of disease countries to itself, the originator companies are trying to segment the market which does not lead to universal access to medicines in all middle income countries. The study will evaluate these licenses from the standpoint of competition law and dilution of TRIPS flexibilities and identify the plausible repercussions of the changing business model.


Project Manager

Nisha Gera

Main Areas of Research

Globale Wettbewerbsordnung