A new research paper in Health Affairs suggests that the use of compulsory licenses may not lead to cost savings, when compared with voluntary negotiations.
Compulsory licensing (CL) allows low-income countries to break innovator patents and accelerate cheap alternatives, either produced locally or imported. In some cases the price cuts of CL can be substantial, notably in Thailand, where key medicines dropped to about 10% of the original price.
But researchers (including Amir Attaran a contributor to this site) at Universities of Ottawa and Denver demonstrate that negotiations of companies with foreign governments and multilateral and bilateral donors was more efficient at lowering prices.
The paper does not analyze the quality of the drugs actually procured, but it is instructive that in only 2 of 13 cases where CL was used for local production was the price cheaper than would have been delivered by negotiation. And some of the companies, notably in Indonesia and Equador that produced as a result of CL have dubious quality records, according to local experts I spoke with.
Of course, CL remains a legitimate tactic for emerging nations when companies remain intransigent in tiering their prices for lower incomes, but it should always be a last result. The price of drugs will probably be worse, and the quality less likely to be good either.