In 2024, the concept of compulsory licensing remains a critical aspect of the pharmaceutical industry, providing a mechanism to balance patent rights and public health needs. This process allows governments to license companies or individuals other than the patent owner to produce and sell patented pharmaceuticals, particularly in public health emergencies.

Compulsory licensing has gained attention for its role in making essential medicines more accessible, especially in low-income and developing countries. A notable example occurred during the COVID-19 pandemic when countries like Canada, Germany, Ecuador, and Chile amended their laws to facilitate the use of compulsory licenses for COVID-19 treatments. U.S. drug maker AbbVie notably decided not to enforce patent rights for its antiretroviral drug Kaletra globally during the outbreak​​​​.

The World Trade Organization’s (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) sets the framework for compulsory licensing. It allows WTO members to make limited exceptions to patent rights under specific conditions, such as national emergencies or extreme urgency. Notably, TRIPS does not specify the reasons justifying compulsory licensing, leaving it to individual countries to determine. It mandates that patent holders should receive adequate remuneration, considering the economic value of the authorization​​.

One significant amendment to TRIPS, effective since 2017, allows countries lacking pharmaceutical manufacturing capacities to import drugs produced under compulsory licenses from other countries.

This amendment was a response to the challenges faced by several developing nations in accessing expensive patented medicines​​.

Different countries have adopted varied approaches to compulsory licensing.

In India, for instance, the use of compulsory licensing is considered a tool to ensure that lifesaving drugs are available at affordable prices. In contrast, in the United States, while the legal framework for compulsory licensing exists, it has rarely been used, reflecting a different balance between pharmaceutical innovation and public health needs.

Compulsory licensing raises debates regarding its impact on pharmaceutical innovation. Proponents argue that it is essential for addressing public health crises, especially in poorer nations. Critics, however, claim it undermines the incentive for pharmaceutical companies to invest in new drug development due to the erosion of monopoly rights granted by patents.

In conclusion, compulsory licensing in the pharmaceutical industry presents a complex landscape. While it is a crucial tool for addressing public health emergencies and ensuring access to essential medicines, it also brings to the fore the ongoing debate between protecting intellectual property rights and meeting public health needs. As the global health landscape evolves, so will the role and application of compulsory licensing in the pharmaceutical sector.