Previously over at CNBC, in a past weekly column at Asia Times, and here at AHCB, I have written about the compulsory licensing regime China has adopted. Given India’s March 2012 compulsory license of Bayer’s Nexavar, many have wondered when China will do something similar. Right now what is known is only that China has moved forward to adopt a Trade Related Aspects of Intellectual Rights (TRIPS) protocol that would make it possible for compulsory licenses like those India has enacted to occur in China. Conjecture over whether China intends to act on the possibility of compulsory licensing is, at least thus far, just that.
Because China has just as much of a problem paying for healthcare as does India, or other emerging economies who have found compulsory licenses necessary, the question of why Beijing has not acted more forcefully is open to interpretation. This week, Yanzhong Huang at the Council on Foreign Relations posted an update on the compulsory license situation, where he added this comment I found particularly insightful:
“Surprisingly, thus far China has not officially used the flexibility in the TRIPS regime to produce low cost generic version of patented drugs for the benefit of its own population. It even prohibits the marketing in China of Indian made generic drugs. In June of this year, a Chinese newspaper accused the government of pursuing a series of policy measures in pricing, procurement, and reimbursement that had the effect of ‘protecting foreign firms and suppressing domestic firms.’ In a recent conversation I had with a senior Chinese government official, I was told that the Ministry of Health did not have strong incentives to push for issuing compulsory licenses because it did not want to scare off the pharmaceutical related foreign direct investment in China. Instead, the Ministry prefers directly and quietly negotiating with Big Pharma for price discounts.”
Yanzhong’s analysis aligns with the objectives the recent McKinsey report on China’s healthcare reforms also point towards, namely that China is extremely eager to attract foreign investment into its life science industries. As a consequence of this national economic development goal, Beijing is going to be very careful not to send the message to large multinational pharmaceutical companies that it intends to create market access issues, mandatory technology transfer, or compulsory licenses. While ultimately each of these areas could prove to be problematic for pharma, in the short term China’s healthcare reforms are going to be precariously balanced against the country’s desire to further incentivize the localization of drug discovery, commercialization and manufacturing. As Yanzhong adds, “India’s move in March may make its northern neighbor a more attractive destination for bio-pharmaceutical R&D investments. In a nutshell, don’t expect China to pull the trigger on compulsory licensing anytime soon.” If he is right, China’s economic development strategy is going to lead the way, an insight that should help MNC pharma companies think about their own negotiating position with the MOH.
By: Benjamin Shobert, ,
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