Access Denied: Compulsory Licensing and the Structural Limits of Global IP Governance

By Harleen Kaur

In the middle of the COVID-19 pandemic, a Canadian company Biolyse Pharma, sought to manufacture generic COVID-19 vaccines for Bolivia. The effort was ultimately unsuccessful due to a series of bureaucratic requirements under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). This outcome was not the result of inadequate intent or manufacturing capability, but rather reflected the limitations of the international intellectual property governance framework. Despite multiple amendments intended to facilitate access to essential medicines for developing countries over the years, TRIPS continues to present significant practical barriers to developing countries in accessing medicines.

The experience of compulsory licensing under the TRIPS highlights a persistent issue in global governance of IP laws. While international frameworks are designed to allow flexibility for public health emergencies, their structure often makes it difficult to use these provisions in practice. The COVID-19 pandemic demonstrated the gap between policy objectives and implementation. Examining the reasons for the limited effectiveness of compulsory licensing, even after specific reforms, can inform the design of future international agreements on technology, health, and access to essential innovations.

TRIPS Agreement and compulsory licensing powers

The TRIPS Agreement is an international agreement on intellectual property rights that establishes a minimum standards framework for signatory countries. Article 31 of the TRIPS Agreement confers power to Nation States to allow others the use of patents without authorisation of the patent rights holder, as long as the conditions laid down by the article are met. This power of the States is referred to as ‘Compulsory licensing’.

Since it overrides patent rights, this provision can be used in emergency situations where the rights of people trump trade rights, and has been a part of the TRIPS Agreement since its inception in 1995. Generally, negotiations with the patent holder(s) are required before issuing a compulsory license, except in cases of national emergency or other circumstances of extreme urgency or in cases of public non-commercial use. 

Before TRIPS came into force, many developing countries, such as India, already had patent frameworks enacted in a way to protect their social interests. For instance, India did not allow product patents in pharmaceuticals before the enactment of the TRIPS Agreement. This provision allowed India to promote its generic pharmaceutical industry, which provided access to medicines to its population. However, by signing the TRIPS Agreement, India had to allow product patents in pharmaceuticals in addition to process patents. Therefore, after much negotiation, Article 31 was introduced by the TRIPS Agreement to provide some flexibility to developing nations on protecting their public health concerns arising from the need to access medicines.

Inadequacy of the compulsory licensing framework in TRIPS

With time, cracks in the application of Article 31 exception emerged as it was not sufficient for developing countries to access medicines in emergency situations due to cumbersome conditions for compulsory licensing. For instance, Article 31(f) of the TRIPS states that any authorisation under compulsory licensing should be predominantly for the supply of the domestic market. This provision did not take into consideration the global nature of the pharmaceutical industry, where countries like India had a developed manufacturing ability to export drugs to other countries, which did not have such manufacturing capabilities. Also, article 31(f) of the TRIPS Agreement did not clarify the extent to which compulsory licensing for export of drugs was allowed, causing public health issues in States without robust pharmaceutical manufacturing capabilities. For example, the USA threatened trade sanctions against South Africa in 1997 due to a provision that allowed parallel importing of drugs under a compulsory license, despite the provisions being TRIPS-compliant. In addition, Article 31(h) of the TRIPS Agreement requires States to ensure that patent rights’ holders shall be paid adequate remuneration for compulsory licensing, increasing the burden of States to establish the meaning of ‘adequate’ remuneration in case of emergencies.

Attempts at reform

The WTO Ministerial Conference adopted the Doha Declaration on the TRIPS Agreement and Public Health in 2001 to relieve some of the tensions that existed in Article 31. This declaration took a long time to be enforced as a formal amendment of the TRIPS, with the protocol of the Doha Declaration being entered into force on January 23, 2017, after two-thirds of the WTO members accepted it.

There are three important changes brought to the Article 31(f) framework by way of this amendment: 

• A Nation-State may export generic pharmaceutical products under a compulsory license to meet the needs of other countries
• To avoid double payment, it was clarified that the importing States do not have to remunerate manufacturers of exporting countries under the compulsory licensing
• Exporting constraints are waived for developing and least-developed countries so that they can export within a regional trade agreement

Continuing hardships in using this flexibility

However, as seen during the COVID-19 pandemic, these changes introduced further procedural difficulties and impracticalities in the functioning of the compulsory licensing framework. For instance, the importing country is required to demonstrate its own insufficient manufacturing capacity before importing a patented drug.

There are two main issues in these amendments:

• high administrative burden on resource-poor countries before using exceptions, and 

• conflict between the amended TRIPS provisions and other bilateral and free trade agreements, such as international data exclusivity frameworks

Therefore, while the TRIPS Amendment aimed to streamline the process for granting compulsory licenses for the export of pharmaceutical products to countries with insufficient manufacturing capacity, utilising these flexibilities is extremely tough for countries that need such flexibilities the most.

Conclusion

The experience with compulsory licensing under TRIPS highlights the limitations of international governance frameworks that claim to offer flexibility but, in practice, introduce procedural barriers that restrict their use. The implementation of the Doha Declaration reforms, which took sixteen years, resulted in additional administrative requirements that undermined their intended purpose. The case of Biolyse Pharma, which was unable to access Canada's compulsory licensing process during the pandemic, illustrates that formal rights are insufficient without effective mechanisms for their exercise.

The TRIPS experience is instructive for future policy design in the context of health crises and access to essential technologies, including vaccines and climate-related solutions. It is important to assess whether international agreements provide genuine flexibility in emergencies, or whether they maintain existing power structures under the guise of balance. This issue extends beyond pharmaceuticals to the governance of any technology where equity and innovation are at stake. Achieving real flexibility requires not only formal amendments but also the development of systems that function effectively for countries with limited resources and capacity during emergencies.