Practices against fair competition in the pharmaceutical sector have emerged as controversial issues in recent years. The pharmaceutical sector is highly regulated, driven by R&D, and very dependent on patent protection.
Competition law is about competition and consumer benefits in general. The healthcare issue is sensitive in most part of the world. The balance between intellectual property law and healthcare costs is attained through compulsory licensing provisions. The compulsory licensing provision is considered as procompetitive.
The pharmaceutical market usually has two kinds of competition:
• Competition among different brand-name drugs designed to treat the
same disease condition and
• Competition from generic manufacturers of drugs that are equivalent to
branded drugs that have already had success in the marketplace.
Competition from generic drugs is a desirable policy objective as it typically brings substantial savings to pharmaceutical buyers. However, it should be balanced against the incentives brand manufacturers need to invest in developing innovative new products. Competition between branded and generic pharmaceutical manufacturers can provide consumers with substantial savings.
However, Generic entry into pharmaceutical markets raises a number of important questions and challenges for competition policy. The generic product entry into the market can reduce prices and thereby benefit final consumers. However, the desirability of the price reductions pursuant to generic entry must be considered in light of the need to maintain incentives in the pharmaceutical industry for development of new drugs and continued investment in the improvement of mature drugs.
Compulsory licensing is also considered as antitrust remedy as it is against the exorbitant pricing by a patent owner.
The abuse of IPR is a very reasonable likelihood where an enterprise has its rights protected under Intellectual Property (IP) laws. The monopoly protected by IPRs is though permissible under laws but the fact remains that it is very much prone to abuse. The enterprises are often tempted to indulge in to anticompetitive and exclusionary practices and they try to extend their monopoly into areas where they do not have rights protected by IPRs. Specifically in pharmaceutical area, the issues are sensitive since the core products concerned are related to human beings and their health. In 21st century, the cost of healthcare and the related issues are hotly debated on moral grounds. The very basic question is that should a patient be deprived of a medicine only because the drug is patented and the price for the same is exorbitant? The regulators have tried to find a balance between intellectual property rights in pharmaceutical area and the affordability of drugs by a mechanism through compulsory licensing.
A compulsory license, also known as statutory license or mandatory collective management, provides that the owner of a patent or copyright licenses the use of their rights against payment either set by law or determined through some form of arbitration. In essence, under a compulsory license, an individual or company seeking to use another's intellectual property can do so without seeking the rights
holder's consent, and pays the rights holder a set fee for the license.