Prominent Senator Proposes Compulsory Licensing of Patented Drugs

            By David S. Harper

Vermont Senator Patrick Leahy, co-chairman of the Intellectual Property Subcommittee of the Senate Judiciary Committee, introduced a bill last week entitled "Life-Saving Medicines Export Act of 2006."  If enacted, the bill would provide for compulsory licensing of patented medicines (including vaccines and diagnostic tests) in the United States.  According to a statement from Sen. Leahy's office, the bill "allows U.S. companies to make low-cost generic versions of patented medicines for export to impoverished nations that face public health crises but cannot produce those life-saving medicines for themselves."

Sen. Leahy's office also released a summary of the bill providing some details of the proposal.  Under the bill, the Director of the U.S. Patent and Trademark Office (USPTO) would be required to issue a compulsory license to U.S. generic drug companies to make and export patented medicines under several conditions, including:

• the generic company must have made efforts to license directly from the patent holder;
• the compulsory license cannot exceed seven years, although it can be extended once;
• re-export of any drugs is prohibited;
• the generic company must pay a royalty to the patent holder, not to exceed 4% of the commercial value of the exported medicine; the royalty rate will be determined  by the Director of the USPTO.

The summary posted on Sen. Leahy’s web site provides no information about reporting requirements to be imposed on the generic drug companies that obtain compulsory licenses.

UPDATE:

• The full text of the bill is available here