Dutch Minister to explore possibility of compulsory licenses and pharmacy preparations

The Dutch Minister of Medical Care, Bruno Bruins, announced that he is going to explore the possibility of granting compulsory licenses in order to make pharmaceutical companies lower the prices of certain medicines they offer. During a debate, Bruins said that, although the instrument has not been used in the previous years, this does not mean that the Dutch government will not use this instrument in the future. The Minister emphasized that compulsory licenses are very heavy instruments that can easily disrupt the pharmaceutical market.

Probably, the Minister bases this announcement on a report of the Dutch Council for Public Health and Society in which the Dutch government is recommended to use compulsory licenses as a way to require pharmacists to offer their medicines for a lower price. According to this report, only the threatening effect of a compulsory license will often be enough to force pharmacists to agree upon a more reasonable price. According to the report, the Dutch government both has to ensure that patients are not denied life-saving treatments, and that public funds are not spent on excessively expensive medicines. Only measures such as compulsory licenses can make this happen, says the report.

Several countries already have issued compulsory licenses in the past, including France (in 2004 for diagnostic tests for breast cancer) and Italy (in 2005 for antibiotics produced by Merck).

Articles 8 and 31 of the TRIPS Agreement and article 5A of the Paris Convention for the Protection of Industrial Property permit Member States to grant compulsory licenses. This is however only permitted if the law regulating the granting of compulsory licenses contains enough safeguards, such as that "prior to such use, the proposed user has made efforts to obtain authorization from the right holder on reasonable commercial terms and conditions and that such efforts have not been successful within a reasonable period of time".

In the Dutch Patent Act, the issuing of a compulsory license by the Dutch Minister of Medical Care is regulated in article 57 and 58. According to these articles, the Minister may grant a license under a patent to a person designated by him, if the Minister considers this in the public interest. Before granting a compulsory license, the Minister should have ascertained that the patentee is not willing to grant the license voluntarily and on reasonable terms. Upon request of either the patentee or licensee, a court can fix the remuneration that the licensee has to pay to the patentee.

Bruins not only spoke about compulsory licenses, he also mentioned that pharmacists might start preparing medicines for individual patients. He said that this was something to be investigated by the government as well. However, he emphasized that the Dutch government will not assist pharmacists in legal procedures initiated by patentees that claim that this preparation of medicines by pharmacists infringes patent law. It is conceivable that patentees will start such procedures, as there is no "pharmacist's exemption" included in the Dutch Patent Act. Under a pharmacist's exemption, pharmacists will be exempted from patent infringement. Without the pharmacist's exemption, the likelihood of infringement by pharmacists that prepare a patented medicine is significant. According to the report of the Dutch Council for Public Health and Society a pharmacist's exemption should quickly be included in the Dutch Patent Act, enabling pharmacists to make medicines themselves.