China now carries a big compulsory-licensing stick

Drugmakers can count compulsory licensing among the new pitfalls of China's huge-and-growing drug market. Thanks to amended intellectual property laws, the Chinese government can now force generic drugs onto the market before branded meds lose patent protection.

China isn't alone in this, of course; India recently caused a dust-up by compelling Bayer to license its cancer drug Nexavar to Natco Pharma, which promised to sell its copycat version for $176 per month, compared with Bayer's $5,600 monthly price. The Indian genericsmaker had been petitioning for the compulsory license for years, and soon after it launched its version, Cipla, another domestic drugmaker said it would sell its own copy at an even lower price.

As In the Pipeline points out, Thailand has also exercised its compulsory-licensing muscle on AIDS drugs, and Brazil has used it as a negotiating tool. The idea is sanctioned by the World Trade Organization, to open up access to lifesaving drugs in the event of a national health emergency.

Coming on the heels of recent price-cutting news, however, the Chinese IP amendments add to the dangers of relying on the country's fast-growing drug sales to make up for sluggish growth elsewhere. Big Pharma has been investing hundreds of millions at a time in new Chinese facilities, plus hiring thousands of new sales reps to take their products to the Chinese masses.

Whether China will use the new powers to drive prices lower via negotiation, or actually compel drugmakers to license Chinese-made generics, remains to be seen. And drugmakers can hardly turn away from those investments now--nor would they want to, given the potential sales there--but the payoff looks to be more complex and perhaps less massive than it did a few years ago.

- read the In the Pipeline post
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