Compulsory or voluntary licensing? India’s strategic dilemma in access to medicines

India faces a critical dilemma in balancing intellectual property rights with public health imperatives through compulsory licensing and voluntary licensing mechanisms under the TRIPS Agreement. Drawing on the country’s experience since the introduction of TRIPS-compliant patent laws in 2005, Sunil Mani assesses the relative effectively of the two licensing frameworks in advancing access to medicines while sustaining incentives for innovation.

Two recent developments have once again brought to the fore the long-standing debate over compulsory licensing (CL) versus voluntary licensing (VL)¹ as mechanisms for ensuring access to affordable medicines in India. The first is the Delhi High Court's dismissal of Roche's appeal against Hyderabad-based Natco Pharma, thereby allowing Natco to market a generic version of Roche's spinal muscular atrophy drug Evrysdi at a price nearly 97% lower than the branded product (Jani and Surendar 2025). The judgment, hailed as a victory for patients and public health advocates, reaffirms the legitimacy of India's patent law provisions that enable generic competition in cases of excessive pricing. The second concerns the ambiguity surrounding India's ability to invoke TRIPS (Agreement on Trade-Related Aspects of Intellectual Property Rights) flexibilities, including CL, under the recently concluded India-United Kingdom Comprehensive Economic and Trade Agreement (CETA). Early interpretations of the agreement suggested that it might constrain India's policy space by prioritising VL over compulsory measures, rekindling anxieties about the erosion of TRIPS-compliant safeguards in bilateral trade deals.

It is in this context that a recent article in The Hindu raised the crucial question of whether VL or CL represents the better pathway for ensuring access to affordable medicines in India under TRIPS. The issue is particularly urgent given that most healthcare costs in India are paid out of pocket, and patented drugs often remain prohibitively expensive for the majority of its 1.4 billion citizens (Dhar and Gopakumar 2025).

Dhar and Gopakumar (2025) argue that CL is the most effective and reliable tool for making medicines affordable, drawing on India's experience of issuing a compulsory license for a life-saving cancer drug. Yet, they also caution that India has been progressively relaxing its use of TRIPS-compliant flexibilities during free trade negotiations, most recently in the India-United Kingdom CETA. In their reading, CETA's preference for VL over CL risks narrowing India's options.

However, a closer examination of CETA reveals that India's rights under TRIPS remain intact. Article 13.5(1), "Affirmation of TRIPS and the Doha Declaration", explicitly recognises each party's rights and obligations under TRIPS, including their commitment to the Doha Declaration on TRIPS and Public Health (Government of India, 2025). Likewise, Article 13.6(2)(a) and (b), "Affirmation of Public Health Flexibilities", reaffirms the right of each party to make full use of TRIPS flexibilities and clarifies that nothing in the agreement prevents a country from taking measures to protect public health (Government of India, 2025, World Intellectual Property Organization (WIPO), 2023). In practice, this means that India's authority to issue compulsory licences continues to be governed by its domestic legislation and TRIPS provisions, unaffected by the new trade pact.

While this clarification should reassure policymakers, Dhar and Gopakumar's intervention serves a valuable purpose: it brings the broader debate over the relative merits of CL and VL back to the centre of India's pharmaceutical policy discourse. Indeed, the contrasting experiences of Natco Pharma's Evrysdi case – arising from a CL-type framework – and the policy ambiguity surrounding CETA underscore a persistent tension between public health imperatives and trade-related obligations.

India's two decades of experience since the introduction of TRIPS-compliant patent laws in 2005 provide a rich basis for reassessing these mechanisms. How effectively have CL and VL advanced access to medicines while sustaining incentives for innovation? And what lessons do recent developments hold for shaping a balanced, forward-looking licensing framework? In the sections that follow, I explore these questions in detail.

Legal underpinnings of compulsory licensing under TRIPS and India’s domestic law

Under TRIPS, CL allows a government to authorise a third party to produce a patented product or use a patented process without the patent holder's consent, subject to specific conditions. This mechanism, outlined in Article 31, is designed to balance intellectual property rights with public interest, particularly for public health (World Trade Organization (WTO), 1994). A government can issue a compulsory license when the patent holder fails to meet public needs, such as providing medicines at affordable prices or in sufficient quantities, for reasons like public health emergencies, non-commercial public use, or addressing anti-competitive practices. The process requires the requesting party first to attempt to negotiate a voluntary license with the patent holder on reasonable terms, except in cases of national emergency or extreme urgency. The license is non-exclusive, non-transferable, and primarily for domestic market supply, with the patent holder receiving "adequate remuneration" based on the economic value of the license. Decisions are subject to judicial review to ensure fairness, and the 2001 Doha Declaration on TRIPS and Public Health clarifies that countries can define their own grounds for issuing compulsory licenses, particularly to ensure access to medicines (WTO, 2001). In practice, a government or authorised entity, such as a generic drug manufacturer, applies for a compulsory license through the national patent office or relevant authority. If approved, the licensee can produce or sell the patented product at a significantly lower cost.

CL offers several merits. It improves access to medicines by enabling the production of affordable generics, as demonstrated in India's 2012 Nexavar case, where the price of a cancer drug dropped by 97% (Natco Pharma Ltd. versus Bayer Corporation, 2012). CL also protects public health by addressing urgent needs, such as during pandemics or for diseases like HIV/AIDS, ensuring life-saving treatments reach more people. The threat of CL can pressure patent holders to offer voluntary licenses or lower prices, as shown by Brazil's strategy for HIV/AIDS drugs (Correa 2006). Additionally, TRIPS allows countries to tailor CL policies to their public health priorities, enhancing sovereignty over health policy.

However, CL has notable demerits. Issuing compulsory licenses can lead to geopolitical backlash, including international criticism and trade pressures, as seen with India's placement on the US Trade Representative's Priority Watch List after the Nexavar case (Office of the US Trade Representative, 2024). Patent holders argue that CL undermine incentives for research and development by reducing potential profits, which may discourage pharmaceutical innovation. The process of issuing a compulsory license requires legal and technical expertise and can be time-consuming, delaying access to medicines. Furthermore, CL may not address all access issues, particularly when supply chains or production capacities are inadequate, as evidenced by the remdesivir shortages in India during the Covid-19 pandemic (Barnagarwala 2021).

The record of voluntary licensing

India's most notable successes in drug access have been achieved through VL. The case of HIV/AIDS treatment is a striking example. Indian firms such as Aurobindo, Cipla, Emcure, Hetero Labs, and Laurus Labs entered VL agreements through the Medicines Patent Pool (MPP), enabling them to manufacture generic versions of antiretroviral medicines such as tenofovir alafenamide (Medicines Patent Pool, 2020). The results were transformative: treatment costs fell from over Rs. 8 lakh annually to less than Rs. 5,000, making therapy accessible to millions of patients.

More recently, during the Covid-19 pandemic, AstraZeneca's VL agreement with the Serum Institute of India enabled the mass production of Covishield at a cost of just Rs. 250 per dose, ensuring widespread and rapid vaccine distribution across the country (WIPO, 2023). These cases demonstrate VL's potential when originator companies are willing to collaborate.

However, VL has its limitations. Gilead's VL programme for sofosbuvir, a hepatitis C medication, allowed select Indian generic manufacturers to produce and supply the drug to over 100 low- and lower-middle-income countries, including India, which helped lower costs in India from around Rs. 30 lakh to Rs. 20,000 per treatment course (Médecins Sans Frontières, 2015). Yet, the programme excluded many middle-income countries, leaving millions without affordable access to treatment. Additionally, India's rejection of Gilead's patent application for sofosbuvir in 2015 further enabled open generic production within the country, amplifying affordability (Médecins Sans Frontières, 2015). Similarly, delays in Gilead's VL of remdesivir during the second wave of Covid-19 in 2021 – despite eventual licenses to Indian firms like Cipla and Hetero – resulted in acute shortages for Indian patients due to scaled-down production after the first wave (Barnagarwala 2021). These gaps reveal the uneven and often discretionary nature of VL arrangements, which can fail precisely when rapid access is most needed.

The role of compulsory licensing

In contrast, CL provides a legal guarantee of access when voluntary options are absent or inadequate. India's most famous case remains the 2012 licence for Bayer's cancer drug Nexavar (sorafenib tosylate). Bayer priced Nexavar at Rs. 2.8 lakh per month, placing it far beyond the reach of most patients. The Patent Controller issued a compulsory license to Natco Pharma, allowing it to sell a generic version for just Rs. 8,800 – a 97% reduction (Natco Pharma Ltd. versus Bayer Corporation, 2012). This decision not only saved lives but demonstrated the potential of CL as a tool of last resort.

However, subsequent attempts show India's reluctance to employ CL aggressively. In 2013, BDR Pharmaceuticals' application for a compulsory license on Bristol-Myers Squibb's leukaemia drug dasatinib was rejected, partly because the applicant had not made sufficient efforts to obtain a voluntary licence from BMS, and BMS had already licensed the drug to Hetero Drugs, albeit at a still prohibitive Rs. 35,000 per month (Application for Compulsory Licence for Dasatinib, 2013). In 2014, discussions around a potential CL for Roche's lung cancer drug erlotinib did not proceed to issuance, as Roche reportedly offered concessions that led to the matter being dropped (Cipla Ltd. Application for Compulsory Licence for Erlotinib, 2014). The pattern is clear: India has used CL only once for a pharmaceutical product, avoided it when a voluntary license existed, and rejected it when originator companies offered partial concessions.

The Nexavar case also exposed the geopolitical consequences of CL. Although upheld by Indian courts, the decision drew strong international criticism and contributed to ongoing scrutiny of India's intellectual property regime, with the country remaining on the US Trade Representative's "Priority Watch List" (a status it has held since before the Nexavar decision) (Office of the US Trade Representative, 2024). This has made successive governments wary of invoking CL, even when public health conditions justify it.

Lessons for policy

India's cautious approach contrasts with countries like Brazil that have repeatedly used CL as a negotiating tool to secure lower drug prices, particularly for HIV/AIDS treatments. Brazil issued a compulsory license for efavirenz in 2007 and has leveraged the credible threat of CL to force pharmaceutical firms to offer better VL terms, striking a balance between cooperation and compulsion (Correa 2006, Ramani and Urias 2018).

For India, the path forward lies in adopting a similarly strategic posture. VL remains an effective first resort, especially through mechanisms like the Medicines Patent Pool, which standardises and expands licensing across developing nations. Yet the option of CL must remain credible. Its very availability strengthens India's bargaining position, deterring companies from imposing unreasonable prices or restrictive licensing terms.

Toward a hybrid framework

India must therefore move towards a hybrid model that combines the strengths of VL and CL. VL should be prioritised for its capacity to expand supply quickly and foster partnerships with global firms. But CL must remain an active instrument, not a dormant one, particularly for drugs treating diseases that disproportionately affect India's population.

To make this approach credible, India should: (i) Maintain the threat of CL as leverage in negotiations. (ii) Strengthen participation in multilateral platforms like the Medicines Patent Pool. (iii) Introduce transparency requirements mandating full disclosure of VL terms to prevent anti-competitive practices. (iv) Use CL selectively but decisively when voluntary options are inadequate.

This comprehensive framework – negotiated access through VL, the deterrent force of CL, multilateral cooperation, and strict transparency – can ensure that innovation and affordability coexist.

Conclusion

India's pharmaceutical policy sits at the intersection of global intellectual property rules, trade negotiations, and the urgent domestic need for affordable healthcare. Its record demonstrates both the promise and limits of VL and CL. While VL has delivered extraordinary breakthroughs in HIV/AIDS and Covid-19 treatment, their uneven application highlights the continued necessity of CL. Conversely, the reluctance to employ CL beyond the Nexavar case reflects India's caution in navigating international pressures.

As India aspires to remain the "pharmacy of the developing world", its experience suggests that no single tool is sufficient. A hybrid approach that pragmatically combines VL and CL, backed by transparency and global cooperation, offers the most sustainable pathway. For millions of Indians, this is not a theoretical debate but a matter of survival – one that demands both innovation and decisive public health action.

Note:

1. A Voluntary License (VL) is a negotiated agreement where a patent holder willingly grants a generic company permission to produce a patented drug, typically for a royalty and with restrictions. In contrast, a Compulsory License (CL) is a government-authorised override of the patent, granted without the patent holder's consent to address public health needs and make medicines affordable. The core distinction is that VL is a consensual commercial deal, while CL is a non-consensual legal tool used as a measure of last resort.