Ecuador issues a compulsory license on abacavir/lamivudine on 12 November 2012

On 12 November 2012, Ecuador issued a compulsory license on abacavir/lamivudine. (attached here) This follows the issuance of Ecuador’s first compulsory license in 2009 on ritonavir/lopinavir. In a press release issued by Ecuador’s Institute of Intellectual Property, Ecuador noted that compulsory licenses are an integral component of international trade rules that increase access to medicines by helping countries to meet the United Nations Millenium Development Goals:

Las licencias obligatorias son un componente integral de las normas de propiedad intelectual, son la clave actualmente para impulsar el acceso general a los medicamentos. Además las licencias obligatorias son importantes para ayudar a los países que cumplan los objetivos de Desarrollo del Milenio para las Naciones Unidas.

Ecuador noted that a box of 30 pills of abacavir/lamivudine would retail in Ecuador at $753 per month; thus a year’s course of treatment of abacavir/lamivudine would be $9,036. Ecuador’s compulsory licensing order noted that in the United States, a box of 30 pills of abacavir/lamivudine cost $745 or $24.83 per pill. Ecuador granted a compulsory license on abacavir/lamivudine to Acroxmax, an Ecuadorean manufacturer. Through the issuance of this compulsory license, Ecuador endeavors to reduce the cost of abacavir/lamivudine by 75%. In determining the royalty rate, Ecuador use the 2005 WHO/UNDP Tiered royalty method (TRM) to set the royalty, which was calculated as 11.7 cents per capsule.

KEI Comment: Ecuador continues to lead on the implementation of TRIPS flexibilities by granting compulsory licenses on life saving drugs. This is the second time Ecuador has used the tiered royalty method to set royalties. This approach takes the average US pharmaceutical drug royalty, based upon the US price and assuming a 5 percent average royalty, and then reduces the amount of the royalty per capsule, to reflect the difference in relative per capita nominal incomes.