Compulsory Licensing in Turkey: Navigating Public Health Priorities and Intellectual Property Challenges for Foreign Pharmaceutical Companies

Introduction

Compulsory licensing allows governments to authorize the use of a patented product or process without the consent of the patent holder, typically for reasons related to public health, national emergencies, or anti-competitive practices. Although this mechanism ensures access to essential medicines, it raises concerns for foreign pharmaceutical companies that rely on patent protection for market exclusivity and profitability. This article explores the legal framework of compulsory licensing in Turkey, examines the challenges foreign pharmaceutical companies encounter, and proposes adaptation strategies.

1. Legal Framework for Compulsory Licensing in Turkey

1. Industrial Property Law (Law No. 6769)
   • The Industrial Property Law of 2017 governs patents and includes provisions for compulsory licensing. A license can be issued if:
     • The patent has not been used within three years from its grant.
     • There is an urgent public need (e.g., pandemics).
     • A patented product is not sufficiently available to the public at reasonable prices.
   • Turkey’s legislation aligns with the TRIPS Agreement (Trade-Related Aspects of Intellectual Property Rights), which permits compulsory licensing under specific conditions.
2. Scope and Duration of Licenses
   • Compulsory licenses in Turkey are non-exclusive and limited to the extent necessary to meet the public need. Patent holders are entitled to reasonable compensation, though it is often lower than the market value.

2. Challenges for Foreign Pharmaceutical Companies

1. Loss of Market Exclusivity
   • Compulsory licensing undermines the exclusivity period granted by patents, reducing the ability of companies to recoup investments made in research and development (R&D). This makes the Turkish market less attractive for launching innovative drugs.
2. Uncertainty and Risk Management
   • The possibility of compulsory licensing introduces uncertainty into market planning and business strategies. Companies may need to reconsider pricing models or delay product launches to manage risks.
3. Impact on Intellectual Property Rights (IPR)
   • While the TRIPS Agreement provides legal grounds for compulsory licensing, it also emphasizes balance between public health and IPR. In practice, the enforcement of compulsory licensing can create tensions between Turkey and foreign investors.
4. Reputation and Brand Value Risks
   • Pharmaceutical companies that contest compulsory licensing risk negative publicity, as public sentiment may align with governments prioritizing affordable healthcare over corporate profits.

3. Adaptation Strategies for Foreign Pharmaceutical Companies

1. Local Partnerships and Technology Transfers
   • Collaborating with local manufacturers through technology transfer agreements can mitigate the impact of compulsory licensing. This approach helps foreign companies maintain some control over production and build goodwill with the government.
2. Tiered Pricing Models
   • Adopting tiered pricing strategies, where drugs are sold at different prices across regions, can reduce the likelihood of compulsory licensing by ensuring affordable access.
3. Monitoring Legal and Regulatory Changes
   • Foreign firms should monitor policy developments closely and engage with government authorities and industry associations to influence public health policies proactively.
4. Leveraging International Dispute Mechanisms
   • Companies can use international trade agreements and arbitration frameworks, such as the WTO dispute settlement mechanism, to challenge decisions that disproportionately affect their intellectual property rights.

4. Legal Remedies and Dispute Resolution

1. Administrative and Judicial Appeals
   • Companies can appeal compulsory licensing decisions through administrative channels or Turkish courts. While the courts may offer relief, litigation can be lengthy and complex.
2. International Arbitration
   • If a licensing decision violates bilateral investment treaties (BITs), foreign companies can seek remedies through international arbitration. Awards from arbitration tribunals are enforceable under the New York Convention.

5. Conclusion

Compulsory licensing presents both opportunities and challenges for foreign pharmaceutical companies operating in Turkey. While the mechanism ensures access to essential medicines, it disrupts the patent-based business model that drives innovation in the pharmaceutical industry. Foreign firms must adopt flexible strategies, such as local partnerships and tiered pricing, to mitigate risks. Additionally, ongoing regulatory reforms and balanced enforcement practices are crucial to maintaining Turkey’s attractiveness as a destination for pharmaceutical investment.