The Economist reports that countries with major health problems are overruling international patents and switching to locally made generic copies at a fraction of the price link here. "Last month the World Health Organisation passed a resolution supporting compulsory licensing. America objected vociferously, but other rich countries supported the motion." Countries invoking compulsory licensing include Thailand and Brazil, with India, Malaysia and Kenya, making noises about doing so. The Economist notes that these are not poverty stricken countries, to which the generic exceptions are supposed to be limited.

Drug companies are upset, arguing that while compulsory licensing is legal, TRIPS rules allow it only under limited circumstances, such as national health emergencies, and only after they try and fail to negotiate prices with firms.

Benefitting from compulsory licensing is the generic-drugs industry (as well as the consumer, at least in the short run, depending on whether it reduces research on diseases afflicting poor countries). Canada encourages domestic firms to produce copycat drugs for precisely this reason. But their costs are so high that such exports cannot hope to compete with the cheaper pills produced by India. Countries unable to produce generics competitively are allowed to import them.

This story isn't over. Big Pharma is so profitable that it is hard to shed tears for it. Moreover, they haven't been all that eager to develop drugs for poor countries' diseases to date. They have instead been shamed into supplying poor countries when they have already developed the drug for the rich--like AIDS drugs. But the world would be unwise to wait for it to develop drugs for diseases confined to poor areas. Another way has to be found, like the Gates and Buffett initiative.