The compulsory licensing anomaly

 As of now, the Uruguay Round agreement permits too much discretion to governments on compulsory licensing, with "public interest" a deliciously vague expression. As a second-best solution, this needs to be disciplined. The powers granted for public non-commercial use are too broad and there are no guidelines on compensation and royalty payments. While the TRIPS agreement lays down a framework, it is unrealistic to expect that everything should be laid down in such an agreement. However, too much discretion is also undesirable as it leads to arbitrariness. If there is one lesson that emerges from the development experience of developing countries, it is that the costs of arbitrary government decision-making can be devastating. The market is inherently superior. While this is a message that extends to all sectors, it is particularly true of the pharmaceutical sector. Hence a review of TRIPS is in order.