China has proposed compulsory licensing of drugs:

China has overhauled parts of its intellectual property laws to allow its drug makers to make cheap copies of medicines still under patent protection in an initiative likely to unnerve foreign pharmaceutical companies.

The Chinese move, outlined in documents posted on its patent law office website, comes within months of a similar move by India to effectively end the monopoly on an expensive cancer drug made by Bayer AG by issuing its first so-called “compulsory license”.

The action by China will ring alarm bells in Big Pharma, since the country is a vital growth market at a time when sales in Western countries are flagging.

The amended Chinese patent law allows Beijing to issue compulsory licenses to eligible companies to produce generic versions of patented drugs during state emergencies, or unusual circumstances, or in the interests of the public.

For “reasons of public health”, eligible drug makers can also ask to export these medicines to other countries, including members of the World Trade Organisation.

Compulsory licenses are available to nations to issue under WTO rules in certain cases where life-saving treatments are unaffordable.

“The revised version of Measures for the Compulsory Licensing for Patent Implementation came into effect from May 1, 2012,” China’s State Intellectual Property Office said in a faxed statement to Reuters.

The changes can be found on the website of China’s State Intellectual Property Office at http://link.reuters.com/tus68s

Here is the Google Translate link.

Number one on the compulsory licensing hit parade will apparently be the AIDS anti-viral tenofovir.

One significant part of this is that compulsory licensing is not covered by the ban on drug re-importation, because they weren’t exported from the US.

WTO rules would seem to indicate that, absent an extension of the law to cover compulsory licenses, that they would be legal in the US.

Then again, the phrase, “Drugs made in China,” gives me less confidence than, for example, French manners or British cooking,.

H/t Naked Capitalism.