OBJECTIVES: This study was carried out to analyze economic impact of the compulsory licensing (CL) policy on four cancer drugs (i.e., docetaxel, lentrozole, erlotinib and imatinib). METHODS: Total direct medical cost was forecasted during next five years based on the Thai government’s perspective if the CL policy would be implemented.  We compared three scenarios were as follows: 1) without CL policy implementation; 2) CL policy implementation on four cancer drugs (i.e., docetaxel, lentrozole, erlotinib and imatinib); and 3) CL policy implementation on three cancer drugs excluding imatinib because a pharmaceutical company proposed that imatinib would be given for free only to cancer patients under universal coverage scheme, if no CL policy on imatinib. Epidemiological data were retrieved from the Burden of Disease Project and National Cancer Institute of Thailand.  The prices of original and generic drugs were obtained from pharmaceutical companies and National Health Security Office, respectively.  A decision tree and Markov model were used to estimate the expected number of patients in Thailand who would need each of those drugs.  Then, the total medical direct cost was calculated by multiplying the expected number of cancer patients for each drug and its price and discounted by 3%.  Probabilistic sensitivity analysis was used to determine the impact of parameter uncertainty.  RESULTS: It was found that within the next five years, the total direct medical cost of three scenarios: 1) without CL policy implementation; 2) CL policy implementation on four cancer drugs; and 3) CL policy implementation on three cancer drugs excluding imatinib were 7,698, 1,403, and 6,414 millions Baht, respectively. CONCLUSIONS: The CL policy implementation on four cancer drugs would help the Thai government save 6295 million Baht in 5-year period.  The results of this study provided evidence for decision-makers about the financial benefit of the compulsory licensing policy in Thailand.