In a first-of-its-kind move, a government agency has invoked the compulsory licensing (CL) provision of the Patents Act to allow Hyderabad-based Natco Pharma to sell its generic version of German multinational Bayer’s patent-protected cancer medicine, Nexavar (sorafenib tosylate), at a fraction of the cost of the latter drug in India.
The Controller General of Patents, Designs and Trademarks has asked Natco to manufacture and sell its sorafenib at Rs 8,880 (for a month’s treatment), after paying six per cent royalty on the net sales to Bayer on a quarterly basis. Bayer’s Nexavar costs Rs 284,428 for a month’s dose. The CL is valid till the patent for Nexavar expires in 2021.
The order also wants Natco to supply the medicine free of cost to at least 600 needy and deserving patients every year. The CL, however, restricts Natco from exporting or outsourcing the production of the medicine. It also gives strict instructions to Natco to distinguish its product from Bayer’s product.
Incidentally, Natco and domestic drug major Cipla have challenged the validity of the Nexavar patent in a separate proceeding before the high court here, and also before the Intellectual Property Appellate Board at Chennai.
While health advocacy groups and Natco hailed the verdict, Bayer expressed disappointment and hinted at appeal options. “We will evaluate our options to further defend our intellectual property rights in India,” a Bayer spokesperson stated in an emailed response.
“Nexavar has a Rs 20-25 crore market in India. The entry of Natco makes it available to patients at a fraction of the original price, besides expanding the reach,” said M Adinarayana, company secretary of Natco.
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Reasons
According to the decision, made public today, the CL was granted after it was found that Bayer supplied the drug to only two per cent of the patient population, thereby not fulfilling the reasonable requirements of the public. The patent office decided Bayer’s pricing of the drug was excessive and did not constitute a reasonably affordable price. The order also questioned the “working” status of the patent, as Bayer did not manufacture the product, but merely imported it for marketing in the country.
The Patents Act allows such CL applications after three years of the grant of patent, if reasonable requirements of the public with respect to the patented invention have not been satisfied; the patented invention is not available to the public at a reasonably affordable price or if the patented invention has not worked in Indian territory.
In this case, India had granted patent protection to Nexavar in 2008, enabling Natco to initiate CL proceedings three years later. Natco said at least 100,000 people suffer from different types of renal cell carcinoma and hepatic cell carcinoma (the types of cancer for which sorafenib is prescribed) in India. Further, every year, 30,000 new patients are diagnosed with both these diseases and nearly 24,000 patients die every year in the country.
Implications
Regarding the observations on the working status of a patent, intellectual property expert Shamnad Basheer said this part is likely to prove controversial, since almost 90 per cent of all patent-protected pharmaceutical products are imported. “Therefore, under the terms of this order, all these drugs are now susceptible to compulsory licences in India”, Basheer opined.
He added the patent controller convincingly argues (in the order) that the Patents Act endorses a "local" working provision and such a provision is compatible with TRIPS (the World Trade Organisation agreement).
“This decision serves as a warning that when drug companies are price-gouging and limiting the availability, there is a consequence. The patent office can and will end monopoly powers to ensure access to important medicines,” stated Michelle Childs, director of policy/advocacy at the Access Campaign of the non-government Medecins Sans Frontieres. “If this precedent is applied to other drugs and expanded to include exports, it would have a direct impact on affordability of medicines used by MSF and give a real boost to accessing the drugs that are critically needed in countries where we work.”
Basheer noted that if the other petition before the high court in Delhi and the IPAB in chennai succeed, “then the compulsory license by Natco becomes infructuous. All generics are then free to manufacture this drug without paying any royalty to Bayer”. India had introduced compulsory licensing provisions in the Patent Act amendments made in 2005. The government had never exercised the provisions, though it had discussed the possibilities of allowing local manufacturing of a bird flu drug through CL in the wake of the epidemic threat some years earlier.