Last week, India issued its first “compulsory licence”. The licence allowed the mid-sized domestic pharmaceutical firm Natco to manufacture and sell a generic version of a patent-protected cancer medicine from Germany-based Bayer at a price that is 97 per cent lower than that of the innovator’s brand. Following the March 9 order from the Controller General of Patents, Designs and Trademarks, Natco’s version of the liver and renal cancer drug sorafenib tosylate will now be available for Rs 8,880 to Indian patients, as an alternative to Bayer’s brand Nexavar, which costs Rs 2,84,428 (both for a month’s treatment).
The significance of the decision, however, is not limited to making one particular drug reasonably affordable in the domestic market. The issuance of the compulsory licence (CL) has put India on a list of several countries, developing and developed, that have used or threatened to use the CL provisions of their national patent laws to drive down the prices of patented medicines. With India planning to take baby steps towards universal access to free essential medicines, CL has the potential to become one of the mechanisms that can ensure the availability and affordability of drugs in the future. Under Indian patent law, which was amended to comply with the World Trade Organisation’s TRIPS (Trade Related Aspects of Intellectual Property Rights) Agreement in 2005, CLs can be issued to any capable third party to manufacture and supply a patent-protected product without the consent of the patent owner. CLs can be considered if it is reasonably proved that the reasonable requirements of the public with respect to the patented invention have not been satisfied, if the product is not affordable, and if the patented invention “has not worked” in the territory of India. The Indian Patent Office took the view that all three conditions were satisfied in the case of Bayer’s product. The medicine was reaching only two per cent of the patient population; the price was prohibitively high; and the medicine was not manufactured in India, suggesting that mere importation may not amount to saying that a patent’s status is “working” within India’s geographical territory.
The ramifications of this interpretation are huge, as 90 per cent of patent-protected products of foreign pharma multinationals available in India are imported. Independent studies have pointed out that many of them, especially the ones that have monopoly power in the market, are priced very high. All such products can now be susceptible to Natco-style challenges in India. It provides a business opportunity to domestic firms, such as Natco; there are at least three other such CL challenges being planned by Indian companies against patent-protected drugs. Bayer is expected to challenge the CL award at the Intellectual Property Appellate Board soon, and so this verdict may not be the last word on the subject. Still, for the Bayers of the world, the patent office’s decision has signalled the need for country-specific pricing structures and negotiated supply arrangements for innovative drugs to which they hold patents in India.