India’s First Compulsory Licensing Order

India’s first compulsory licensing order in the post TRIPS patent era garnered more attention than one might have expected.

The NY Times reported it, as did a host of other renowned papers, journals and periodicals.

KEI (Knowledge Ecology International) has a very useful web page documenting its take on the decision, as also all articles/pieces that have reviewed the decision so far. Jamie Love, the founder of KEI had filed a very potent affidavit before the Controller General of Patents poking several holes in Bayer’s estimated cost of 1.8 billion dollars for its patented cancer drug (Nexavar).

The Hindu ran an excellent editorial on the issue by Ananthakrishnan, where he notes:

“Mere application of the test of reasonable price in a country with a weak social health insurance infrastructure provides a strong argument for compulsory licensing in the case of Nexavar, the patent for which is held by the German multi-national company, Bayer. At present a month’s treatment regime of 120 tablets costs Rs.2.84 lakh, but manufacture under compulsory licensing will slash it to Rs.8,880. The Indian applicant has been granted the licence till the expiry of the patent in 2021.

The use of compulsory licensing is bound to raise the temperature in the pharmaceutical industry and be dubbed a move that will stifle innovation. But that would be ignoring the point that it is perfectly legal, and is in fact provided for in the patents regime to balance public interest and corporate profits.”

I summarised the text of the 63 page order in this piece in the Indian Express and extract the key portions below:

“In August 2011, Natco, an Indian generic manufacturer, had applied for a compulsory licence in respect of Bayer’s patent covering an anticancer drug, sorafenib tosylate, meant for patients with advanced kidney and liver cancer.

A compulsory licence is a legal instrument designed to force intellectual property owners to license out their statutorily granted right to interested third parties capable of manufacturing the patented product at cheaper prices.

….Constituting what many regard as a textbook case for compulsory licensing, Controller General of Patents P.H. Kurian found that all the grounds prescribed in Section 84 of the Indian Patents Act for the issuance of a compulsory licence had been met:

One, Bayer supplied the drug to hardly 2 per cent of approximately 88,000 patients who required the drug. Therefore, the reasonable requirements of the public with respect to the patented drug (Nexavar) were clearly not met.

Two, Bayer’s pricing of the drug was excessive and did not constitute a “reasonably affordable” price. It charged Rs 2.8 lakh for a month’s supply of the drug, whereas Natco was willing to supply the same quantity at Rs 8,800 a month.

Three, since Bayer did not manufacture reasonable quantities of the drug in India, it could not be said to have complied with the “working” requirement under the Indian Patents Act.

…The order marks a watershed in the history of Indian patent law and in many ways represents a “middle path” in the debates surrounding pharmaceutical patents and access to affordable drugs. Patents may now be more palatable to critics, if their worst monopoly effects can be successfully moderated through instruments such as compulsory licensing.

….Although this order marks an important victory for patients and activists who are fighting on their behalf, it is only the beginning. Much more needs to be done, particularly by the Indian government.

For one, the government cannot simply sit back and let innovators and generics slug it out, hoping that lower generic prices would necessarily redress our public health concerns. Illustratively, one simply needs to turn to the fact that Natco’s version of Bayer’s patented drug will sell at Rs 8,800 per month. Given that a sizeable proportion of Indians live below poverty line, how many of our patients can afford even this lower generic price?

The government must step in and take proactive measures to ensure accessible healthcare for all. It should facilitate robust insurance schemes, where health coverage extends to the poorest of the poor. Only then will our right to good health translate from paper to practice for the aam admi.”

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  • Congratulations on the victory! Hopefully the government will prudently consider other drugs as well. Is there a list of drugs somewhere that might be up for consideration next?

  • Hi Nick. Any drug that is not priced reasonably is susceptible to a compulsory licence. and any drug that is not worked (interpreted by the controller as not manufactured in India)., which effectively means that almost 95% of all patented drugs in india are now susceptible to compulsory licenses…

  • Yes, but is there a list of likely suspects that might have a compulsory license against them next? i.e. drugs that are widely viewed as not priced reasonably and that the Indian government would have good reason for prioritizing for public health reasons?

  • Hi Nick,

    this is not a government license in the strict sense (akin to what was issued in Brazil and thailand). rather this application is initiated by a private party (natco) who is statutorily entitled to a license once certain grounds are met. to this extent, the controller is really functioning as a quasi judicial authority. and the next license will simply depend upon whether other generic manufacturers bring forward CL applications. like i said, under this order, 95% of all patented drugs are susceptible—waiting to be applied for….

  • I agree with most of what you have said Shamnad. The poor are anyway not going to benefit from this as for some Rs. 8800/- may be an income for the year! The Government has to ensure that these drugs also reach such poor. At the same time, I wonder where does a poor man from a remote part of the country go for cancer treatment? Definitely not the nearby dispensary. He has to come to a metropolitan city where we have a hospital equipped with the doctors as well as the medicines for treating such patients. And though I have not conducted a research on the availability and number of such hospitals, was wondering if there exists a mechanism where the poor and needy actually get some respite (from the generic drugs). Leave cancer – talk about the other diseases which may be as fatal or life threatening – where is the mechanism? Is encouraging the generic industry (whom we lovingly call copycats, the solution for all our woes?) How will innovation happen? Well, why are we bothered for innovation, let the outsiders innovate, we have our Patents Act to save our skin. We can continue copying. Making demi Gods out of the generic industry may not however be the right choice as they are no philanthrops but also out there to make money.

    Hell, is there a middle path somewhere?

    And well, what is the 'victory' all about? I thought you were neutral in this war!!