Natco to make copy of patented Bayer drug

India used the compulsory licensing provision under its patents law for the first time to make the patented cancer drug Nexavar available at affordable prices to curb the mounting cost of drugs. The permission was granted by the Patent Controller of India, under the compulsory licensing provision of the amended Indian Patents Act (2005).

The grant of the licence by the Controller-General of Patents, Designs and Trade Marks to Natco Pharma for manufacture of the drug Sorafenib Tosylate (Nexavar) to treat liver and kidney cancer is a landmark event, consistent with the test of public interest that governs such a measure. Under Section 84 of the Indian Patents Act, 1970, any person can make an application to the Controller for a compulsory licence after the expiry of three years from the date of sealing of the patent, on the following grounds — non-fulfilment of reasonable requirements of the public, or non-availability of the invention to the public at a reasonable price. The Trade-Related Aspects of Intellectual Property Rights (TRIPS) and the Doha Declaration provide for compulsory licensing in specified circumstances, including concerns on public health or public interest.

Reasons for granting License

In his order, Mr. Kurian, Controller-General, said that Natco’s application met three key conditions for granting compulsory licences.

Ø The German firm, Bayer, was able to supply its drugs to only 2 per cent of the country’s patient population and did not meet the “reasonable public criteria” requirement.

Ø  Its price was not “reasonably affordable”, and

Ø  It was imported and not manufactured in the country.

Licence Details:

Ø  Bayer, at present, offers the month's treatment regime of 120 tablets costing Rs.2.84 lakh.

Ø  Now manufacturing under compulsory licensing by Natco will slash it to Rs 8,880 per month, just 3 per cent of the price charged by Germany’s Bayer AG. 

Ø  Natco will have to pay Bayer royalty pegged at 6% of the net sales, every quarter.

Ø  The Indian applicant has been granted the licence till the expiry of the patent in 2021.

Planning Commission Recommendations:

Ø  The question of drug access and prices has become particularly important after India changed over from a regime that recognises process patents for medicines to one of patents for products, since 2005.

Ø  Use of the provision has been advocated by the High Level Experts Group (HLEG) of the Planning Commission headed by Dr. K. Srinath Reddy, to address the issue of lack of access to essential drugs and affordability. The effects are expected to be felt most acutely in the case of new drugs, notably those relating to cancer, HIV/AIDS and psychiatric conditions.

Ø  The Planning Commission HLEG has drawn attention to more possible negative outcomes if enhanced provisions of TRIPS Plus, which would enable “evergreening” of patents beyond 20 years, are applied.

Joseph E. Stiglitz -Medical prize fund:

The economist and Nobel Laureate, Joseph E. Stiglitz summed up the problem in the British Medical Journal five years ago,

“Restricting the use of medical knowledge not only affects economic efficiency,
but also life itself. We tolerate such restrictions in the belief that they
might spur innovation, balancing costs against benefits. But the
costs of restrictions can outweigh the benefits.”

Professor Stiglitz advocated a medical prize fund to spur innovation, with large rewards for discoverers of cures or vaccines for scourges such as malaria, and smaller rewards for others that are similar to existing drugs. Such intellectual property would then be open to generic drug manufacturers.

Future Course

Ø  The bold move on compulsory licensing should be a first step in a process of reform and price controls that will make available essential drugs to all Indians at little or no direct cost.

Ø  Indians consumed about Rs.56,000 crore worth of medicines through private chemists in the open market, going by March 2011 figures submitted to the Planning Commission. The price gap between government procurement of drugs and retail sale can be staggeringly wide — between 100 per cent and 5,000 per cent.

Ø  Preparing a Strong “Essential Drug List” to suit the current national disease profile is important.

Ø  Strong role of the public sector pharmaceutical industry and its capability to produce generic drugs should be encouragement to revive its fortunes.

Ø  This initiative is crucial to the universal health coverage that the Indian government wants to provide to all its citizens in coming years, starting with the Twelfth Plan.

Ø  It should also serve as a clear signal to pharmaceutical companies to stop extracting staggering profits from a market with weak social support mechanisms.

Reactions:

A Bayer spokesperson has said, “We are disappointed by the decision of the Patent Controller in India to grant a compulsory licence for Nexavar. We will evaluate our options to

further defend our intellectual property rights in India.”

P Bhaskara Narayana, chief financial officer, Natco Pharma, has said, “We welcome this order as it opens up a new avenue of availability of life-saving drugs at an affordable price to the suffering masses in India.”

Michelle Childs, director of policy/advocacy at the Access Campaign of the non-government Medecins Sans Frontieres, has said “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,”