Access to affordable Medicines in India and the Instrument of Compulsory Licensing: Case of Nexavar

Patents in India are granted to encourage inventions and to secure that it is worked on a commercial scale. The Indian Patent Act ensures that a Patentee should not be able to enjoy a monopoly for the importation of the patented article. The Patent Act provides measures by way of compulsory licensing (CL) to ensure that the patents do not impede the protection of public health and nutrition and the patent rights are not abused by the patentee. The CL therefore serves to strike balance between two disparate objectives- rewarding patentees for their invention and making the patented products, particularly pharmaceutical products, available to large population in developing and under developed countries at cheaper and affordable cost.

As is known, CLs allow third parties to exploit a patented invention without the consent of the patentee. They there, deprive patentees of their most important right, i.e. the right to say ‘no’ to the exploitation of their invention by the third parties. CLs are usually granted through administrative procedures managed by a governmental body. CLs are granted by governments which, thereby, substitute their authority for the consent of the patent owner. They therefore are in the nature of administrative contracts.

On March 9, 2012, India’s first CL was granted by the Patent Office to Natco Pahrma Ltd. for producing generic version of Bayer Corporation’s patented medicine Nexavar, used in the treatment of Liver and Kidney cancer.  The Controller decided Bayer on all the three grounds in the Patents Act for the grant of CL (reasonably requirements of the public not being satisfied; non-availability to the public at a reasonably affordable price, and the patented invention not being worked in the territory of India). While the multinational giant was selling the drug at INR 2.80 lakh for a month’s course, Natco promised to make available the same at a price about 3% (INR 8800) of what was charged by Bayer. Natco was directed to pay 6% of the net sales of the drug as royalty to Bayer. Among other important terms and condition of the non-assignable, non-exclusive license were directions to Natco to manufacture the patented drug only at their own manufacturing facility, selling the drug only within the Indian Territory and supplying the patented drug to at least 600 needy and deserving patients per year free of cost.

Aggrieved by the Controller’s decision, Bayer immediately moved to the Intellectual Property Appellate Board (IPAB) alleging that the grant of CL was illegal and unsustainable. On March 4, 2013, IPAB upheld the country’s first compulsory license to a pharmaceutical product.  Specifically, the decision upheld a compulsory license issued to Natco Pharma Ltd., an Indian generic drug manufacturer, to sell Bayer’s patented chemotherapy drug Nexavar (sorafenib tosylate).  The Board rejected Bayer’s appeal holding that if stay was granted, it would definitely jeopardize the interest of the public who need the drug at the later stage of the disease. It further held that the right of access to affordable medicine was as much a matter of right to dignity of the patients and to grant stay at this juncture would really affect them. Given the economic consequences of this compulsory license, Bayer is expected to further appeal this decision.  It is important for companies procuring patents and doing business in India in all industries to understand the country’s compulsory licensing laws.

A compulsory license is a statutorily created license that allows certain parties to use or manufacture a product encompassed by the claims of a patent without the permission of the patent owner (patentee) in exchange for a specified royalty.  The Indian Patent Act (Act) contains very broad compulsory licensing provisions.  The two provisions of the Act that allow for compulsory licenses are Sections 84 and 92.

Compulsory Licenses in India

As mentioned above, the IPAB upheld the compulsory license to Nexavar on March 4, 2013, which was originally granted by the Controller in March 2012.  Since 2012, compulsory licenses have been granted or are in process of being granted for several pharmaceutical products as shown by below:

Drug	Company	Indication	When Issued
Nexavar®	Bayer	Hepatocellular carcinoma	March 2012 – Decision upheld March 2013 (Article 84)
Herceptin®	Genentech	Breast cancer	In process by the Department of Industry Property and Promotion (DIPP) (Article 92)
Ixempra®	BMS	Breast cancer	In process by the DIPP (Article 92)
Sprycel®	BMS	Leukemia	In process by the DIPP (Article 92)

Compulsory licenses issued in other countries

India is not the only country that has issued compulsory licenses for patented pharmaceutical products.  While the compulsory license laws vary country-by-country, as shown in the below table, compulsory licenses have been issued by several countries for a number of different pharmaceutical products, as under-

Country	Drugs
Brazil	Efavirenz
Cameroon	Lamivudine, Nevirapine
Canada	Oseltamivir
Ecuador	Lopinavir/Ritonavir
Ghana	Generic HIV and AIDS medicines
Indonesia	Lamivudine, Nevirapine
Israel	Hepatitis B vaccine
Italy	Imipenem/cilastatine, Sumatripan succinate
Malaysia	Didlanosine, Zidovudine
Mozambique	Lamivudine, Stavudine, Nevirapine
Thailand	Lopinavir/Ritonavir, Clopidrogel, Erlotinib, Letrozole, Docetaxel
Zambia	Lamivudine, Stavudine, Nevirapine

Conclusion

The issue of compulsory licenses in India is something that every company should be concerned about when procuring patents and conducting business in India.  While most of the recent attention has centered on compulsory licenses for patented pharmaceutical products, it is important to remember that India’s Patent Act provides for broad compulsory license provisions that are not limited to just pharmaceutical products but encompass products from any technology.