Saturday, May 12, 2012

Compulsory licence and the future of access to medicines

KM Gopakumar/ New Delhi

The decision to grant licence to Indian firm to produce a cancer drug is welcome step

The Indian Patent Office (IPO) made a landmark order on 12 March 2012 to grant compulsory licence (CL) to the Hyderabad-based Natco Pharma. The CL allows Natco to produce the generic version of Bayer's anti-cancer medicine Sorafenib. Sorafenib is used for the treatment of primary renal cell carcinoma (RCC) or kidney cancer and advanced primary liver cancer known as hepatocellular carcinoma (HCC) that cannot be removed by surgery. It can extend the life of kidney cancer patients by 4--5 years and of liver cancer patients by 6--8 months. As a result of CL, Sorafenib would be available to patients in India for Rs 8800 per box that contains 120 tablets of 100 mg for a month's treatment against Bayer's price of Rs280,000 per box.Every year at least 9000 people require Sorafenib to save their life. The order of the IPOis thus a landmark asit brings relief to so many people.
Bayer obtained patent for Sorafenib in India in March 2008 and importedthe medicine from its manufacturing facility in Germany. The CL is issued under Section 84 (1) of the Indian Patents Act (IPA). Under this section,CL can be issued on three grounds viz. a) that the reasonable requirements of the public with respect to the patented invention have not been satisfied; b) that the patented invention is not available to the public at a reasonably affordable price; and c) that the patented invention is not worked in the territory of India.
The CL decision of the Patent Office disrupts the business model of pharmaceutical transnational corporations (Big Pharma). The Big pharma often uses the patent monopoly to import patented medicines without any price differentiation in the developing countries. The CLmakes it almost impossible for Big Pharmato supply medicines in India solely through importation.However, the most important feature of this licence isthe mode of granting the licence. It is granted at the request an Indian pharmaceutical company. Under the Patents Act,CL can be invoked in two ways. First, any pharmaceutical company can approach the patent office requesting for the grant of CL. Second, through an executive order the Government of India can authorise its relevant department/s or a third party to make use of the invention for the purposes of government such as public health or defence. This is commonly known as 'government use'. Since a pharmaceutical company initiated the present CL, there is little room for political pressure. Hence, the Big Pharma, who opposes CL mechanism, didnot unleash the propaganda against the issuance of CL as they did it in the past against Brazil and Thailand. Similarly, the developed country governments including the EU and the US did not come out publicly against the CL.
However, industry observers are watching whether the decision on CL would pave way for a new business model for Indian pharmaceutical companies to bring the costly, patented medicine at an affordable price through CL. There are many important life-saving patented medicines with exorbitant prices (Table 1).In order to pre-empt the threat of CL, Roche has already announced its decision to cut prices of its two cancer medicines viz. trastuzumab (Herceptin) and Rituximab(Mabthera), usedfor the treatment breast cancer and cancers of the lymphatic system known as non-Hodgkins lymphomas. The current price of these medicines is USD 300 and USD 4500 per month per patient. As per the announcement,Emcure,the Indian pharmaceutical company, would repack the medicines and market them in India. Development of such a business model depends on many factors. However, Roche has not announced the discounted price.
All companies are not in a position to use CL to introduce generic versions, because the applicant requires technological capabilities to develop the product. MNCs may prevent these companies from using CLs through a carrot and stick approach. Carrot comes in different forms like a voluntary licence with restrictive conditions, or in the form of strategic alliances or offers to buy out these companies at a higher price. Stick may come in as a series of litigations or propaganda or both against these companies globally. Propaganda may even come in the form special price for Indian consumers.
Similarly, the issuance of CL from the Patent Office is not the end of the story; in a way it is the beginning of protracted legal battle till the final decision from the Supreme Court. Thus companies with certain resource base and patience can make use of CL provisions. Bayer has already made its intention to challenge the decision of the Patent Office before appropriate forum.
Further, there are still legal uncertainties in the CL provisions of the Patents Act. These legal uncertainties include the lack of time limit to dispose CL applications or the ceiling on royalty or the stringent conditions accompany with CL, etc. This may prevent companies from using CL. Therefore, further fine-tuning of the legal provisions either through amendment of the legal provisions or rules or precedents are required to increase the level of confidence among applicants. It is also relevant to note that there is no fresh CL application before the patent office.
The information asymmetry may prevent potential CL applicants from using CL provisions. Often a single medicine would be covered with multiple patents; hence it is important to identify the relevant patents.
There are two important factors viz. current alliance with Big Pharma and exposure in the developed country marketsthat would influence the decision of the Indian pharmaceutical company to choose CL path, which is believed to be confrontationist. Currently, many Indian pharmaceutical companies have strategic alliances with Big Pharma primarily for contract manufacturing. This may prevent those companies to rub the Big Pharma on the wrong side by seeking CL. Similarly, those companies whichare generating maximum revenue from the developed country markets may be reluctant to use CL fearing backlash in the developed country markets.
In the absence of a credible public sector capability in the pharmaceutical production, access to affordable medicines in India is completely dependent on the ability and willingness of the private sector to make use of CL provisions. Therefore, it is important for the Government of India to create an enabling policy environment to encourage the Indian pharmaceutical companies to make use of CL provisions. However, the immediate task before the government is to defend the decision, both inside and outside the court, to resist the propaganda and the potential legal challenges to CL provisions at the national and international forums.

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