@ Glance

COMPULSORY LICENSE:
Compromise or Necessity
&
Co.

With third rank in terms of volume

of production and fourteenth in
terms of value, the Indian
pharmaceutical sector is
recognized as the leading global
player in the international market. Bhawna Sharma Rishu Srivastava
Patent Research Analyst
Despite this India itself has a large
unmet domestic demand for
S. S.
critical medicines.
Rana
government to
balance
the
rights of the
patent holder
e have affirmed our with
its
obligations
to
commitment
to the
protection
of
intellectual property ensure
rights. But, the global
of
economy, the global working
community,
cannot afford the complete patents,
privatization of research, of availability of
knowledge
generation, the products
a
especially in fields like medicine. at
reasonable
We need to evolve mechanisms
that protect intellectual property price,
and, at the same time, address promotion
the needs of the poor, stated Dr.and
Manmohan Singh in his remarkdissemination
at the Tenth Fortune Globalof
technological
Forum.
invention and
The provision of compulsoryprotection of
license (CL) provided in thepublic health
Indian Patent Act, in fact, servesand nutrition.

to strike balance between these

two
disparate
objectivesThough after
Doha
rewarding patentees for theirthe
invention and making themDeclaration on
TRIPS
available to third parties in casethe
of need. It is an intervention agreement and
mechanism that enables thePublic Health,

about
52
countries
Hyderabad
have issuedto
based
Natco
CLs
Pharma Ltd.
(including
for
producing
Brazil,
generic version
Thailand,
of
Bayer
Malaysia,
Corporations
South Africa
s
patented
and

medicine

Ecuador)1,
Nexavar, used
India grantedin the treatment
its first CLof
liver
and
recently
inkidney
cancer.
March 2012 The
article

discusses
the
international
debate stirred by
the
said
judgment
and
the
broader
ramifications on
the Indian and
global
patent
system as well as
the
apprehensions of
the innovating
companies.

Natco vs.
Bayer for
Nexavar
Last year in July,
Natco
Pharma
had
filed
application for CL
in
respect
of
Nexavar
stating
that the German
companys drug
was unaffordable
for the average
Indian. It had also
claimed to sell the
copycat version of
the drug for just
INR
8,800 for a
months course.
Interestingly the
price is about 3
% of what is
charged by the
multinational
giant for the same
course. Natco had
earlier
approached Bayer

with a request for a voluntary account as to

license to manufacture and sell the whether
the
drug, which did not materialize. It applicant has
is worth noting here when the made efforts to
application for CL is considered by obtain
the Controller, he also takes into voluntary
1

Department of Industrial Policy

and
Promotion:

license from innovator

the patentee company. The
and if the Patent Office held
same
has that the
conditions
been rejected
specified in the
by
the

Discussion Compulsory
paper on
License, August

50 | May
2012 |

24, 2010

LegalEra | a.in
www.legaler

Patent
Act, i.e.,
reasonable
requirements of
the public,
availability to

@ Glance
Grant of CLs will not only help patients but
also spur competition by increasing domestic
manufacturing capacity and know how in
newer lines of drugs. However unrestricted
awarding of CLs could be a major setback to
drug discovery and development programmes
both in India and abroad
accessibility
public at a reasonable of drugs to
affordable
price
and the poor in
working of the invention the country
in India, have not been in its fortymet and hence granted fifth report
the CL. It was settled that on
6% of the net sales of the Issues
drug would be paid to Relating to
Bayer by Natco as royalty. the
Availability

Pharmaceutical Sector of Generic,

in India
Generic
and Significance of the Branded and
Case
Branded
Medicines
With third rank in terms of
In light of the
volume of production and
above
facts
fourteenth in terms of
and also in
value,
the
Indian
the wake of
pharmaceutical sector is
takeovers of
recognized as a leading
Indian
global
player
in
the
pharmaceutic
international
market.
al companies
Despite this, India itself has
by
a large unmet domestic
multinational
demand
for
critical
s the grant of
medicines. The prevalence
compulsory
of cancer is estimated to be
license
about 205 million people,
assumes
with about 8,00,000 new
significant
infections every year and
5,50,000 deaths occurringimportance.
each year due to cancer 2.
The
table
The Parliamentary Standing
below
Committee on Health and
delineates
Family Welfare had also
five of the
raised issues about the
major
availability and

pharma
takeovers in
India:
(please refer
the
table
below.)

Since most
of the above
companies
are
export
oriented,
their
acquisition
would
further
alienate
them from
the domestic
market
thereby
reducing the
local
availability
of products
manufacture
d by them
which may
further affect
the
drug
prices. The
CLs
thus
could
possibly be
used
to
promote
competition.
The CL on
Nexavar is
not
only
expected to
help cancer
patients, it is
also is a step
towards
building
domestic
manufacturi
ng capacity
and
knowhow in
a new range
of drugs.

be at the
receiving end
Analysis of the Case
as it would
break their
For
Indian domestic companies
monopoly.
the
Controllers decision would
set precedence of the legal
As
India
and
administrative
joins
procedure adopted and
Thailand as
would define modalities of
only
the
operation of the provision
second
for CL provided in the
country
to
Patent Act. At the same
grant
a
time, it would open the
compulsory
gate for them to market
license for a
copycat drugs under CL;
cancer drug,
the MNCs however would
proponents
s

Year
May 2010

the pricing of
patented
drugs,
not
only in India
but also in
other
developing
countries.
Reportedly,
Roche
has
announced
its decision
to
sell
cheaper
variants
of
breast
and
blood cancer

SS, Cancer Control

Program in India:

Challenges for the

Millennium, Health

Administrator Vol XVII,

Number 1: 10-13 pgs.

(2001) 3Department of

Industrial Policy and

Promotion: Discussion

Dec 2009
h
a
July 2008
w
June 2008
K
April 2008

The table below

delineates five
of the major
pharma
takeovers in
India3

of the CL
believe that
the recent
judgment
would
ultimately
lead
to
lowering of
exorbitantly
-priced lifesaving
cancer and
HIV drugs.
It
would
also compel
the MNCs to
reconsider

paper on Compulsory

License, August 24,

2010

51 |
May

2012 | ra | www.legalera.in
LegalE

@ Glance
It is pertinent to point out that as the fast developing Indian economy
integrates and carves its niche internationally, the Patent Offices
decision may have implications beyond the pharmaceutical sector.
Brand name

MNC

MRP (INR) Disease

Roche

1.35L

Anti-cancer

Merck
Bristol Myers

87,920
66,430

Anti-cancer
Anti-cancer

Actemra 400 Mg Injection 1

Roche
Zenapax 25 Mg Injection 5 ML
Roche
Eraxis 100 MG Injection 1
Pfizer
Granocyte 34 Injection
Sanofi-Aventis

40,545
28,875
9,107
5,720

Anti-cancer
Anti-cancer
Anti-infectives
Anti-cancer

Victoza 6Mg Injection 3 ML

4,315

Anti-diabetic

Herceptin Injection 50 ML
Erbitux 700 Mg Injection 50 ML
Erbitux 700 Mg Injection 50 ML

Abbott

Estimated cost of life saving drugs produced by leading MNCs in India 4

CL will not help

unless issues such
drugs in the Indian market soon. At the same time, in order as
healthcare
to circumvent CLs, the patent holders may contemplate infrastructure,
collaboration with local manufacturing companies in India. disease diagnosis
This would not only bring down manufacturing cost but the and
medical
technology transfer would also help the local industries.
insurance
are
tackled as even
It is pertinent to point out that as the fast developing Indian the
generic
economy integrates and carves its niche internationally, the version of
Patent Offices decision may have implications beyond the Nexavar (priced
pharmaceutical sector. It is already being criticized by at INR 8,800)
innovating R&D companies as well as industrial lobbies such would be beyond
as Organization of Pharmaceutical Producers of India. Bayer, the reach of poor
Indians suffering
in its arguments before the
Patent Office, had defended the higher price of the patented from diseases like
drug stating that although innovation-based products may cancer.
cost a price over generics, this price pays for the pipeline (i.e.
the future innovation) and competition not to mention the Keeping in view
failed projects, which is about 75% of the total R & D cost. It the cost incurred
and time spent on
has been argued that any
4

MUKHERJEE, Rupali, 2012, Road to Cheaper Drugs, Times of

India, March, 24

the research and

development of
any new drug
(almost
15 years and $800
million
to
$2
billion), rampant
granting of CL may
become a major
setback in research
and development.
Last year Cipla had
applied
for
a
voluntary license

for Mercks antiHIV

drug
Isentress
and
Natco
Pharma
had sought
a
similar voluntary
license
from
Pfizer to make
and sell copies
of
the
US
Companys HIV
medicine in India.
Both
the
companies have
cited
similar
reasons that the
drugs
were
exorbitantly
priced and were
inaccessible
to
Indian patients.
This clearly is the
first step in the
grant of CL as, if
denied voluntary
license, both the
firms would have
the
option of
applying for CL
with
the
Controller
General
of
Patents. Generic
companies
may
exploit
the
process as a mean
to
generate

revenue,

property in India.
This may be quite
ironical
for
a
thus restrictions on granting CL as a commercialized affair
country that has
and resorting to it with the sole aim of procuring drugs at a
declared
the
cheaper rate need to be imposed. Thus grant of CL without
current decade as
addressing key issues would be a major setback for the drug
the Decade of
discovery and development programmes in India and
abroad. It may prove to be a deterrent factor for innovators Innovation.
and MNCs that are contemplating investment in intellectual

Disclaimer:

been

made

to

The article intends

ensure accuracy of

to provide general

the

information

contained

only

information
in

article

taken

legal

author cannot be

advice or opinion

held responsible for

related to specific

any

situations.

misrepresentation

as

Every

possible effort has

but

the

and should not be

the

or inaccuracy.

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