India's Nexavar compulsory licence upheld

Bayer received a setback in India at the beginning of March 2013, when the country's Intellectual Property Appellate Board (IPAB) upheld the issuance of a compulsory licence for Bayer's kidney and liver cancer drug, Nexavar (sorafenib tosylate). The compulsory licence had been granted to Natco Pharma in March 2012, and was issued under the provisions of Section 84 of the Indian Patents Act, 1970. The compulsory licence was the first of its kind to be granted by the Indian government, and will remain in force until 2021, when the relevant patent protecting Nexavar in India expires.

Section 84 of the Indian Patents Act permits the issuance of a compulsory licence under three grounds: that the reasonable requirements of the public with respect to the patented invention had not been satisfied, or; that the patented invention is not available to the public at a reasonably affordable price, or; that the patented invention is not worked in the territory of India. It appears that the Nexavar case revolved around the second provision. Of course, 'a reasonably affordable price' is a vague concept. At the time of the original decision to grant the licence, Knowledge Ecology International (KEI), a not-for-profit non-governmental organisation that filed an affidavit in the case, commented that Bayer's price for Nexavar in India was Rs 3,411,898 per year; KEI argued that this was more than 41 times the projected average per capita income for India in 2012. KEI had reported that Bayer had tried to justify the price by making claims of high research and development costs. This was a charge that KEI rejected, arguing that research for sorafenib had been partly subsidised by the US Orphan Drug tax credit, and that the drug was jointly developed by Onyx Pharmaceuticals. KEI claimed that Bayer had made billions of dollars from sorafenib, and had made little effort to sell it in India, where it was priced beyond the means of most of the population. KEI added that Bayer's main defence of the drug's pricing in India was the firm's programme of discounts to lower-income patients, and the fact that Cipla was selling an infringing product at a lower price. KEI added that Bayer was in the process of suing Cipla.

Shortly after the IPAB upheld the Nexavar decision, and to coincide with International Women's Day, the Campaign for Affordable Trastuzumab sent a letter to India's Minister for Commerce and Industry enquiring about actions taken by the Ministry on the recommendation from a Ministry of Health Expert Committee that was set up to explore the possibility of issuing compulsory licenses for generic and biosimilar versions of cancer drugs. In particular, the campaign noted that trastuzumab, which Roche markets under the brand name, Herceptin, had been recommended for compulsory licensing by the Expert Committee. The letter notes that the recommendations of the Expert Committee were under consideration by the Department of Industrial Policy & Promotion, a department within the Ministry of Commerce and Industry, but that no further moves have yet been made. The Campaign's letter urges that trastuzumab be compulsorily licensed, essentially arguing that such a move would be justified because Roche has not done enough, in the group's view, to lower the price of the drug in India. It is perhaps unlikely that this particular push will gain any traction, but nonetheless, such pressure will be a cause for concern for the pharmaceutical industry, now that the Nexavar decision has been upheld.

Compulsory licenses are permitted under the World Trade Organisation's TRIPS agreement, in order to address public health emergencies, but are controversial. The branded pharmaceutical industry is not surprisingly generally opposed to their use, as they permit patents to be overridden; unless used sparingly, compulsory licences could threaten to weaken the patent framework. Similarly, pressure groups have seen them as a potential tool to bring down prices of drugs and foster generic competition, and so have often pushed for drugs to be issued with compulsory licenses, albeit generally unsuccessfully. The TRIPS agreement is also vague over what constitutes a public health emergency; international consensus has tended to agree that issues such as HIV/AIDS can be defined in such a way, but with regard to Nexavar, it is arguable whether or not cancer also counts. Compulsory licenses, or more specifically the threat of them, have also been used by governments as a tool to force pharmaceutical companies to negotiate new pricing arrangements. Whether Bayer will lower the price of Nexavar in India remains to be seen.

The Nexavar compulsory licence will certainly be a headache for Bayer in particular, and the branded industry in general. Although the licence has been issued to only one company, and with some restrictive conditions, the issuance of the licence will be of concern because of the precedent it sets. India's pharmaceutical industry is more than capable of responding to other compulsory licences, should the country go down that route. Reports already suggest that Bayer will now appeal this latest decision, and it is arguable that Bayer will have to, given the implications. However, the firm will also be aware that appealing the compulsory licence will require care to avoid a PR nightmare.

Ian Platts – Editor, World Generic Markets

This article is tagged to:
Sector: Pharmaceuticals & Healthcare
Geography: India, India, India, India

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