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    India’s First Compulsory Licence Upheld, But Legal Fights Likely To Continue

    Published on 4 March 2013 @ 8:59 pm

    By for Intellectual Property Watch

    New Delhi – India’s Intellectual Property Appellate Board (IPAB) today upheld the country’s first compulsory licence on a pharmaceutical product. The much-awaited verdict by Justice (Ms) Prabha Sridevan upholds the compulsory licence issued to Hyderabad-based Natco Pharma Ltd, an Indian generic drug manufacturer, which sells a much cheaper version of German pharmaceutical company Bayer AG’s kidney and liver cancer drug Nexavar in the market.

    [Update:] Bayer on 5 March announced it will appeal the decision (IPW, Developing Country Policy, 5 March 2013).

    Sridevan cited affordability and product access as the reasons for the decision to dismiss Bayer’s appeal against the compulsory licence (CL). However, the Chennai-based IPAB hiked the royalty which Natco would have to pay to Bayer (under the terms of the CL) from 6 per cent to 7 per cent.

    Mr. Madineedi Adinarayana, company secretary and general manager of Legal and Corporate Affairs at Natco Pharma Ltd, told Intellectual Property Watch that the IPAB decision is “very significant” and he is “happy” that the CL had been upheld. But, he said, “This is unlikely to be the end of the legal battle.”

    “The only relief that Bayer has got is a rise in royalty,” Adinarayana  said, adding that the company did not wish to comment on its plan of action for the future. “We will have to see what happens in the coming days,” he said. “We will decide about our legal options after studying the IPAB decision in detail, and after seeing what Bayer does.”

    If Bayer wants to continue the legal fight, it has the option of going  to the High Court in Mumbai, or in Chennai, or going to India’s Supreme Court.

    At the time of writing, the full text of IPAB judgment on the Nexavar case, was not public. Public health advocates and intellectual property rights experts shared their initial thoughts with Intellectual Property Watch. Bayer has yet to issue an official reaction to the IPAB decision, and not yet responded to inquiries.

    Background

    Bayer holds an Indian patent for the chemotherapy drug sorafenib tosylate, sold under the trade name Nexavar. On 9 March 2012, the then Indian Patent Controller issued the first-ever compulsory licence to Natco Pharma to manufacture an affordable generic version of sorafenib tosylate. Bayer promptly filed an appeal against the compulsory licence order before the IPAB in Chennai. Meanwhile, the CL had a dramatic effect on the drug’s price – bringing it down to 8,800 rupees (approximately USD 160) for a month’s dose – a fraction of Bayer’s price of 280,000 rupees (approximately 5,098 USD). Under the terms of the compulsory licence, however, Bayer got a six per cent royalty on sales by Natco.

    The mechanism of compulsory licence, which has generated a lot of heat globally, is embedded in India’s patent law. Section 84 of India’s Patents Act provides that an interested person may apply for a compulsory licence to work the patented invention on any of the following grounds: the reasonable requirements of the public with respect to the patented invention have not been satisfied; the patented invention is not available to the public at a reasonably affordable price; or the patented invention has not been worked in the territory of India.

    Granting the CL to Natco reinvigorated the old debate about patents versus patients in India and turned the spotlight on the escalating battle between multinational pharmaceutical companies and the country’s generic drug manufacturers.

    In an emailed statement to Intellectual Property Watch in May 2012, a Bayer spokesperson had said, “We strongly disagree with the conclusions of the Patent Controller of India and have appealed his order on May 4th 2012 with the Intellectual Property Appellate Board. We will rigorously continue to defend our intellectual property rights which are a prerequisite for bringing innovative medicines to patients” (IPW, Public Health, 20 May 2012).

    What does the IPAB decision on Nexavar mean for the future of compulsory licensing in India? James Love, president of  Knowledge Ecology International (KEI), an international NGO that tracks debates around intellectual property policy and practice worldwide, told Intellectual Property Watch that “on the whole, based upon reports, the decision looks like a big win for cancer patients” Love, however, agrees with the view that there is likely to be more litigation in the days ahead.

    “Natco and Bayer are both likely to appeal parts of the decision,” he said. “Bayer has far more things to appeal, since they lost almost every argument. But Natco may appeal the 7 percent royalty, which is higher than the 2005 (Canada,) 2001 (UNDP) and 1998 (Japan) royalty guidelines, and about two points higher than the median royalties in the Parr study.”

    Leena Menghaney India campaign manager, Médecins Sans Frontières (MSF) Access Campaign said in a statement that they have not yet been able to read the decision, but said, “We’re relieved with the decision by the IPAB to uphold India’s first compulsory licence. The decision confirms that the Indian Patent Office is able to use all the means legally at its disposal to check the abuse of patents and open up access to affordable versions of patented medicines.”

    Most importantly, Menghaney said, “the decision means that the way has been paved for compulsory licences to be issued on other drugs, now patented in India and priced out of affordable reach, to be produced by generic companies and sold at a fraction of the price.” She said she hoped that, in the near future, compulsory licences will be issued for the newest drugs to treat HIV and affordable generic versions will be available not only in India, but in the rest of the developing world.

    MSF has urged Bayer “to address the reality that their prices are too high and not to appeal this decision. It is not the use of a compulsory licence that should be challenged, but the continued pursuit of excessively high profits over public health needs.”

    Shamnad Basheer, an Indian academic specialising in intellectual property law told Intellectual Property Watch that the IPAB’s decision had given a “lot more legal certainty to the generic sector in India.” This, he said, is a “good thing.” Basheer points out that since March 2012, when Natco got the CL, no new compulsory licences have been filed. He reasons that this could be because other generic drugmakers are waiting to see what happens to Bayer’s appeal against the CL.

    “I think compulsory licenses will be on the rise all over the world because it is the middle path between extreme patent protectionism and patent abolitionism,” Basheer said. 

    The IPAB decision comes at a time when the final verdict on another landmark case involving patents and pharma is awaited in India. Novartis is seeking patent protection for the most recent formulation of its blockbuster leukemia drug, imatinib, sold as as Gleevec in the United States and Glivec in India. Novartis has sought patent protection for this drug. Indian courts have rejected the Swiss drug maker’s petition on the grounds that the new formulation is not a novel invention, and therefore does not merit intellectual property rights. India’s Supreme Court is expected to take a final decision on this matter very soon.

     

    Patralekha Chatterjee may be reached at info@ip-watch.ch.

     

    Comments

    1. Compulsory Licensing is Not a Bad Word! - Intangible.Me | Intangible.Me says:

      [...] ruling was also captured by Jamie Love in a KEI briefing note and by Patralekha Chatterjee of the IPWatch. SpicyIP Summary of the [...]

    2. Bayer Will Appeal India Compulsory Licence On Its Cancer Drug | Intellectual Property Watch says:

      [...] The IPAB ruled yesterday that the Indian government was within its rights in issuing a compulsory licence allowing the manufacture of affordable generic versions of Bayer’s patented drug, with royalties to be paid to Bayer (IPW, 4 March 2013). [...]

    3. Prof. Vijay Oak says:

      The IPAB ruling is very significant as a number of people cannot afford expensive life saving drugs. Now the pharma companies themselves should start producing generic medicines to some extent along with patented ones for economically weaker section. Although for the time being some monetary loss will be there, service to humanity will help such companies in long run.

    4. India Weathering Doubts About Its Approach To Intellectual Property | Intellectual Property Watch says:

      […] India also issued a compulsory licence on a medicine that caused significant concern among the patent-holding industry (IPW, Developing Country Policy, 4 March 2013). […]


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    We welcome your participation in article and blog comment threads, and other discussion forums, where we encourage you to analyse and react to the content available on the Intellectual Property Watch website. By participating in discussions or reader forums, or by submitting opinion pieces or comments to articles, blogs, reviews or multimedia features, you are consenting to these rules.

    We welcome your participation in article and blog comment threads, and other discussion forums, where we encourage you to analyse and react to the content available on the Intellectual Property Watch website.

    By participating in discussions or reader forums, or by submitting opinion pieces or comments to articles, blogs, reviews or multimedia features, you are consenting to these rules.

    1. You agree that you are fully responsible for the content that you post. You will not knowingly post content that violates the copyright, trademark, patent or other intellectual property right of any third party or which you know is under a confidentiality obligation preventing its publication and that you will request removal of the same should you discover that you have violated this provision. Likewise, you may not post content that is libelous, defamatory, obscene, abusive, that violates a third party's right to privacy, that otherwise violates any applicable local, state, national or international law, that amounts to spamming or that is otherwise inappropriate. You may not post content that degrades others on the basis of gender, race, class, ethnicity, national origin, religion, sexual preference, disability or other classification. Epithets and other language intended to intimidate or to incite violence are also prohibited. Furthermore, you may not impersonate others.

    2. You understand and agree that Intellectual Property Watch is not responsible for any content posted by you or third parties. You further understand that IP Watch does not monitor the content posted. Nevertheless, IP Watch may monitor the any user-generated content as it chooses and reserves the right to remove, edit or otherwise alter content that it deems inappropriate for any reason whatever without consent nor notice. We further reserve the right, in our sole discretion, to remove a user's privilege to post content on our site. IP Watch is not in any manner endorsing the content of the discussion forums and cannot and will not vouch for its reliability or otherwise accept liability for it.

    3. By submitting any contribution to IP Watch, you warrant that your contribution is your own original work and that you have the right to make it available to IP Watch for all purposes and you agree to indemnify IP Watch, its directors, employees and agents against all damages, legal fees and others expenses that may be incurred by IP Watch as a result of your breach of warranty or of these terms.

    4. You further agree not to publish any personal information about yourself or anyone else (for example telephone number or home address). If you add a comment to a blog, be aware that your email address will be apparent.

    5. IP Watch will not be liable for any loss including but not limited to the following (whether such losses are foreseen, known or otherwise): loss of data, loss of revenue or anticipated profit, loss of business, loss of opportunity, loss of goodwill or injury to reputation, losses suffered by third parties, any indirect, consequential or exemplary damages.

    6. You understand and agree that the discussion forums are to be used only for non-commercial purposes. You may not solicit funds, promote commercial entities or otherwise engage in commercial activity in our discussion forums.

    7. You acknowledge and agree that you use and/or rely on any information obtained through the discussion forums at your own risk.

    8. For any content that you post, you hereby grant to IP Watch the royalty-free, irrevocable, perpetual, exclusive and fully sub-licensable license to use, reproduce, modify, adapt, publish, translate, create derivative works from, distribute, perform and display such content in whole or in part, world-wide and to incorporate it in other works, in any form, media or technology now known or later developed.

    9. These terms and your posts and contributions shall be governed and interpreted in accordance with the laws of Switzerland (without giving effect to conflict of laws principles thereof) and any dispute exclusively settled by the Courts of the Canton of Geneva.

     

     
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