Indian Industry Pushing for Compulsory Licenses for Tamiflu

While Swiss-based Roche, the rights holder to the most-favoured medicine for avian influenza, is pursuing sub-licenses, India is moving ahead with exploring the option of compulsory licensing. If this goes through, India would be able to export Tamiflu to developing countries and certain developed countries.

The Indian Cabinet is considering issuing compulsory licenses to local generics companies under the 2005 Indian Patents Act which would allow them to produce copies of Roche’s anti-influenza medicine, Tamiflu (oseltamivir), for the domestic market as well as for export.

The companies would also need compulsory licenses from the importing countries in which Tamiflu is patented if they would like to export the product, said D. G. Shah, secretary general of the Indian Pharmaceutical Alliance. All countries can issue compulsory licenses under their national patent acts but each country has to incorporate the relevant provisions of the World Trade Organization Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreements in their national act, he said in an interview.

The Indian Cabinet is examining how compulsory licenses could be issued under the Indian Patents Act, whose Section 92A (1) states: “Compulsory license shall be available for manufacture and export of patented pharmaceutical products to any country having insufficient or no manufacturing capacity in the pharmaceutical sector for the concerned product to address public health problems, provided compulsory license has been granted by such country or such country has, by notification or otherwise, allowed importation of the patented pharmaceutical products from India.”

India also has incorporated into its national law the relevant provision of the TRIPS agreement which sets out that a majority of production must be for domestic use. TRIPS Article 31(f) states that any use of the patented material without authorisation of the rights holder “shall be authorised predominantly for the supply of the domestic market of the member authorising such use.”

Section 90.1.vii of the Indian Act states: “the license is granted with a predominant purpose of supply in the Indian market and … the licensee may also export the patented product.”

According to experts, there has been significant debate over the term “predominantly.” Shah interpreted it as at least 51 percent for domestic use. The rest could be exported under Indian law, he said.

The Indian government will now meet with three local companies. The Cabinet met on 21 October and decided to explore the possibilities of having the three Indian generics companies, Cipla, Ranbaxy and HeteroDrugs, produce Tamiflu, “essentially for stockpiling,” according to Shah.

According to a press report, while the industry is pushing for compulsory licenses, Cipla has also contacted Roche regarding rights to produce Tamiflu.

Is Compulsory License Necessary?

An Indian trade official in Geneva on Monday could not confirm that a Cabinet meeting had taken place but said that Tamiflu was not patented in India, although an application was pending. Sources say that a patent application is in the “mailbox,” filed in the interim period before Indian law gave protection to pharmaceutical products this year, and that this patent had to be issued before compulsory licenses could be issued.

He thus believed that generics companies in India could just “go ahead” and start producing Tamiflu generics without compulsory licenses, but countries that wanted to import these drugs would need a compulsory license.

But Shah disagrees. He said that assuming that Roche had filed a patent application in India for Tamiflu which was pending, companies like Cipla were not allowed to start producing Tamiflu without a license. In any case, Cipla has indicated that it would not be ready to produce Tamiflu for another three or four months, he said.

Shah said that if private companies were issued compulsory licenses in India, they would profit from the production but would sell the drugs “significantly cheaper.” The generics company Ranbaxy also has indicated that it is capable of producing generic Tamiflu.

Ellen ‘t Hoen of Medécins Sans Frontières said Tuesday that the Indian government was likely preparing for the issuance of compulsory licenses on the same day the patent approval comes through in order to protect its domestic industry, which consists of mainly generic manufacturers. Although there is no patent for Tamiflu in India today, the environment is seen as too insecure for companies to start producing a generic version because Roche could take legal action once it receives the patent if not before.

Roche, meanwhile, is pursuing sub-licenses, which gives the company the right to have something produced within a certain time period (while it keeps the rights to the product as well as produces itself). There has been no discussion of voluntary licenses, another option, according to sources. Roche has never been subject to compulsory licenses before, according to an industry source.

Shah said he was certain that the Indian government would issue the compulsory licenses and said the next Cabinet meeting would take place in the next few days.

Notification Needed For Export

Shah said that developing countries which did not have the production capacity themselves should file for compulsory licenses to import Tamiflu from India. However, 23 developed countries and 10 new European Union member states opted out of a 2003 waiver of TRIPS rules preventing the importation of medicines produced under compulsory licenses in other countries. These countries have agreed not to import such medicines.

Countries are free to issue compulsory licenses for domestic use only, but when it is for export or import, they have to notify the WTO. This was established under a decision reached on 30 August 2003 that resolved a mandate under paragraph 6 of the 2001 Doha Declaration on TRIPS and Public Health. That decision created a waiver for countries needing to issue a compulsory license for a drug but lacking their own manufacturing capabilities. It allows them to import generic versions of the drug produced under compulsory license by other countries.

Most of the considerations of governments recently whether to issue compulsory licenses for the production of Tamiflu have been for domestic use only. However, if the WTO is being notified of export (or import) it will appear on this website: http://www.wto.org/english/tratop_e/trips_e/public_health_e.htm.

In addition to India, Tamiflu also is not patent-protected in countries such as Romania and Israel. Romania may not be able to produce and export but Israel has the generics company Teva, which is among the largest generics companies in the world.

Roche, for its part, is set to boost its economic performance as a result of the avian flu. It is already the fastest growing drug firm in the world with a share performance to match, and investor returns have increased 50 percent in a year. Last week its share price reached record highs after it said third-quarter profits rose by 20 percent to CHF8.9 billion, according to the UK Observer newspaper.

Roche’s earnings from Tamiflu grew by 263 percent during the first nine months this year compared with the same period in 2005, according to the Economist.

Industry analysts estimate that Roche will benefit from Tamiflu with extra profits of CHF1.14 billion this year and CHF2.28 billion next year, according to the Observer.

Sub-licensing in the United States

In the United States, Roche has agreed to meet with four generics companies shortly to discuss possible production of Tamiflu, in co-operation with the US Department of Health and Human Services.

These companies will be issued sub-licenses and Roche “agrees to negotiate on equitable terms”, according to a joint press release.

The companies are Teva Pharmaceuticals, Barr Laboratories, Mylan Laboratories and Ranbaxy Laboratories. It was too early to provide any details regarding the possible deals between Roche and the four generics companies in the United States, a source said.

A spokesperson at Barr told Intellectual Property Watch on 21 October that the company “is interested in assisting Roche in manufacturing additional Tamiflu that may be needed should there be a public health need. We do not currently have a deal with Roche but are interested in meeting with Roche representatives to learn more about the manufacturing process and the raw materials used in Tamiflu.”

The deals come after pressure from US Senator Charles Schumer, a New York Democrat who wrote two letters to Roche last week pressuring it to compromise on its patent rights for the sake of public health, saying that the government should issue compulsory licenses if this was not done. Schumer was later joined by South Carolina Republican Sen. Lindsey Graham.

The Consumer Project on Technology (CPTech) has been calling on the developed country governments that opted out of the 2003 waiver, including the United States and the European Union, to issue compulsory licenses.

Roche this week cautioned against countries producing their own generic version of Tamiflu, saying it was concerned about quality as well as quantity. “I think it is pretty clear that Roche intends to suppress generic production as much as it can get away with,” CPTech Director James Love said in his organisation’s email list. “A failure to issue compulsory licenses liberally
(open licenses) will result in a slower response by the generic industry to the capacity and supply problem, and much higher prices, and smaller stockpiles. The private market is likely to be particularly important for those who cannot realistically depend upon governments to protect them (which is the majority of the world’s population).”

According to Reuters, the United States has enough Tamiflu to treat about 2.3 million people, about one percent of its population.