For the first time India has invoked a ‘compulsory licence’ clause to cut the cost of a patented anti-cancer drug
For the first time India has invoked a ‘compulsory licence’ clause to cut the cost of a patented anti-cancer drug by allowing another company to manufacture the therapy. India granted the licence to the generic firm Natco Pharma to produce Bayer’s Nexavar (sorafenib) for the treatment of advanced kidney and liver cancer.
Industry analysts and legal experts believe this paves way for the Indian generic drug industry to use this route to produce cheaper drugs for life-saving treatments for HIV/Aids and cancer. And global pharmaceutical companies are likely to bear the brunt of these cost cutting measures in lost revenues.
Under World Trade Organization (WTO) rules, a compulsory licence allows countries to give manufacturers permission to produce patented drugs or use proprietary processes without the consent of the patent owner. This measure has been invoked in the past to, for example, tackle a national health crisis. Besides India, Thailand granted compulsory licences in 2006 and 2008 for heart and HIV/Aids drugs.
A generics firm can apply for a compulsory licence if the patent is at least three years old. The compulsory licence is part of the WTO’s agreement on intellectual property rights called the Trade Related Aspects of Intellectual Property Rights (TRIPS). India has been signatory of the agreement since 2005.
Natco Pharma, which has been granted India’s first compulsory licence, has promised to sell a month’s supply of the generic version of Nexavar at INR8800 (£110), 97% less than the current market price of £4000. Bayer, which developed the drug with US firm Onyx Pharmaceuticals, reported sales for Nexavar of $934 million (£590 million) in 2010.
However, the Indian Association of Biotechnology Led Enterprises (ABLE) has questioned whether Nexavar even comes under the class of a lifesaving drugs for the purposes of a compulsory licence. It pointed out that the drug was not approved by UK’s National Institute for Health and Clinical Excellence (NICE) in view of the fact that it only increased survival in primary liver cancer by six months.
In his decision, India’s patent controller P H Kurian said: ‘During the last four years, the sales of the drug by the patentee at a price of about INR2.8 lakh [for a one month course] constitute a fraction of the requirement of the public. It stands to common logic that a patented article like the drug in this case was not bought by the public due to only one reason, i.e. its price.’
In its decision the Indian patent office stipulated that Natco must pay 6% of sales to Bayer. Natco may also only produce the drug at its Indian plants and can only sell the drug in India. The company will also have to provide the drug free of charge to at least 600 patients per year. According to Natco, the market for Nexavar in India is about INR300 million(£3.76 million) per year.
‘In future, before such rulings are invoked, it might be a good idea to debate on the cost of goods versus the cost of innovation,’ Satya Dash, chief operating officer of ABLE said. ‘If we put in mechanisms to compensate the companies which do innovation, then the severity of such rulings will be quite considerably mitigated.’
Bayer has said it is considering its options. At the same time, it is already battling another Indian pharma company, Cipla, in the courts. Cipla has been producing a generic version of Nexavar without a compulsory licence since April 2010.
Unsurprisingly, the Indian patent office’s decision has polarised India’s pharma sector. While the Indian Drug Manufacturers Association (IDMA) has welcomed the decision, a disappointed Organisation of Pharmaceutical Producers of India (OPPI) warned that compulsory licences must be used cautiously and only in extraordinary circumstances.
Daara Patel, secretary general of the IDMA tells Chemistry World: ‘This will set an excellent caution for patent holders not to charge exorbitant prices . This will also encourage other Indian companies to manufacture lifesaving drugs with the sincere objective of taking care of the welfare of patients.’ Ranjit Shahani, president of OPPI and managing director and vice chairman of Novartis India, disagrees. ‘Issuing of compulsory licenses is a shortcut that may help a few in the short- term but the long-term damage to the future health of the world will be dramatic and far more costly,’ he said. ‘If used injudiciously, compulsory licenses will in fact work to the detriment of the patient through the negative impact they will have on future investment in innovative pharmaceuticals.’
Industry analysts said this will not have any adverse impact on the investments in India as global pharma companies were aware of the compulsory licensing provision and, moreover, this will lead to multinationals adopting different pricing strategies for developed and developing nations.
‘India is too big a market for the global pharma companies to ignore,’ S A Karthik, founder of Quasar Legal, a Bangalore-based law firm said. ‘This is not the last word,’ he adds. ‘This debate or battle is far from over at this juncture.’