Grant of Compulsory License for Bayer’s Nexavar in India raises more questions than answers

On March 12, 2012, the Patent Office of India, in its landmark ruling, granted its first ever Compulsory License (CL) for Bayer’s patented kidney and liver cancer drug Nexavar (Sorafenib), to the generic pharma player Natco, broadly citing the following reasons:

  • Reasonable requirements of public under Section 84 have not been satisfied.
  • The Patented Drug was not available to the public at a reasonably affordable price as per Section 84 (1) (b).
  • Patented invention is not worked in the territory of India as per Section 84 (1) (c)

The 62 page order of the Controller General of Patents, Designs and Trade Mark (CGPDTM) granted the CL to Natco for the rest of patent life of sorafenib in India at the high end of the UNDP 2001 royalty guidelines at 6 percent.

Sorafenib:

Sorafenib was co-developed and co-marketed by Bayer and Onyx Pharmaceuticals  for the treatment of advanced  renal cell and hepatocellular carcinoma. The drug got its first regulatory approval from the US FDA for advanced renal cell carcinoma in 2005.

National Institute of Health and Clinical Excellence (NICE) of UK had indicated that the drug extends life of the kidney cancer patients by three months on an average.

As stated earlier, in March 2008, Indian patent for Sorafenib was granted to Bayer by the CGPDTM. Thereafter, in December 2010 Natco had requested for a voluntary license from Bayer, which was rejected by the patentee.

It has been reported that sorafenib was registered as an ‘orphan drug’ in the US. The R&D cost of sorafenib was partly subsidized by the US Orphan Drug tax credit.

Mixed reaction:

Though the research based pharmaceutical industry across the world expressed its disappointment over the judgment, many experts and NGOs from different parts of the globe have opined that CGPDTM has set a right precedence by granting a CL for sorafenib, which will ensure, in the times to come, that patent monopolies are kept limited, especially when the patented products are not “reasonably affordable”.

Many people, therefore, envisage that the grant of the first ever CL by the Indian Patent Office could ultimately open the door for other generics players of India to apply for the same on similar grounds and mainly for ‘non-working of patents’, as many patented medicines are now imported into India by the respective global players.

Granting CL should be the last resort:

While none can deny that all citizens of India should have access to innovative and lifesaving medicines, as will be required for their medical treatment, it appears rather impractical to envisage that routine issue of CL by the Indian Patent Office will be able to resolve this critical issue on a long term basis.  Grant of CL, if any, I reckon, should be taken only after exhausting all other access improvement measures.

Working of a patent:

In this particular case, it has been decided by the CGPDTM that working of a patent will require the concerned company to manufacture the drug in India in a reasonable quantity. The argument of the CGPDTM in this respect, many experts believe, is quite a stretch of an interpretation of the statute.

This is mainly because, as one of the signatories of TRIPS, India has a national commitment for adherence to this important international agreement. It is, therefore, widely believed, if importation is not considered as working of patent, the country could expose itself to the risk of  violation of the Article 27.1 of TRIPS, both in letter and spirit.

The Article 27.1 of TRIPS:

The Article 27.1 of TRIPS on ‘local working of patents’ indicates as follows:

“1. Subject to the provisions of paragraphs 2 and 3, patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application. Subject to paragraph 4 of Article 65, paragraph 8 of Article 70 and paragraph 3 of this Article, patents shall be available and patent rights enjoyable without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced.”

Thus as per Article 27.1 of TRIPS, if commercialization of products patented in India, is done locally either through imports or local manufacturing, should be considered as ‘local working of patents’.

Form 27 vindicates the fact:

Form 27 of the Indian Patents Act, which is a statement regarding the working of patented inventions on commercial scale in India, in its point number 3, under ‘if worked’ states as follows:

“If worked: quantum and value (in Rupees) of the patented product:

  1. Manufactured in India
  2. Imported from other countries (give country-wise details)”

Thus, when Form 27 itself accepts importation as ‘local working of patent’, it is indeed intriguing why was the decision to the contrary taken by the CGPDTM?

Moreover, it is worth noting that the term ‘manufacture in India’ was deleted from the earlier Section 90 (a) of the Patents Act.

A statutory requirement:

CGPDTM through a circular dated December 24, 2009, directed all Patentees and Licensees to furnish information in ‘Form No.27’ on ‘Local Working of Patents’ as prescribed under Section 146 of the Patents Act.

It will be interesting to know, whether CGPDTM in response to Form 27 submissions of Bayer had informed them earlier that the Nexavar Patent has not been worked in India. If not, what is then the sanctity of Form 27 filing?

Delhi High Court Judgment:

Further, it has been well reported that in the legal case of ‘Telemecanique & Controls (I) Limited Vs. Schneider Electric Industries SA 94(2001)DLT865’ on working of patents, the Delhi High Court had concluded that importation would amount to working of Patents.

India specific pricing for innovative drugs is not uncommon:

At this stage, it is worth mentioning that India specific pricing for innovative drugs are not uncommon in the country at all. Following are some good examples:

  • GlaxoSmithKline  Pharmaceuticals has already announced its differential pricing system for India and will sell its innovative drugs at prices 25% to 40% less than what those are in the US.
  • MSD  has already introduced its India specific price for patented products. Their patented cervical cancer drug Gardasil is being sold in India at 75% -80% less than the global prices.
  • Moreover, MSD’s patented anti-diabetic drug Januvia (sitagliptin phosphate) is locally sourced and marketed at one-tenth of the global price.
  • In 2008 Novartis  reportedly tied up with the domestic pharma major USV to market its patented anti-diabetic drug Galvus (Vildagliptin) by pricing it lower than Januvia. According to reports, Novartis markets Galvus in the metros, while USV markets the same brand in tier two and three cities of India.
  • Roche  has recently collaborated with the domestic pharma player Emcure Pharmaceuticals to manufacture its two well-known biologics Herceptin and MabThera not only to cater to the domestic needs, but also for export to other developing markets.

Manufacturing of a small quantity locally – an issue:

As quoted in the order of the CGPDTM there are around 8842 eligible patients for sorafenib in India. All these patients put together will require Nexavar ranging from 27000 (Bayer’s figure) to 70000 boxes (NATCO’s figure) per year.  Thus, the moot question remains: even for such small annual requirements, should global companies set up manufacturing facilities in all the countries like, India.

Another question: if other smaller markets of the world also make local manufacturing mandatory for any pharmaceutical products that will be sold in their respective countries, will the Indian players find those markets attractive enough to expand their business? In that case who will be the net losers?… Patients?

Conclusion:

If the issue of whether importation will be considered as ‘local working of patents’ or not is not answered conclusively under higher judicial scrutiny in conformity of Article 27.1 of TRIPS and CL is granted to local manufacturers for commercial benefits under similar situation, availability of life saving innovative products in the Indian market for the patients of India could be in a real jeopardy.

The objective of improving access to innovative medicines is a very desirable one for any country like ours. However, if India routinely starts granting CL for this purpose before exhausting all other avenues to achieve this goal, it would risk sending a very wrong signal to the outside world that the country is shirking its responsibilities to create an appropriate ecosystem to foster and support pharmaceutical innovation to offer better quality of lives to the citizens of the country in particular.

In the absence of both collaboration and foreign direct investments by the global innovators in the field of pharmaceutical research and development, India may feel handicapped, especially when our neighbor China is surging ahead in this field with longer strides.

Thus, routine grant of CL, as is being envisaged by many in India, on a similar situation could, on the contrary, make the issue of access to innovative medicines by the common man even more challenging, in the longer run.

By: Tapan J Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Leave a Reply

You must be logged in to post a comment.