German pharmaceutical company Bayer AG has formally
lodged a challenge against a landmark Indian ruling that allowed a domestic
generic drug-maker to produce a low-cost version of an anti-cancer drug for the
Indian market. The appeal was filed on Friday 4 May with India’s Intellectual
Property Appellate Board.
Back in March, the Indian Patent Office announced
that it had issued its first compulsory license to Indian generic drug producer
Natco - a move that effectively ended Bayer’s
monopoly over Nexavar, a drug that is used to treat kidney
and liver cancer.
Compulsory licensing is when a government
authorises a party other than the patent owner to produce the patented product
or process without the patent owner’s consent. The patent owner shall,
nevertheless, be paid an adequate remuneration, taking into account the
economic value of the authorisation.
The Indian ruling “damages the international patent
system and endangers pharmaceutical research,” Pradhan
added.
India is the world’s third-largest pharmaceutical
drug producer by volume; in 2011 the domestic pharmaceutical market reached a
record US$12.2 billion in sales.
New Delhi only began issuing patents for drugs in
2005 in order to comply with the WTO’s Agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPS Agreement). WTO rules explicitly allow
compulsory licensing as long as procedures and conditions set out in Article 31
of TRIPS are fulfilled. The 2001 Doha Ministerial Declaration on the TRIPS
Agreement and Public Health further recognised that “each member has the right
to grant compulsory licences and the freedom to determine the grounds upon
which such licences are granted.”
Original ruling
The Indian patent authority’s March ruling found
Bayer’s version of Nexavar to be “exorbitantly priced
and out of reach of most of the people.” The 62-page decision also indicated
that the German pharmaceutical giant had not taken “adequate or reasonable
steps to start the working of the invention in the territory of India on a
commercial level and to an adequate extent.”
The ruling allows Natco
to sell the drug at Rs. 8,800 per patient per month,
or US$175 - a 97 percent price cut compared to Nexavar. The compulsory licence was granted to Natco until 2020; the Indian company is required to pay
royalties to Bayer on a quarterly basis.
Compulsory licensing decision under scrutiny by
trading partners
India’s landmark decision has not escaped the
notice of its trading partners, with the Office of the US Trade Representative
noting in an official report last week that it would “closely monitor
developments concerning compulsory licensing of patents in India following the
broad interpretation of Indian law in a recent decision … while also bearing in
mind the Doha Declaration on TRIPS and Public Health.”
The Special 301 report, issued annually by the
Office of the USTR, also urged New Delhi “to provide an effective system for
protecting against unfair commercial use, as well as unauthorised disclosure,
of test or other data generated to obtain marketing approval for pharmaceutical
and agricultural chemical products.”
In the report, India was one of 13 countries placed
on a “priority watch list” by Washington, a classification that indicates
“significant concerns” in the area of intellectual property rights protection
and enforcement.