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IPAB upholds the first Compulsory License granted in India post TRIPs

The Intellectual Property Appellate Board (IPAB) on 4th March 2013 has upheld the Compulsory License (CL) issued by the Indian Patent Office to Natco Pharma. This will allow Natco to manufacture and sell generic version of Bayer’s kidney and liver cancer drug Nexavar (sorafenib tosylate) in India.

The decision was taken on an appeal filed by Bayer Corporation against the Union of India, The Controller of Patents and Natco Pharma against the Compulsory license issued to the generic drug manufacturer in March 2012 to manufacture and sell the generic version of Nexavar.

The Compulsory License enables NATCO to sell the drug at a price not exceeding Rs. 8880 for a pack of 120 tablets (one month’s therapy) against Rs. 284,428 being the cost of Naxavar sold by Bayer. The license is valid till the expiry of the patent – 2021. In its ruling, IPAB has stated that Natco will pay 7% in royalties to Bayer on the net sales. The order also makes it obligatory for NATCO to supply the drug free of cost to at least 600 deprived patients per year.

Background

Bayer was granted an Indian Patent (215758) in year 2008 for the drug Sorafenib Tosylate (Nexavar being the trade name) which is scheduled to expire in 2020. It is a palliative medicine for hepato-cellular carcinoma and renal cell carcinoma. The disease affects a very small percentage of the population. The drug is administered to the patients at stage IV of the disease and the drug admittedly improves the quality of life in the last months of the patient. Bayer imports all the Nexavar that it sells in India; there is no local manufacturing of the same.

Two Indian Generic drug manufacturers – Cipla and Natco started producing and selling the generic version of Nexavar. Cipla had launched its generic version of Nexavar as early as 2010. Bayer filed patent infringement cases against both Cipla and Natco.  The infringement suit against Cipla is still pending. Cipla has counter filed for revocation of the Nexaver patent by Bayer.  While Cipla has not been issued any injunction the two parties have agreed on a trial.

Natco on the other hand filed for CL for Nexavar based on Section 84 (see below) in year 2011. Natco was issued the compulsory license in mid 2012 by the Controller of Patents. The present ruling from IPAB is on the appeal submitted by Bayer against the issuance of CL to NATCO by the Controller of Patents.

Nexavar Price scenario for one month supply as of today in India:

Bayer – Rs 2,80,000/month

Cipla – Rs 5,400/month

Natco – Rs 8,800/month

Compulsory License

Definition for patents: when the authorities license companies or individuals other than the patent owner to use the rights of the patent — to make, use, sell or import a product under patent (i.e. a patented product or a product made by a patented process) — without the permission of the patent owner.

CL has existed as far back as the 1830s. Eventually the concept was recognized by the international community through the Paris convention of 1883. Today it is one of the flexibilities on patent protection included in the WTO’s agreement on intellectual property — the TRIPS (Trade-Related Aspects of Intellectual Property Rights; Articles 30, 31) Agreement. Patent laws of many countries have provision for granting CLs.  Examples of such countries are – Canada, USA, UK, France Australia and Thailand, India, Brazil, Ghana.

In the Indian Patents Act 1970 the Sections 84, 91 and 100 enlist the various ways that a CL can be issued. The Sections 91 and 100 are provisions for government to issue CL sans any application by a third party when it deems appropriate. Section 84 can be cited in application for a CL by any third party.

Natco cited section 84 in its application for CL for Nexavar.

Section 84:

“(1) At any time after the expiration of three years from the date of the 1[grant] of a patent, any person interested may make an application to the Controller for grant of compulsory license on patent on any of the following grounds, namely:— (a) that the reasonable requirements of the public with respect to the patented invention have not been satisfied, or (b) that the patented invention is not available to the public at a reasonably affordable price, or (c) that the patented invention is not worked in the territory of India.”

The ruling in favor of NATCO was based on the findings that Bayer satisfied all of the above listed criterions:

  1. Bayer supplied the drug to only 2% of the patient population; therefore the reasonable requirement of the public with respect to Nexavar was not met.
  2. Bayer’s drug was available at an unreasonably high price (Rs 2.8 lakhs for a months’ supply of the drug) therefore it didn’t doesn’t fulfill the “reasonably affordable” price criterion.
  3. Bayer did not sufficiently “work” the patent in India which was interpreted by the Controller to mean that the patentee didn’t manufacture the drug to a reasonable extent in India.

Implications of this ruling

  1. The ruling has undoubtedly benefitted the patients. Through the CL they are assured of an affordable, uninterrupted and unlimited supply of Nexavar. Cipla although has competitively priced its drug it is under no obligation to produce the same as it is not bound by any directive from the government like Nacto is now.
  2. This decision is landmark as it shows the working of the Indian Patent System. An application for a CL gets filed three years after the Inventor obtaining the Patent, the CL is granted in 7 month, upheld by IPAB in the hearing after one year. Natco has chartered the path for other Indian companies to follow suit.
  3. With the “working of the patent” clause been granted to Natco, many other MNCs could come under the same ambit as most work by importing the drugs into India. Although IPAB in its ruling of the Natco case has considered to some extent Bayers appeal to include import of the drug under “working of the patent” too. Whether some formula should be arrived at for determining the ratio of the drugs indigenous manufacturing: import for a sensible “working of the invention” will be interesting to see.
  4. Differential drug pricing may still not become the reality and will differ from case to case. It’s interesting to see that Bayer didn’t do enough to save the CL from being applied for in the first place, on the other hand it was found ready for a trial with CIPLA (with numerous  big pharmaceutical companies having faced patent revocation in 2012, can Bayer  rely on this route). This just shows that it doesn’t make economic sense for Bayer to have its patented drug selling in India.  Slashing the prices down to suit the Indian market may also put the Pharmaceutical companies in a tight spot in developed nations where increasing numbers of uninsured people and economic slowdown can be reasons to put similar pressures on them in those countries.

Picture Courtesy: Microsoft Office

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