elhi/Mumbai, 13 March 2012 – Indian health groups are rejoicing at the announcement of the first compulsory licence (CL) issued by the Controller of Patents on 12 March 2012. The CL has been granted in response to an application filed by generic manufacturer Natco Pharma nine months ago requesting authorization to make and sell generic versions of the cancer medicine, sorefanib tosylate. CL provisions are among the major health safeguards in India’s patent law.

The first CL comes at a time when more and more medicines are being patented in India. The real impact of the World Trade Organisation (WTO) mandated patent system is starting to be felt now in India.

“The unthinkable pricing of medicines at tens of thousands of dollars in India – the pharmacy of the developing world - has been a reality for cancer patients for some years now. Bayer’s price for sorefenib for which it obtained a patent in 2008 is over USD 60,000 per patient per year. Not just sorefanib, several patented cancer medicines are being sold at exorbitant prices in India,” said Mr. YK Sapru of the Cancer Patients Aid Association (CPAA). “Cancer patients have been awaiting just such a positive signal from the government that our lives are more important than the obscene profiteering of the multinational pharmaceutical industry,” he said.

Under the CL, Natco Pharma, an Indian generic company has won the right to produce and market sorefanib tosylate, a life extending cancer medicine, in exchange for paying Bayer a reasonable royalty. Generic competition will now drive the price down to approximately 3 % of the price that Bayer was charging (i.e. from Rs. 2, 80,000 to 8,800 per patient per month). Under the CL terms and conditions Natco is required to pay Bayer 6% royalty on net sales.

While pricing was a major issue considered by the Patent Controller in the issue of the CL he also examined key issues related to availability and the working of the patent granted to Bayer in 2008.

“This is a turning point for India’s generic manufacturers. Since 2005 when India changed its patent law to comply with WTO rules, there have been serious questions about the ability of Indian generic companies to continue producing newer medicines. Since then several patents on medicines have been granted in India leading to an increasing trend of high priced, imported patented medicines available only through select distributors, doctors and hospitals,” said S. Srinivasan of the All India Drug Action Network (AIDAN). “This CL is a game changer. The next step will be for the government to take the initiative in issuing CLs for government use,” he added.

“Such a compulsory licence, - issued on the application of a generic company - to tackle the anti-competitive and predatory use of patents is an extremely important step that can be a precedent towards the grant of many such licenses in the future to address public health goals,” says Dr. Amit Sengupta of the Peoples Health Movement.

Anand Grover, Director of Lawyers Collective HIV/AIDS Unit that represents several HIV and cancer groups in court battles in India agrees. “The idea of an exceptional compulsory licensing system limited only to emergencies or to epidemics is a myth that has been promoted by multinational companies,” he said. “In 2001, all WTO members including the US and EU signed the Doha Declaration on TRIPS and Public Health that recognises, “…the right to grant CLs and the freedom to determine the grounds upon which such licenses are granted” of all governments. This compulsory licence which has been issued on an anti-cancer medicine reflects that compulsory licensing provisions in the Indian law can be used to promote access to medicines, even for non-communicable diseases,” he added

“The health safeguards in Indian Patent law are exceptionally important for us who depend on affordable generics,” said Loon Gangte of the Delhi Network of Positive People (DNP+). “The legal provision against evergreening (i.e. the practice of granting secondary patents on existing medicines) has helped us in safeguarding the generic production of first and second line AIDS medicines. Now the use of CLs to open up generic competition on patented medicines offers hope in the long term,” he said.

“India is likely to face exceptional pressure from developed countries and multinational pharmaceutical companies in the coming weeks,” cautions Santhosh MR of the Centre for Trade and Development (Centad). “Already the Indian government is defending India’s strict patentability standards from the legal challenge mounted by Novartis in the Supreme Court and fighting the offensive on intellectual property enforcement targeting generic manufacturers launched by the EU in bilateral FTA negotiations. Civil society and patient groups offer full support in these tough battles to protect access to affordable generic medicines,” he adds.

Notes to the Editor:

The compulsory license was issued under Section 84 of the Indian Patents Act, 1970. Under Section 84, compulsory licence applications can be filed by generic companies when (a) the reasonable requirements of the public with respect to the patented invention have not been satisfied or (b) it is not available to the public at a reasonably affordable price or (c) the patent is not being worked.

Section 84 reflects the provisions of Article 31 of the World Trade Organisation’s Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) which can be read here: http://www.wto.org/english/docs_e/legal_e/27-trips_04c_e.htm

According to the WTO, a compulsory licence is not the same as tearing up a patent as “the patent owner still has rights over the patent, including a right to be paid for the authorized copies of the products.” See http://www.wto.org/english/tratop_e/trips_e/public_health_faq_e.htm

The Doha Declaration on the TRIPS Agreement and Public Health, signed by all WTO members re-affirming the right of all WTO members “to grant CLs and the freedom to determine the grounds upon which such licenses are granted” (see para 5.b) is available here: http://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_trips_e.htm

The decision of the patent controller issuing India’s first compulsory licence is available here: http://www.ipindia.nic.in/ipoNew/compulsory_License_12032012.pdf