Info Service on Health Issues (Mar12/03)
15 March 2012
Third World Network
India issues compulsory licence for anti-cancer medicine
Published in SUNS #7330 dated 15 March 2012
New Delhi, 13 Mar (K.M. Gopakumar) - India's Patent Office issued a
compulsory license on Bayer's anti-cancer medicine sorafenib tosylate
on 12 March to a domestic manufacturer Natco Pharma, opening the door
to a much cheaper generic version of the life-saving medicine.
Sorafenib is an anti-cancer medicine for the treatment of primary renal
cell carcinoma (kidney cancer) and advanced primary liver cancer known
as hepatocellular carcinoma that cannot be treated with surgery. Sorafenib
can extend the life of patients in kidney cancer by 4-5 years and in
liver cancer by 6-8 months (see SUNS #7326 dated 9 March 2012).
The compulsory license (CL) is granted to Natco under Section 90 of
the Indian Patents Act with 13 terms and conditions and is operational
for the remainder of the term of the patent till 2020. When the patent
expires in 2020, there will be no restriction on other generic production.
The patented version produced by German pharmaceutical giant Bayer costs
about US$5,600 per month and under the CL, the price of the generic
medicine sold by Natco shall not exceed Rs. 8,880 (about US$176) for
a pack of 120 tablets, required for one month of treatment. This constitutes
a price reduction of nearly 97 per cent.
Natco must maintain records including accounts of sales in a proper
manner and shall report the details of sales to the Controller of Patents
as well as the Licensor (Bayer) on a quarterly basis, on or before the
fifteenth day of the succeeding month. Natco shall have the right to
manufacture the medicine covered by the patent at its own manufacturing
facility and shall not outsource the production.
The licence is non-exclusive (i.e. others may be licensed to manufacture)
and non-assignable. Natco shall pay royalty to Bayer at the rate of
6% of the net sales of the drug on a quarterly basis and such payment
shall be affected on or before the fifteenth day of the succeeding month.
The licence is granted solely for the purpose of making, using, offering
to sell and selling the medicine covered by the patent for the purpose
of treating the two types of cancer in humans within the territory of
Natco shall supply the medicine to at least 600 needy and deserving
patients per year free of cost. It has to annually submit in the form
of an affidavit the details of such patients, i.e. name, address and
the name of the treating oncologist to the Office of the Controller
of Patents and such report shall be submitted on or before 31 January
of the year, in respect of the preceding year.
Natco shall not have the right to import the medicine. The licence does
not include any right to represent publicly or privately that Natco's
generic product is the same as Bayer's or that Bayer is in any way associated
with Natco's product.
The generic product must be visibly distinct from Bayer's product (e.g.
in colour and/or shape), the trade name must be distinct, and the packaging
must be distinct. Bayer will provide no legal, regulatory, medical,
technical, manufacturing, sales, marketing, or any other support of
any kind to Natco.
Natco is solely and exclusively responsible for the product and for
all associated product liability. Bayer, its directors, officers, employees,
agents and affiliates shall not be held liable in any manner whatsoever
for any action of Natco.
Bayer is free to do whatever it wishes with its residual patent rights
subject to the non-exclusive licence to Natco, and is free to compete
with Natco and to grant its own licences to third parties to compete
[It has been shown in previous cases that the availability of generic
versions of a patented medicine results in competition that drives prices
down, making essential medicines much more accessible to patients.]
In reaching the decision, the Controller of Patents found that Natco's
CL application is justified on three grounds under Section 84 (1) (a),
(b) and (c) of the Patents Act that allows for a CL after the expiry
of three years from the date of grant of a patent.
These grounds are: (a) The reasonable requirements of the public with
respect to the patented invention have not been satisfied; (b) The patented
invention is not available to the public at a reasonably affordable
price; and (c) The patented invention is not worked in the territory
Natco sought the CL citing all these three grounds. The Controller accepted
Natco's contention that Bayer as a patentee failed to fulfil the above
three grounds under the law.
On the first ground, the Controller stated that "the patentee's
conduct of not making the drug available as per the requirements of
the public in India during the four years since the grant of patent,
is not at all justifiable".
The Controller further stated that "it is also not the case of
the patentee that there is no demand for the drug because as per their
own submission, there is requirement for at least 8,842 patients. Even
after the lapse of three years, the Patentee has imported and made available
only an insignificant proportion of the reasonable requirement of the
patented product in India".
The Controller further held that Bayer also failed to fulfil Section
84 (7)(a)(ii) of the Patents Act. This provision states that reasonable
requirements of the public with respect to the patented invention shall
be deemed not to have been satisfied if, by reason of the refusal of
the patentee to grant a licence or licences on reasonable terms, the
demand for the patented article has not been met to an adequate extent
or on reasonable terms.
The Controller rejected Bayer's argument that there is an adequate supply
of Sorafenib if one takes into account the number of boxes sold by another
generic manufacturer M/s Cipla, which is facing a patent infringement
suit from Bayer for producing a generic version of Sorafenib.
According to Bayer, 8,842 patients require Sorafenib treatment. The
affidavit filed by Bayer stated that the projected sales in 2011 would
be 5,279 boxes, with a break-up of 593 boxes from Bayer and 4,686 boxes
from Cipla. Bayer also submitted a sales projection table showing that
Cipla and Bayer would reach out to 9,463 patients by 2015.
Rejecting this submission, the Controller found out from Form 27 [the
statement regarding the working of a patented invention on commercial
scale in India under Section 146(2) of the Patents Act] that Bayer imported
only 340 units (60 tablet pack) of "support pack" and 340
units (960 tablet pack) of sample pack "both having an invoice
value of Rs. 1,045,692 (about US$20,941) packets".
Hence, the Controller held that "from the Form No. 27 filed by
the patentee for the year 2009 and 2010, ... only an insignificant quantum
of the drug was made available by the Patentee to the public during
these two years. As discussed, I am not inclined to buy the argument
of the Patentee by taking shelter of M/s Cipla's supply".
[Section 146(2) of the Patents Act states that " ... every patentee
and every licensee (whether exclusive or otherwise) shall furnish in
such a manner and form and at such intervals not being less than six
months as may be prescribed, statements as to the extent to which the
patented invention has been worked on a commercial scale in India".]
The Controller further stated that "for argument sake, even if
I consider the sale of 4,686 packets during 2011 by M/s Cipla, the supply
in India was not anywhere near the requirement".
On the second issue of "reasonably affordable price", i.e.
whether the patented invention is not available to the public at a reasonably
affordable price, the Controller decided that "during the last
four years the sales of the drug by the Patentee at a price of about
Rs. 280,000 (for a therapy of one month) 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 was not reasonably affordable to
them. Hence, I conclude beyond doubt that the patented invention was
not available to the public at a reasonably affordable price and that
Section 84 (1) (b) of the Patents Act 1970 is ‘invoked in this case'".
On the argument of Bayer that "affordable to the public" is
required to be considered as affordable to different classes/sections
of the public, the Controller stated that "I fully agree with the
Patentee. I only wonder why the Patentee did not execute this concept
by offering differential pricing for different classes/sections of public
On the third issue of whether the patented invention is not worked in
the territory of India, the Controller decided that "it is an admitted
fact that the Patentee does have manufacturing facilities for manufacturing
drugs in India, including oncology drugs. However, even after the lapse
of four years from the date of grant of patents, the patentee failed
to do so ... Accordingly, I hold that Section 84(1)(c) is attracted
in this case and consequently a compulsory license be issued to the
Applicant under Section 84 of the Act".
In reaching this decision, the Controller rejected Bayer's argument
that working of patents does not mean manufacturing but that importation
is sufficient to fulfil the Section 84(1)(c) requirement.
To support its argument, Bayer cited Article 27(1) of the WTO TRIPS
Agreement (in intellectual property) and argued that the deletion of
the words "manufactured in India" from Section 84(7)(a)(ii)
during the Patents Act amendment in 2002 is to comply with the TRIPS
Rejecting Bayer's argument, the Controller held that "When Article
27(1) of the TRIPS Agreement is read with the afore-mentioned provisions
of the TRIPS Agreement and the Paris Convention, it follows that importation
of a patented invention shall not result in forfeiture of a patent.
However, reasonable fetters on the patent rights in the form of a compulsory
license is very well within the purview of the Paris Convention and
TRIPS Agreement, when there is an abuse of patent rights."
[According to Article 27(1), patents shall be available and patent rights
enjoyable without discrimination as to the place of invention, the field
of technology and whether the products are imported or locally patented.]
According to several experts, this is a landmark decision in the post-TRIPS
Agreement era. Even though many CLs were issued after the conclusion
of the TRIPS Agreement especially after the adoption of the Doha Declaration
on the TRIPS Agreement and Public Health, these have mainly been HIV/AIDS
medicines and have been in the form of a "Government Use"
order. This is the first time that a CL is granted at the request of
a generic company.
Experts also pointed out that this would pave the way for issuance of
more CLs especially for medicines for non-communicable diseases that
are increasingly becoming a public health problem.
There are at least another 33 more patented medicines, which are sold
at exorbitant prices by multinational corporations. For instance, a
50 ml injection of Roche's anti-cancer drug trastumuzab (brand name:
Herceptin) costs Rs 135,200 (about US$2,586); Merck's cetuximab (Erbitux)
is Rs 87,920 (about US$1,683.93), Bristol-Myers-Squibb's ixabepilone
(Ixempra) Rs 66,430 (about US$1,271.18), Pfizer's pegaptanib (Macugen)
Rs 45,350 (about US$867.48), Sanofi-Aventis' rasburicase (Fasturtec)
Rs 45,000 (about US$860.42), and Roche's bevicizumab (Avastin) Rs 37,180
These 33 medicines fall under the following disease categories: anti-cancer
(10), cardiac (7), anti-infective (5), analgise (3); neurological (4),
diabetic (3) and Ophthal/ontological (1).
Public interest groups, industry and the market welcomed the CL order.
Dr. Amit Sengupta of the Peoples' Health Movement said: "Extremely
significant is that this is a rare instance where a general CL has been
issued, not bound by government use provisions or those requiring to
show ‘extreme urgency' or ‘emergency'. Practically all CLs issued so
far in other parts of the world have been of the latter kind. By using
a CL that can be utilized by a generic company without encumbrances,
means a possible opening of opportunities for using CL to promote competition".
M. R. Santhosh of the Centre for Trade and Development, a New Delhi-based
think tank working on access to medicines issues, welcomed the order
and cautioned that "India is likely to face exceptional pressure
from developed countries and multinational pharmaceutical companies
in the coming weeks."
Dr. Gopakumar Nair, Chairperson of the Sub-Committee on Intellectual
Property Rights, Indian Drug Manufacturers Association (IDMA), said:
"This is a landmark judgement and is long awaited from the Indian
Patent Office. Being acknowledged as the ‘pharmacy of the world', India
has to meet the aspirations of the developing and least developed countries".
He also stated that, "In achieving the balance of rights and obligations,
access to affordable critical medicines is as much an obligation on
the part of both the patentee and the government."
Medecins Sans Frontieres (MSF) Access Campaign's Director of Policy/Advocacy,
Michelle Childs, said: "This decision serves as a warning that
when drug companies are price gouging and limiting availability, there
is a consequence: the Patent Office can and will end monopoly powers
to ensure access to important medicines."
The stock market also seemed to viscerally welcome the decision. The
share price of Natco appreciated by about 7% and recorded a 52-week
high price after the announcement of the CL order.
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