The ultra powerful pharmaceutical multi nationals are facing a setback due to India’s weak patent regime for medicines. India has been favoring the low cost Indian generic companies. Also, recently the Indian patent office granted compulsory license allowing Natco Pharma Ltd to make and sell a copy of German drug maker Bayer AG’s patented cancer treatment Nexavar. The decision to allow Natco Pharma to sell Bayer’s patented cancer drug Nexaver has divided the pharmaceutical industry with domestic firms welcoming the decision while multinationals were disappointed by this decision. The US has also criticised India’s decision to issue its first compulsory license to domestic drug company Natco for selling copied versions of Bayer’s anti-cancer drug Nexaver arguing that it would discourage new investments and dilute the international patent regime.

Indian patent system has many problems. India has been reluctant to protect patents for many years, especially in areas where foreign firms have advantages over domestic ones. This reluctance is especially strong in pharmaceuticals. Earlier until 2005, India’s patent regime recognized only process patents for making pharmaceutical products—and not the actual products and allowing its home-grown generic drug industry to copy foreign innovations.

All this was changed when India amended its patent act in 2005 and made laws according to the Trade-Related Aspects of Intellectual Property Rights (TRIPS) provisions under World Trade Organization (WTO). When the country adopted an expanded patent law, it was widely hailed and multinational firms began moving in. Even several patents for best selling medicines which were granted in U.S.A and Europe were not given patent protection in India.

But recently, Natco Pharma was granted compulsory license for Bayer’s drug Nexaver that is allowed to sell the Bayer’s patented drug for kidney liver cancer which was a setback to global players who entered the Indian market with a hope of greater protection for their patented drugs. As per the order of the India Patents Office, Natco will have to pay a royalty of 6 per cent of the net sales on a quarterly basis to Bayer. It will have to manufacture the drug only at its own plant since it is not allowed to outsource production. Not on Bayer but also top selling medicines likeanticancer drug Tarceva from Roche; and HIV medicine Viread from Gilead Sciences have failed to get protection from India’s patent system. Cipla was allowed to sell the generic of Tarceva patent on the basis of public interest and pricing. Cipla’s drug was 1/3rd the cost of Roche’s patented drug. Natco has also sought a similar voluntary license from Viiv Healthcare, the joint venture company that houses HIV/ AIDS drug business of Pharmaceuticals and Pfizer Inc.

As per TRIPS agreement, a compulsory license can be invoked by a national government allowing someone else to produce a patented product or process without the consent of the patent owner. It is done for the cause of public health.

US have placed India on priority watch list in its latest trade representative report, which raises concerns over the country’s enforcement of intellectual property rights. It also urged India to continue to work to streamline its patent opposition proceedings and it will closely monitor developments concerning compulsory licensing of patents in India while also bearing in mind the Doha Declaration on TRIPS and Public Health.

Indian government has strongly objected U.S. according to the government the Indian patent system is fully compliant with TRIPS provision and pin pointed that the focus is mainly trade and no importance is given to public health.

Now the biggest and most-watched of them will be drug major Novartis’ bid to patent Gleevec, another anti-cancer drug used to treat leukaemia. Novartis has argued that its patent on the drug should be extended as it has increased its efficacy by 30%. If a patent is granted to Novartis then the practice of patent evergreening will open where companies make minute changes to old drug and file for 20 years patent protection. Hence blocking the market for cheap generic versions and prices of drug will stay high.