Overview:The Controller General of Patents, Designs and Trade Marks has given a compulsory license to Hyderabad based Natco a local drug maker to manufacture and sell its generic version of German multinational Bayer’s patent-protected cancer medicine, Nexavar (Sorafenib tosylate), at about 30 times lower than charged by its Bayer Corporation.
Detailed Analysis: On Monday in a landmark judgment by the Indian Patent Office’s decision to allow Natco Pharma to sell Bayer’s patented cancer drug Nexavar on the grounds that Bayer could not be able to make the liver and kidney cancer drug available to a majority of needy patients because of its high cost. Nexavar helps extend life by a few months, and about 8,000 patients in advanced stages of renal cancer are in need of the drug. As per WorldTrade Organization 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. The license is valid till expiry of the patent in 2021as the Bayer has filed for the patent in 2001 and has been granted the same in 2008. The drug will be available to the public at a cost of Rs. 8,880 for a pack of 120 tablets (one month’s therapy) as against Rs. 2.8 lakhs sold by Bayer. In the past, Bayer has dragged Natco and Cipla to court with a patent infringement suit for producing low-cost versions of Nexavar. Now Cipla is also selling the product at a slightly higher price of Rs. 28,000. The government orders also make it necessary for Natco to supply the drug free of cost to at least 600 needy and deserving patients per year. Natco is expecting revenue of Rs. 25-30 crore per year thus causing an increase of 6.4% in its share. In addition to this Natco will have to pay 6% royalty payment on net sales to Bayer on quarterly basis and will have to manufacture the drug only at its own plant since it is not allowed to outsource production.
Reasons behind the compulsory licensing:There are three main reasons behind this licensing to Natco Pharma. First, the German firm was able to supply its drugs to only 2 per cent of the country’s patient population and did not meet the reasonable public criteria requirement. Second, its prices were not reasonably affordable, and third, it was imported and not manufactured in the country and Bayer did not import the drug at all in 2008 and imported in small quantities in 2009 and 2010 thus making it almost insufficient to meet the requirements.
Following this order, a mixed response has been reported from pharmaceutical companies stating that the government should have found other solutions to such type of issues concerning pricing and access. MNCs have also stated that these types of licenses should only be granted in case of a public health crisis otherwise they would undermine the innovative pharmaceutical industry and will discourage investment in new medicines for patients.
Inference:The government should impose compulsory licensing as it could lead to the decrease in the prices with access to needy patients. Moreover, multinational foreign based companies will also seeks partnership with the Indian generic manufacturers thus forcing the MNC’s to rethink their pricing strategies especially in the developing country like India.