In a landmark ruling, India's Patent Office has for the first time granted a generic drugmaker a compulsory license to make a copycat version of a patented medicine. The license was awarded to Natco, which can now make a generic of a Bayer kidney and liver cancer medication called Nexavar, although only for domestic distribution. The ruling also calls for Natco to pay 6 percent royalties to Bayer.
The move was described as a game changer, because the ruling could open the door for other Indian generic drugmakers to override patents for all sorts of medicines. Natco had argued that the cost of Nexavar is unaffordable for the average Indian and could be sold for a fraction of what Bayer charges. The decision is expected to lower the price from $5,500 per person each month to $175, a drop of nearly 97 percent.
The drug generated $934 million in global sales in 2010, according to Indian Patent Office, which also noted, however, that the product was barely sold in India and called this "neglectful." "The mandate of the law is not just supply the drug in the market, but to make it available in a manner such that substantial portion of the public is able to reap the benefits of the invention. If the terms are unreasonable, such as high cost, availability is meaningless," the Patent Office wrote (here is the ruling).
Patient advocacy groups and non-governmental organizations hailed the decision. "This decision marks a precedent that offers hope: it shows that new drugs under patent can also be produced by generic makers at a fraction of the price, while royalties are paid to the patent holder," says Tido von Schoen-Angerer, who heads the Medecins Sans Frontieres Access to Essential Medicines campaign. "More generic companies should now come forward to apply for compulsory licences, including on HIV medicines, if they can’t get appropriate voluntary licences."
Compulsory licensing, you may recall, has been a flashpoint between brand-name and generic drugmakers for several years. Consumer advocates and non-governmental organizations have lined up with generic drugmakers to charge that the cost of essential brand-name meds are often out of reach to most people in poor or developing countries.
"The Indian government took a first step toward protecting its public from high prices on patented drugs. We hope this will lead to more standardized policies for the grant of compulsory licenses when products are so expensive that access is limited to only the most wealthy patients," says Jamie Love of Knowledge Ecology International, a non-profit advocacy group that focuses on intellectual property issues that affect access to medications.
For their part, brand-name drugmakers say overriding patents with compulsory licenses robs them of incentives and rewards for investing in innovative research. The issue has caused high-profile disputes in such countries as Thailand, Brazil and South Africa, predominantly involving HIV medicines (some background here). Indian law, by the way, allows a drugmaker to apply for a compulsory license only after the innovator company rejects the voluntary request.
Bayer tried to justify its price by making claims of high R&D costs, although the Indian patent office noted in its ruling that the drugmaker did not provide specific figures to bolster its argument. Bayer also noted argued that discounts were offered to lower income patients, but another generic maker, Cipla, was selling an infringing product at a lower price. Bayer, by the way, has filed suit against Cipla, which means availability could disappear, depending upon the outcome of the litigation.
In any event, Bayer is expected to appeal the decision to the Indian Supreme Court. We have asked the drugmaker for a comment and will update you accordingly. [UPDATE: A Bayer spokeswoman calls us to say this: "We're disappointed and currently evaluating our legal options to cotinue to defend our intellectual property."]
In another contentious battle, the Supreme Court in India later this month will hear arguments over whether the government had the right to deny a patent to Novartis for the Gleevec cancer med. That dispute involves a patent based on a new form of the drug, which would offer a 20-year extension. A previous government ruling denied the request after deciding the new form did not meet a standard for enhanced efficacy (back story here).