A historic move to make drugs affordable
The government's decision to grant a compulsory licence for the manufacture
of an important anti-cancer drug should be the first step towards making
available essential drugs at little or no direct cost.
India's use of the compulsory licensing provision under its
patents law for the first time to make the patented cancer drug Nexavar
available at affordable prices is an essential, although belated step to curb
the mounting cost of drugs.
The grant of the licence by the Controller-General of Patents,
Designs and Trade Marks to Natco Pharma for manufacture of the drug Sorafenib
Tosylate (Nexavar) to treat liver and kidney cancer is a landmark event,
consistent with the test of public interest that governs such a measure. Under
Section 84 of the Indian Patents Act, 1970, any person can make an application
to the Controller for a compulsory licence after the expiry of three years from
the date of sealing of the patent, on the following grounds — non-fulfilment of
reasonable requirements of the public, or non-availability of the invention to
the public at a reasonable price. The Trade-Related Aspects of Intellectual
Property Rights and the Doha Declaration provide for compulsory licensing in
specified circumstances, including concerns on public health or public interest.
Licence till 2021
Mere application of the test of reasonable price in a country with
a weak social health insurance infrastructure provides a strong argument for
compulsory licensing in the case of Nexavar, the patent for which is held by the
German multi-national company, Bayer. At present a month's treatment regime of
120 tablets costs Rs.2.84 lakh, but manufacture under compulsory licensing will
slash it to Rs.8,880. The Indian applicant has been granted the licence till the
expiry of the patent in 2021.
The use of compulsory licensing is bound to raise the temperature
in the pharmaceutical industry and be dubbed a move that will stifle innovation.
But that would be ignoring the point that it is perfectly legal, and is in fact
provided for in the patents regime to balance public interest and corporate
profits. Use of the provision has been advocated by the High Level Experts Group
(HLEG) of the Planning Commission headed by Dr. K. Srinath Reddy, to address the
issue of lack of access to essential drugs and affordability.
The question of drug access and prices has become particularly
important after India changed over from a regime that recognises process patents
for medicines to one of patents for products, since 2005. The effects are
expected to be felt most acutely in the case of new drugs, notably those
relating to cancer, HIV/AIDS and psychiatric conditions. Further, the Planning
Commission HLEG has drawn attention to more possible negative outcomes if
enhanced provisions of TRIPS Plus, which would enable “evergreening” of patents
beyond 20 years, are applied.
Producing drugs is, no doubt, an expensive business, and
significant funds are invested in research and rigorous testing. The drugs
developed through this process have great impact on the well-being of people.
Yet, patents can also produce monopolies, and thus immense power for
corporations. It is important to remember that patents deal with intellectual
property, which, unlike other property, produces no conflict over use. Use by
one person does not cause any rivalry with another and thus has no marginal
costs.
Medical prize fund
The economist and Nobel Laureate, Joseph E. Stiglitz summed up the
problem in the British Medical Journal five years ago thus: Restricting
the use of medical knowledge not only affects economic efficiency, but also life
itself. We tolerate such restrictions in the belief that they might spur
innovation, balancing costs against benefits. But the costs of restrictions can
outweigh the benefits. He cited in particular, the discovery and patenting of
genes linked to breast cancer, a development that would, in countries without a
national health service, deprive many poor women access to the expensive test.
As a departure from the corporate-led pathways of innovation, which often invest
in lifestyle drugs research rather than life-saving formulations, Professor
Stiglitz advocated a medical prize fund to spur innovation, with large rewards
for discoverers of cures or vaccines for scourges such as malaria, and smaller
rewards for others that are similar to existing drugs. Such intellectual
property would then be open to generic drug manufacturers.
Issue of pricing
In the absence of effective intervention by the government, drug
pricing can produce expensive distortions. Indians consumed about Rs.56,000
crore worth of medicines through private chemists in the open market, going by
March 2011 figures submitted to the Planning Commission. What is revealing is
that the price gap between government procurement of drugs and retail sale can
be staggeringly wide — between 100 per cent and 5,000 per cent. Moreover, the
price index for medicines has parted from the index for all commodities and
moved steadily upward, since 1997-98. This is clear evidence of unethical
pricing of many medicines for rising profit, using patents as a cover, as well
as lack of regulation.
The bold move on compulsory licensing should be a first step in a
process of reform and price controls that will make available essential drugs to
all Indians at little or no direct cost. Drawing up a strong essential drug list
to suit the current national disease profile is important. The public sector
pharmaceutical industry and its capability to produce generic drugs have a
strong role to play in such a plan, and deserves encouragement to revive its
fortunes. This initiative is crucial to the universal health coverage that the
Indian government wants to provide to all its citizens in coming years, starting
with the Twelfth Plan. It should also serve as a clear signal to pharmaceutical
companies to stop extracting staggering profits from a market with weak social
support mechanisms.
anant@thehindu.co.in
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