Natco ruling is a watershed

by P. T. JYOTHI DATTA

source: The hindubusinessline

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The Patent Controller has signalled that critical medicines should be reasonably priced.

Life-saving medicines can turn cheaper, once compulsory licences are issued for patents.

February 28: The day of the nation-wide trade union strike, few people are on the roads and in offices in Mumbai. But on the second floor of the Patent Controller's office, a handful of people sit around a horse-shoe-shaped table, in a post-lunch session. They are listening to final arguments on pharmaceutical company Natco's application, seeking a compulsory licence on Bayer's Nexavar, an advanced kidney cancer medicine. It is also the last hearing of Mr P. H. Kurian, as Patent Controller General.

Subsequently, at noon, on March 12, the news breaking and burning wires in cyberspace is — India grants its first-ever compulsory licence to pharmaceutical company Natco. The Hyderabad-based company can now make and sell its chemically-similar or generic copy of Nexavar to patients in India. And it will do so, at a price that is 97 per cent less than the price of the original medicine. The compulsory licensing (CL) judgment also pegs royalty that Natco will pay Bayer at six per cent of net sales.

Bayer sells Nexavar at Rs 2.8 lakh for a month's supply of 120 tablets, while Natco will sell that medicine at Rs 8,800. Also in the fray here is Cipla — which sells its generic version of Nexavar at Rs 28,000 per month — but the company is at present fighting a patent-infringement case filed against it by Bayer, at the Delhi High Court.

MATURE DECISION

The Patent Controller's judgment is a path-breaker, as it signals the Government's decision to cast its lot in favour of making a critical and expensive medicine more affordable to the public. It also reflects the maturing of the Patent office, as the intellectual property or IP-driven global community watches decisions coming from of India — since it shoulders the responsibility of being a pharmacy to the international community.

If the CL judgment will open the floodgates for more generic pharmacy companies to explore this route, is something only time will unravel. But it illustrates how the amended Patents Act (2005) is being put to test from different quarters.

The CL judgment also comes in the run-up to the final hearings on another long-drawn benchmark case, at the Supreme Court, on Novartis' cancer medicine Glivec. While Novartis contests the rejection of its patent application on Glivec — in the process, The Patents Act is being put through a high-profile and globally significant test.

PRICE CORNERSTONE

On Nexavar, it is expected that Bayer would go in for a legal review of the CL judgment. But that doesn't take away from the point being hammered home by the Government through the grant of the CL — there is no getting away from the reality of pricing medicines “reasonably”. The bargain is, if the medicine is for the public, what good is it if the public cannot access it, says intellectual property expert Mr Shamnad Basheer. The judgment, a baby step for Natco, is, in fact, a giant leap for rest of the generic pharmaceutical companies, he says. But the principle behind the judgment, to make a product accessible to a larger public, can be used for the rest of the sectors as well, he points out.

A CL is granted under the amended Indian Patents Act (2005), and in the pharmaceutical context, it allows a generic pharmaceutical company to make a copy of a patented medicine, on the payment of royalty to the innovator. Royalty payment is in recognition of the investments the innovator must have put into researching and developing the original medicine. Mr Basheer further clarifies the situations that trigger a CL. In the case of a health emergency, the Government steps in and overruns a company's patent, giving more companies the right to make the said medicine, if it is in the interest of public health.

During the anthrax scare in 2001, the United States government was at the brink of considering overrunning Bayer's patent on Ciprofloxacin, to get the antibiotic at lower prices from the rest of the companies, so more people could access it.

A patent allows a company or the inventor an exclusive monopoly on the product for 20 years — but the alternate situation, where a CL is issued, is when a third party knocks at the door of the Government, on the grounds that the patent-holder isn't serving the local market adequately, Basheer explains. In fact, the Nexavar CL judgment reasons that Bayer hadn't “worked” its patent or manufactured Nexavar locally, and its imported quantities weren't enough to serve the local market. In fact, it served only 2 per cent of more than 8,000 patients who needed the medicine locally, the judgment said.

Companies are allowed to import medicines, but you need to make it affordable to the public, says Dr Prabuddha Ganguli, a patent expert and head of Vision-IPR. Lauding the judgment, he points out that the patentee (Bayer) had conceded it didn't comply with the reasonable requirements of the public. “From that stand-point it is suicidal”, he says. The patent-holder should have voluntarily reduced prices, or given a voluntary licence, allowing another company to make the product at lower prices, but that too didn't happen.

The other “strategic error” on the part of the patentee is that it offered the medicine at a subsidised cost, but under certain conditions — to patients recommended by an oncologist. “Benevolence is no substitute to bypass the law,” Dr Ganguli says.

The lesson for patent-holders is to work their patents, as the Indian patent office has matured, and is taking a serious note of such issues, he points out. Also, multinational companies will now be more judicious in the declarations they are mandated to make to the Patent office — on what they are doing with their patents.

A price rethink is also in order, as MNCs increasingly slant to differential pricing for different countries. In fact, companies like GlaxoSmithKline, are already pricing products differently in different markets, depending on the paying capacity of the people.

But the Organisation of Pharmaceutical Producers of India (OPPI), a platform largely for foreign companies, is disappointed with the CL judgment. “Compulsory licences should be used only in exceptional circumstances, such as in times of a national health crisis. If used arbitrarily, compulsory licences will serve to undermine the innovative pharmaceutical industry and will be to the long-term detriment of the patient,” says Mr Ranjit Shahani, OPPI President, and the India-head of Novartis. For better access, you need improved healthcare infrastructure and distribution, he points out.

POWER AND RESPONSIBILITY

While the CL judgment gets debated threadbare, the man who scripted it — Mr Kurian, leaves the Patent office, “a satisfied man”. In his three-plus years as its head, he has cleaned it up, brought in more transparency, technology and efficiency, making the patent office more “friendly” to the public. The day the CL judgment was made public, Mr Kurian handed charge to the new man in, Mr Chaitanya Prasad.

Steering clear of discussing the piping-hot judgment, Mr Kurian instead pulls out a book from his black bag — Gurucharan Das' The difficulty of being good – On the subtle art of Dharma — from where he draws inspiration. Quoting Yudhishtra, Kurian explains his own actions: “I act because I must.”

Some see Mr Kurian's CL judgment as an exit in a blaze of glory. Some others say he leaves the office more transparent and efficient, than when he took charge. In Kurian's own words, quoting former British Prime Minister Benjamin Disraeli, he says, “Power is nothing but responsibility transferred to you and to be transferred to someone else… I consider power as a responsibility transferred to me, in this case, by the public, by the parliament, by public opinion.”

Or as Dr Ganguli puts it, it's more than the CL judgment. Mr Kurian leaves after having brought in a purpose and a sense of pride in the Patent office.

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