In an eagerly awaited decision, India's Controller of
Patents has granted a licence to generics pharmaceutical
manufacturer, Natco Pharma Ltd (Natco) to manufacture Bayer's
patented anticancer drug 'Naxavar'. Although it may well be
appealed, the decision is likely to result in a surge of
applications for compulsory licences in respect of expensive,
potentially life-saving patented drugs.
In essence, Natco argued that Bayer had not made the patented
drug available to the public at a reasonably affordable price and,
further, that it had failed to work the patent in India. It
undertook to manufacture the drug for sale in India only.
Two controversial issues
Two important issues dealt with by the Controller were the
interpretation of 'reasonably affordable price' and
'working' the patented invention.
'Reasonably affordable price'
This was hotly debated by both sides. Bayer argued that the
price of its drug had to take account of overall R&D costs,
which it demonstrated were rising every year. It argued that it was
in the public interest to fund research into areas of unmet medical
needs, and that this the cost of such research was necessarily
reflected in the price of patented drugs. Further, it raised a
fundamental argument that has long been a cause of debate between
generic and innovator companies: it is the prerogative of an
innovator to decide what constitutes a 'reasonably affordable
price'. Natco, on the other hand, relied on various studies to
show that the price of Bayer's drug was clearly unaffordable
for many potential users in India.
The Controller held that 'reasonably affordable price'
must be construed predominantly with reference to the public and
not the patentee and that, so construed, the price of Bayer's
drug was not 'reasonably affordable'.
'Working' the patent in India
The interpretation of 'working the patent in India' has
been controversial: does it mean manufacturing the patented product
in India or commercially working the patent by way of importation
of the patented product?
The Controller interpreted 'working' to mean local
India is the second country in Asia, after Thailand, to grant a
compulsory licence in relation to a patented cancer drug. Clearly,
the Controller's decision will be disappointing for research
based pharmaceutical companies, and welcomed by generics
manufacturers. It is, however, likely that Bayer will appeal the
decision, particularly in relation to the Controller's
definition of 'working the patent'.
In the meantime, multinational pharmaceutical companies should
consider taking the following steps to pre-empt compulsory licence
applications: (a) entering into licensing arrangements to ensure
better distribution and (b) taking steps to introduce a
differential pricing structure for the sale of patented drugs to
different sections of the public.
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This article enunciates the recent, much awaited, and landmark judgment delivered on September 16, 2016 by Hon'ble Delhi High Court throwing light on the important provisions of the Copyright Act, 1962.
The Patents Act 1970, along with the Patents Rules 1972, came into force on 20th April 1972, replacing the Indian Patents and Designs Act 1911. The Patents Act was largely based on the recommendations of the Ayyangar Committee Report headed by Justice N. Rajagopala Ayyangar. One of the recommendations was the allowance of only process patents with regard to inventions relating to drugs, medicines, food and chemicals.
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