Case of compulsory license in pharmaceutical area in India

I. The Patentee
Bayer Corporation invented Nexavar in 1990s.
Drugs are not to cure, but to prolong the life of patients with liver cancer and end-stage
kidney.
The patent entered the national phase in India on 5/7/2001.
After examination under the provisions of the Patent Act, 1970, a patent was granted on
3/3/2008.
The Patentee has also obtained patents in many other countries for the same drug
including members of the European Patent Office.
II. The Applicant
received license from Drug Controller General of India for manufacturing the drug in
bulk and for marketing it.
Natco had contacted with Bayer to request for a voluntary license. However, Bayer
refused.
Natco then requested a compulsory license under Article 84 of the Indian Patents Act
which was in effect. N
atco then had filed an application for issue of compulsory license to manufacture the low-
cost version of Nexavar.
The compulsory license was granted in accordance with the grounds described under
section 84 of the Indian Patent Act.The license is valid till expiry of the patent in 2021.
III. Legal ground of the case
In India, there is Patent Grant which is prescribed in Patent Act, 1970. The objective of it
is to ensure that the inventions are worked in India on a commercial scale and to the
fullest extent without any undue delay.
Natco convinced authorities that they were eligible to receive a compulsory license based
on each above reason:
1. The reasonable requirements of the public with respect to the patented invention
have not been satisfied
- Natco used the numbers on use of the drug Nexavar and practical needs to prove that
Bayer did not meet the reasonable demands of the Indian population for this drug.
- Patentee imported and sold the drug in India and had not taken adequate steps to
manufacture the product in India to make full use of invention.
- The product was available only in limited quantities in pharmacies attached to certain
hospitals in only some metro cities.
- In the case, the applicant had proved that even 1% of the public did not derive benefit of
the patented drug. The authority has agreed with this reason.
2. The patented invention is not available to the public at a reasonable price
- Natco and Bayer had profound disagreement on the issue of affordable prices.
- Natco said that the term "reasonably affordable" was first applied for the public
consumer.
- Bayer said that the concept must apply appropriately to the manufacturer, which should
cover the cost of research efforts, development success and failure until the actual drug is
sold in the market.
- However, Bayer could not explain why they did not apply the price ladder diagrams for
their own price strategy.
- Finally, authorities supposed "reasonably affordable" must be construed with reference to
public use.
- Bayer did not deny the evidence that Nexavar had the price beyond the reach of a large
majority of cancer patients in India.
3. The patented invention is not worked in territory of India
- Article 84 does not define the term "made in India.
- The authority still hold the opinion that in order to avoid compulsory licenses the patent
owner have to manufacture products in India or grant licenses to other producers.
IV. Conclusion
- There were different opinions about the long-term effects of compulsory licenses for
Natco - especially because the case can also be altered due to complaints.
- The World Health Organization (WHO) has welcomed the broader approach to medicine
that the decision of the Indian authority will bring.
- However, the pharmaceutical and biotech corporations are worried about the side effects
that the compulsory licenses can cause to R&D.
- They said that compulsory licenses for pharmaceutics must be limited only to specific
situations such as national health crisis or actual prices of drugs cannot be reached.
- However, this is the first case of a series pushing developing countries to use compulsory
licenses to make expensive drugs become more accessible to their people.