The compulsory licence on sorafenib: A right step to ensure access to medicines
The decision by the Indian Patent Office to grant a local company a compulsory licence to produce a generic version of an anti-cancer drug patented by Bayer on the grounds that it was not available at a 'reasonably affordable price' is a major step to ensure access to medicines.
THE Indian Patent Office (IPO) made a landmark order on 12 March to grant domestic drug company Natco Pharma a compulsory licence (CL) to produce the generic version of multinational pharmaceutical firm Bayer's anti-cancer medicine sorafenib.
This order would allow sorafenib to be made available for Rs8,800 ($173.93) per box that contains 120 100 mg tablets for a month's treatment, against Bayer's price of Rs280,000 per box.
However, Natco is not the first generic company to bring this medicine at a lower price. India's leading pharmaceutical company Cipla had introduced its generic version earlier, only to be subjected to a patent infringement suit by Bayer. The Patent Office order now ensures that low-cost sorafenib would be available in India even if Bayer wins the patent infringement suit. Further, Natco's price is even lower than Cipla's price of Rs28,000 per pack.
Sorafenib is used to treat primary kidney cancer (renal cell carcinoma, RCC) and advanced primary liver cancer (hepatocellular carcinoma, HCC) that cannot be removed by surgery. It can extend the life of kidney cancer patients by 4-5 years and of liver cancer patients by 6-8 months.
Bayer obtained the marketing approval for sorafenib in 2005 and launched the drug worldwide in 2006 under the brand name Nexavar. Total sales of sorafenib in 2009 were $934 million.
Bayer charges an exorbitant price for this life-saving medicine. As a result, the UK National Institute of Clinical Excellence rejected sorafenib for National Health System (NHS) use in England, Wales and Northern Ireland, saying that the cost of the drug does not justify the benefit. Citing the same reason, the Scottish Medicines Consortium refused the use of sorafenib within NHS Scotland. However, the incremental benefit of the medicine is considered valuable.
In India, Bayer obtained the patent for sorafenib on 3 March 2008. The company supplied the medicine to the Indian market by importing it from its German manufacturing facility.
Natco filed its application for a compulsory licence under Section 84(1) of the Indian Patents Act on 29 July 2011. Section 84(1) allows any interested party to make a CL application after the expiration of three years from the date the patent was granted. The application can be made on three grounds: (a) that the reasonable requirements of the public with respect to the patented invention have not been satisfied; (b) that the patented invention is not available to the public at a reasonably affordable price; (c) that the patented invention is not worked in the territory of India. However, Section 84(6)(iv) also insists that, prior to the CL application, the applicant should make efforts to obtain a voluntary licence from the patentee on reasonable terms and conditions; six months is provided as a reasonable time period for such efforts. Natco initiated the CL process by seeking a voluntary licence through a letter dated 6 December 2010 and received a refusal letter from Bayer on 27 December 2010.
Through an order dated 11 August 2011, India's Controller of Patents, the head of the Patent Office, stated that after 'careful consideration of the Application I am of the view that a prima facie case, under Section 87(1) of the Patents Act 1970, has been established'. Further, the Controller directed Natco to serve a copy of the CL application to Bayer to initiate CL proceedings.
[Section 87(1) of the Patents Act states: 'Where the Controller is satisfied, upon consideration of an application under Section 84, or Section 85, that a prima facie case has been made out for the making of an order, he shall direct the applicant to serve copies of the application upon the patentee and any other person appearing from the register to be interested in the patent in respect of which the application is made, and shall publish the application in the Official Journal.']
Bayer attempted to delay the proceedings by approaching the courts to challenge the Patent Controller's order. Bayer stated that the Controller had not given Bayer an opportunity to present its views before making the order. The Mumbai High Court refused to hear the petition, citing jurisdiction, and directed Bayer to approach the Delhi High Court. (It is learned that even though Bayer approached the Delhi High Court, it subsequently withdrew the petition without pressing for an order.)
Natco in its CL application stated that Bayer was supplying the medicine through imports and failed to take adequate steps to manufacture the product in India. As a result, the medicine was available only in limited quantities through pharmacies attached to a few big hospitals in four cities, Chennai, Delhi, Kolkata and Mumbai. Further, Natco mentioned that Bayer was charging an exorbitant price for the medicine and made the product out of reach of most of the people who needed it.
Natco also cited six reasons to show the failure of Bayer to satisfy the reasonable requirements of the public with respect to the patented invention. They were: (a) refusal of request for a voluntary licence under reasonable terms and conditions; (b) failure to adequately meet the demand for the patented product; (c) exorbitant prices made the product out of reach of the common man, hence a failure to meet the demand for the product on reasonable terms; (d) non-working of the patented invention in India; (e) limited supply of the patented product through selective sources; and (f) abuse of monopoly rights by charging an exorbitant price.
Further, Natco stated that it could produce and market the medicine for Rs8,800 per month per person. It also stated that sorafenib would be made available free of cost to deserving and needy patients.
On the first ground [under Section 84(1)] of whether Bayer failed to satisfy the reasonable requirements of the public with respect to the patented invention, the Controller stated in his March decision that 'the Patentee's conduct of not making the drug available as per the requirements of public in India during four years, since the grant of patent, is not at all justifiable'. The Controller further stated, 'It is also not the case of the Patentee that there is no demand for the drug because as per their own submission, there is a requirement for at least 8842 patients. Even after the lapse of three years, the Patentee has imported and made available only an insignificant proportion of the reasonable requirement of the patented product in India.'
On the second ground of whether the patented invention is not available to the public at a reasonably affordable price, the Controller decided that 'during the last four years the sales of the drug by the Patentee at a price of about Rs280,000 (for a therapy of one month) constitute a fraction of the requirement of the public. It stands to common logic that a patented article like the drug in this case was not bought by the public due to only one reason, i.e., its price was not reasonably affordable to them. Hence, I conclude beyond doubt that the patented invention was not available to the public at a reasonably affordable price and that Section 84(1)(b) of the Patents Act 1970 is invoked in this case'.
On the argument of Bayer that affordability is required to be considered with regard to different classes/sections of the public, the Controller stated that 'I fully agree with the Patentee. I only wonder why the Patentee did not execute this concept by offering differential pricing for different classes/sections of public in India'.
On the third ground of whether the patented invention is not worked in the territory of India, the Controller said, 'It is an admitted fact that the Patentee does have manufacturing facilities for manufacturing drugs in India, including oncology drugs. However, even after the lapse of four years from the date of grant of patent, the Patentee failed to do so . Accordingly, I hold that Section 84(1)(c) is attracted in this case and consequently a compulsory licence be issued to the Applicant under Section 84 of the Act.'
However, some of the conditions imposed on Natco are onerous in nature. For instance, one of the conditions is that the licence 'is granted solely for the purpose of making, using, offering to sell and selling the drug covered by the patent for the purpose of treating HCC and RCC in humans within the Territory of India'. The licensee must also ensure, among others, that its product is 'visibly distinct from the licensor's product (e.g. in colour and/or shape); the trade name must be distinct, and the packaging must be distinct. The licensor will provide no legal, regulatory, medical, technical, manufacturing, sales, marketing, or any other support of any kind to the licensee'. These conditions are imposed on the licensee without any statutory basis. Care should be exercised that such conditions are not attached to future CLs.
Implications on access to medicines
Often pharmaceutical multinational corporations (MNCs) misuse their patent monopoly to charge exorbitant prices and undermine local production through importation. The sorafenib CL disrupts this type of abuse because the Patent Office ordered its issuance on the ground of absence of affordable price and local manufacturing. In other words, the CL makes it difficult for MNCs in the coming days to charge exorbitant prices for patented medicines and to meet developing-country market needs through importation. Thus this licence opens the door to curbing such abuses of patent monopoly. This is an opportunity for other developing countries to invoke compulsory licensing on the same grounds.
The sorafenib licence is believed to be the first of its kind issued in a developing country in response to an application filed by a generic manufacturer since the World Trade Organisation (WTO)'s international Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) came into force. Even though developing countries have granted over 50 CLs in the last 16 years - especially after the 2001 Doha Declaration on the TRIPS Agreement and Public Health reaffirmed WTO member states' right to use flexibilities (like compulsory licensing) enshrined in the TRIPS Agreement - these licences were issued under the 'government use' format, not at the request of a generic medicine company.
In the past, pharmaceutical MNCs and developed countries mounted economical and political pressures against the issuance of CLs. For instance, drug giant Abbott withdrew the registration of nearly 12 medicines from Thailand after the issuance of a 'government use' order in that country. The Trade Commissioner of the European Union wrote a letter to Thailand stating that the latter's decision to invoke 'government use' provisions was illegal.
In the case of the present licence, the US Commerce Secretary has already conveyed the US' concerns on the CL issuance. However, unlike in the 'government use' format, the present CL was issued after a quasi-judicial process and the executive branch of the state had little role in its issuance. Therefore the external pressure may not have the desired effect on CL issuance.
Most importantly, this CL proves that generic pharmaceutical companies can use compulsory licensing to supply important patented medicines at an affordable price. A business model based on TRIPS flexibilities, especially compulsory licensing, can be adopted to ensure access to new medicines and also to encourage local production in developing countries.
It may also have the effect of forcing pharmaceutical MNCs to change their behaviour towards developing countries in order to avoid the issuance of CLs. For instance, Roche has already announced its decision to cut the prices of two cancer medicines, trastuzumab (brand name: Herceptin) and rituximab (Mabthera), which are used for the treatment of breast cancer and cancers of the lymphatic system known as non-Hodgkin's lymphomas. The current prices of these medicines are $300 and $4,500 per month per patient. As per Roche's announcement, the Indian pharmaceutical company Emcure would repack the medicines and market them in India. Interestingly, Roche has yet to reveal the discounted prices, hence it is too early to make a judgement on this decision.
However, analysts point out that one cannot expect substantial price reductions in such dealings; otherwise, it would put the MNCs on the defensive with regard to the exorbitant prices in developed countries. Therefore, these analysts dismiss the Roche announcement as merely an attempt to preempt the threat of compulsory licensing. Further, the developing countries should not be swayed by such differential pricing decisions. It is important for them to determine the affordability of the medicines in relation to the socioeconomic conditions of each country, rather than simply accepting the quantum of any price reduction announced by the MNCs.
Resource to compulsory licensing
Besides sorafenib, there are many more patented medicines which are sold at exorbitant prices in India. In the absence of a credible public sector capability in pharmaceutical production, access to affordable medicines in India is completely dependent on the ability and willingness of the private sector to make use of compulsory licensing provisions.
However, whether more Indian pharmaceutical companies would come forward to apply for CLs depends on many other factors. There are two important factors, namely, alliances with MNCs and exposure in developed-country markets. Currently, many Indian drug companies have strategic alliances with pharmaceutical MNCs, primarily for contract manufacturing. These companies may not want to get on the wrong side of Big Pharma by seeking CLs. Similarly, companies which derive a large portion of their revenues from developed-country markets might be reluctant to use CLs for fear of a backlash in these markets.
Furthermore, not all companies are in a position to use CLs to introduce generic versions, because developing the product requires technological capabilities. MNCs may also prevent companies from using CLs through a carrot-and-stick approach. The 'carrot' could come in the form of a voluntary licence (with restrictive conditions), a strategic alliance or an offer to buy out the company at a high price. The 'stick' may be wielded through a series of litigations and propaganda against these companies globally.
In any case, the issuance of a CL by the Patent Office may not be the end of the story; it could instead mark the beginning of a protracted legal battle in the courts. For instance, Bayer has already made known its intention to challenge the latest decision of the Patent Office before the appropriate forum. Thus only companies with the resource base and patience can make use of CL provisions.
Further, there are still legal uncertainties in the compulsory licensing provisions of the Patents Act. These include the lack of a time limit to dispose of CL applications and of a ceiling on royalties to be paid to the patentee, and the stringent conditions accompanying CLs. Such uncertainties may deter companies from having recourse to compulsory licensing. Therefore, further finetuning of the legal provisions, through amendments or rules or precedents, is required to increase the level of confidence among applicants.
Lack of information may also hinder potential CL applicants. Often a single medicine would be covered with multiple patents; hence it is important to identify the relevant patents prior to lodging an application. Smaller pharmaceutical companies may find it difficult to obtain such information.
Therefore, developing-country governments like the Indian government need to address the abovementioned issues through legal and policy tools to create an enabling environment for domestic pharmaceutical companies to make use of CL provisions. However, the immediate task is to vehemently resist anti-CL propaganda and potential legal challenges to CL provisions at national and international forums.
*Third World Resurgence No. 259, March 2012, pp 26-28