India’s compulsory licence to Natco : First cut

I quickly read through the Indian Patent Office’s order granting a compulsory licence to Hyderabad’s Natco to make and sell its generic of Bayer’s patented liver and kidney cancer drug Nexavar in India.  While I’m no legal expert and I’ve just speed-read the order, some things just stand out so here goes.

The order as well as most of the arguments made on both sides are surprisingly straightforward and easy to understand. The Indian patent office believes that Natco deserves a compulsory licence because Bayer has not made the drug available to the actual number of people who need it in the country, that Nexavar is unaffordable to most Indians, and that the invention is “not worked” in India which it has interpreted to mean “manufactured to a reasonable extent” in India (Nexavar is imported).

The numbers quoted in the order (by various parties) are interesting and revelatory.

According to GLOBOCAN data admitted by the Patent Office, 16,000 Indian patients with liver cancer and 7120 patients with kidney cancer need Nexavar.  Bayer itself has estimated 8842 patients need Nexavar each year in India.The IPO estimates that in 2011, Bayer would not have supplied Nexavar to more than 200 patients.

Then, the cost of therapy with Nexavar is Rs 2,80,428 per month and Rs 33,65,146 per year.  Treatment is lifelong.   In the case of liver cancer, survival is extended by 6 to 8 months and in the case of kidney cancer by 4 to 5 years.  For context, according to Indian government norms, a family of five with an income of above Rs 4805 a month in urban areas and more than Rs 3924 in rural areas is deemed to be above the poverty line. Natco proposes to sell at Rs 8800 per month.  The CL requires it to pay Bayer a 6 per cent royalty on net sales.

The order suggests that Natco has not pulled any punches going all out to make a case for a CL.  Bayer on the other hand seems to have presented a rather weak defence. For instance, in trying to prove availability of the drug it has included the sales of generic Nexavar made by generic company Cipla even as it is fighting a patent infringement suit case against the same company!The IPO has refused to take these into account since as it rightly claims Cipla can be prevented from selling by a court at any time.

Bayer believes that while assessing affordability the patent office should take into consideration that health insurance to pay for the drug doesn’t cost as much as the drug itself.  But even a secondary school student knows that insurance is bought by only 10 per cent of Indian households.

It has pointed out that Natco’s blanket CL makes the drug cheaper even for those who can afford it. But that has only led the IPO to wonder why Bayer did not follow differential pricing for various classes of society to begin with!

In a nutshell, the Indian patent office has put all innovators on notice. I quote from the order , “From its very nature a right cannot be absolute. Whenever conferred upon a patentee the right also carries accompanying obligations towards the public at large.”

It is these rights and obligations that Bayer has failed to prove convincingly that it has discharged. These are my initial thoughts. More later.


3 thoughts on “India’s compulsory licence to Natco : First cut

  1. The U.S. can — and should — learn from India’s example in this case. Too often, the patent system gives the appearance of favoring private profit over the public interest. Certainly, innovators have a right to benefit financially from their intellectual property; but in some life-and-death cases it seems to me that basic human rights should trump considerations of revenue maximization.


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