Abantika Ghosh of the Indian Express, has reported in today’s edition that the Department of Industrial Policy and Promotion (DIPP), the nodal department of the Government of India’s handling IP policy “has started the process of issuing compulsory licences for three commonly used anti-cancer drugs, Trastuzumab (or Herceptin, used for breast cancer), Ixabepilone (used for chemotherapy) and Dasatinib (used to treat leukaemia).”
The report mentions that the compulsory licences can be issued under both Section 84 and Section 92 of the Patent Act, 1970 but does not specifically identify any single provision under which the CLs in question are being issued. CLs under S. 84 require an application to be made by a private manufacturer to the Controller General of Patents, who can then issue CLs to the private manufacturer, provided certain grounds are met. This is what happened in the case of Bayer’s Nexavar patents, where NATCO had been granted the first ever compulsory licence for a pharmaceutical patent. .
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| A scene from Sholay, where Gabbar asks 'Ab tera kya hoga kalia' I can just imagine the Secretary of the DIPP asking Big Pharma the same question after issuing the CLs. |
CLs under S. 92 are however completely different. In this case, the Central Government, itself can issue CLs on the grounds of a public health emergency. The exact phraseology is as follows: “(1) If the Central Government is satisfied, in respect of any patent in force in circumstances of national emergency or in circumstances of extreme urgency or in case of public non-commercial use, that it is necessary that compulsory licenses should be granted at any time after the sealing thereof to work the invention, it may make a declaration to that effect, by notification in the Official Gazette”. Given that the news report has mentioned that the DIPP is involved in the process it probably means that the Central Government has delegated this power under Section 92 to the DIPP under the Government of India-Rules of Business.
Under S. 92 once the Central Government has issued a notification in the Official Gazette of India, any person interesting in manufacturing the drug, may approach the Controller General for a CL, who will then issue a licence. The advantage of going under S. 92 instead of S. 84 is that it is a much simpler, faster process and always guarantees a CL.
S. 84 requires the applicant to establish that the patentee is not making available the invention at a reasonable cost. All these questions, along with the possible rate of royalty are factual issues which have to be decided by the Controller General after hearing both parties. This decision, which is a judicial decision, can then be appealed to the IPAB. However under S. 92, the decision to grant a CL is a decision by the political executive, the basis of which cannot be challenged in a court of law. More importantly, S. 92 allows the Controller General to waive the entire hearing process that is followed under S. 84 of the Patent Act on the grounds that a public health emergency requires expediency on the part of the government. The provision only states “PROVIDED that the Controller shall, as soon as may be practicable, inform the patentee of the
patent relating to the application for such non-application of section 87.”
The patentee can in all probability challenge the terms and conditions of the CL after he is informed of the terms and condition of the CL.
The provision also states that “in settling the terms and conditions of a licence granted under this section, the Controller shall endeavour to secure that the articles manufactured under the patent shall be available to the public at the lowest prices consistent with the patentees deriving a reasonable advantage from their patent rights.” This standard is different from the S. 90 standard, which is required to be followed in the case of S. 84 licences, which is as follows “that the royalty and other remuneration, if any, reserved to the patentee or other person beneficially entitled to the patent, is reasonable, having regard to the nature of the invention, the expenditure incurred by the patentee in making the invention or in developing it and obtaining a patent and keeping it in force and other relevant factors”. In the NATCO-Bayer case, under S. 84 the royalty rate was fixed at 6% of net sales. Given that the S. 92 standard appears to be lower the royalty figure could possibly fall significantly below 6%.
Of the three drugs that are targeted, the choice is hardly surprising except for the fact that I was unaware that Herceptin was protected by any patents in India.
Herceptin, which is owned by Genetech, (a subsidiary of Roche) was the subject of a massive campaign last year, which we had blogged about over here, where civil society groups had petitioned the government to adopt policies to reduce the price of this drug. Like we had mentioned earlier, Herceptin originally used to be priced at Rs. 1,10,000 per dose and a breast cancer patient ordinarily requires between 18-20 doses. That used to come to between Rs 22,00,000 – Rs. 25,00,000. The price was subsequently reduced marginally to Rs. 75,000 per dose. The total treatment cost then comes to almost Rs. 15,00,000. Like I have stated earlier on this blog, this is way beyond any medical insurance policy offered to middle class Indian families which are allegedly the target of Big Pharma. (The Indian Express is wrong when it mentions the price of Herceptin as Rs. 50,000 per dose.) More importantly, we were speculating that no Indian company had yet secured the approvals or the technology to manufacture Herceptin. There was some news in the market that Biocon was poised to enter the market this year with a bio-similar of Herceptin. Other companies like Dr. Reddy’s have demonstrated the capacity to manufacture biological. It will be interesting to see which company actually makes a move for the final CLs.
The patents for the remaining two drugs – Ixabepilone and Dastinib are owned by Bristol Myers Squibbs (BMS). Dastinib is already the subject of considerable patent litigation before the Delhi High Court, where BMS has sued a number of companies including NATCO. The Indian Express has reported the costs of these drugs at Rs. 80,000 and Rs. 15,000 per dose. It will now be possible for companies like NATCO to approach the Controller General for CLs as a matter of right.
If these reports are true and I find no reason to suspect the Indian Express, the news could serve as a very rude wake up call for some constituents of Big Pharma, which have refused to take into consideration the realities of the Indian market. It should be noted that other companies like GSK, which have massively cut the prices of their patented drugs like Tykerb (targeted at breast cancer) have been excluded from the recent announcement, despite the fact that Indian companies are interested in manufacturing Tykerb. Companies like Roche have cut the prices of Herceptin in the past but the price cut has been a joke since the entire dosage still costs Rs. 15 lakhs. As for BMS, I’m unaware of any pricing cuts for the Indian market. News of these new CLs come close on the heels of a series of patent revocations and oppositions to Big Pharma’s Indian patents.
The most common reaction from Big Pharma is to cry foul and threaten the Indian Government about the repercussions of its decisions to issue CLs. Those threats have rarely worked in the past and are unlikely to work in the future. It is time for Big Pharma to change its policy and tack towards India.
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