Question of ethics

The Intellectual Property Appellate Board’s decision upholding an order of the Controller General of Patents granting compulsory licensing in India for a cancer drug is an important step in the efforts to make costly drugs available to needy patients.

In a path-breaking decision the patent controller had last year allowed a Hyderabad-based drug company Natco to manufacture a generic version of the drug Nexavar which is patented and produced by the German multinational Bayer. Bayer’s appeal against the decision has now been dismissed by the appellate board.

Affordability and access were the two considerations that led the patent controller to take a decision in favour of the Indian company. While Bayer marketed the drug at a price of about Rs 2.8 lakh for a month’s dosage Natco could sell it at Rs 8,800. It was also found that only 150 patients could use the drug while 8,000 critically ill patients needed it.

Compulsory licensing of drugs is allowed legally by countries without the consent of a  patent-holder or manufacturer when the drug is not accessible or affordable by the people. A royalty is paid to the original manufacturer. The appellate board has increased Bayer’s royalty to 7 per cent from the 6 per cent fixed by the patent controller. The huge difference between Natco’s  price and Bayer’s price is the difference between life and death for most patients.

It also shows the unreasonably high profit margin earned by the company on the drug. Bayer’s argument that the high price reflects the cost of research and development is not convincing. The compulsory licensing decision marks an important stage in the interpretation and implementation of patent law in India. It might serve as a guide to other countries also where poor patients find drugs marketed by multinationals beyond their reach.

The decision will also set a precedent in the case of many other generic drugs produced and sold at exorbitant prices by MNCs. The companies may have to make the drugs affordable or see them being made and sold by other companies. Bayer may still not be ready to accept the decision and may go to the court or even to the WTO.

But the early rounds have gone to the view that drugs are not just for profit but for use by those who need them. They have introduced an ethical dimension and an element of fairness in an area known for the most commercial and exploitative practices.

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