Landmark decision

Last week’s order of the Controller General of Patents in India granting the first-ever compulsory licence in the country to a Hyderabad-based pharmaceutical company to manufacture  a patent-protected drug is historic for its implications for public health.

It is also a landmark in the evolution and interpretation of patent law and may have a significant impact on patent law regimes in countries like ours where multi-national drug companies sell their products at exorbitantly high prices.

By his order the patent controller allowed the Indian company Natco to manufacture and sell a generic version of a cancer drug marketed in India by the German company Bayer. While  Bayer’s brand, called Nexavar, used in treatment of liver and kidney cancer, is sold for about Rs 2.8 lakh, Natco will now be able to sell it for Rs 8,800. This will help cancer patients who were unable to buy the medicine because of its high price.

The Indian patent law, as the laws in many other countries, has provisions which empower the authorities to issue compulsory licences  for production of drugs by other companies when the patent-holder makes the drug unaffordable and fails to satisfy the requirements of the public.

 Even the US government had threatened to issue compulsory licence for manufacture of a drug for anthrax, again patented and produced by Bayer, a few years ago. Under the compulsory licence a company  makes a copy of the patented medicine and pays a specified royalty to the patent-holder. It was estimated that Bayer’s medicine reached only about 150 of the 8,000 patients who needed it. 

The  decision is likely to lead to similar orders in the case of many other drugs marketed by drug multinationals. Ninety per cent of the patented MNC products marketed in India may be vulnerable to the kind of challenge faced by the Bayer drug. These MNCs may either have to lower prices drastically or be ready to see their product produced and marketed by other companies. 

 A compulsory licence is not expropriation and a violation of intellectual property rights but a perfectly legal method to use patented products for greater public good.  The decision is bound be challenged at the appellate court level and there are similar cases in the Supreme Court also. The issue might even go the WTO. But, for now, the decision marks a huge victory in the fight against exploitation by pharmaceutical MNCs.