A major area of concern flagged by US Trade Representative (USTR) in regard to ‘alleged’ non-observance of trade related intellectual property rights (TRIPs) by India relates to grant of compulsory licenses (CLs) by latter to generic Indian drug firms for the much-in-demand new drugs for which an innovator company holds a patent.
The grant of a patent confers ‘exclusive rights’ on patent holder for manufacturing and marketing of a product. Thus, during the term of patent (20 years from the date filing patent application), any person keen to make and/or sell cannot do so without seeking prior consent of patent holder.
A CL authorizes the concerned entity to manufacture and market a patented product even without prior consent from the innovator/holder of patent. It is a weapon that government can use to circumscribe the right of patentee in certain situations when it deems necessary to do so in public interest.
Such flexibility was made available to member countries under multilateral TRIPs agreement of WTO sealed in 1995 and was incorporated in Indian Patent (Amendment) Act 2005 (the Act amended the extant law of 1970 to provide inter alia for grant of product patent in high technology areas like pharmaceutical, agro-chemical and food).
CL can be issued under more than one provision of the Patents Act. Under Section 84, a license can be issued for “private commercial use” if it is found that the patent holder has not taken required steps to make the patented product available in sufficient quantities or the price charged is not ‘affordable’ to the patients/consumers.
On the other hand, under Section 92, which allows the government route for issue of CL, the controller can issue the license only based on central government notification citing circumstances of “national emergency or circumstances of extreme urgency or in case of public non-commercial use”.
The intent of flexibility authorized by TRIPs agreement and duly incorporated in our Patents Act was that government would use grant of CL ‘sparingly’ (in fact, as a last resort). It was meant to be used when there is clinching evidence that innovator is exploiting the monopoly power for personal gains un-mindful of the overarching interests of patients/users. However, actions of the authorities viz., office of the patent controller and ministry of health in recent years shows that this is being observed more in breach.
Thus, in 2012 Natco Pharma was allowed to make cheaper version of Bayer’s kidney and liver cancer drug sorafenib (branded name Nexavar). Using the provisions of Section 84, the patent controller directly granted CL on a plea from the generic company (Natco) after notifying patent holder (Bayer) and expressing satisfaction that specified conditions were met. Other companies also tried to obtain CL lured by huge opportunities especially in export markets but got stuck in litigation, courtesy Bayer challenging them in the court.
Finding this route to making in-roads in to the patent holder’s domain (and make a quick buck) a bit tortuous, generic companies are now trying to ride piggy back on ministry of health (MoH) to achieve their goal. MoH has been making vigorous efforts to grant CLs for Bristol-Myers Squibb’s (BMS) chronic myeloid leukaemia drug dasatinib (branded Sprycel). It is also pursuing “government route” under Section 92 for other blockbuster drugs like Roche’s trastuzumab (Herceptin) for treatment of breast cancer.
However, thanks to change of guards at the center following historic elections early this year catapulting N Modi – a dynamic leader known for his track record of good governance and reform credentials – to the center stage, we can look forward to some check on this reckless pursuit of efforts that will seriously undermine the effectiveness of patent, if allowed to continue.
Already, government has set the ball rolling with DIPP (department of industrial policy and promotion) – nodal authority on IPR issues and bestowed with the responsibility of ensuring compliance with India’s obligations under WTO/TRIPs agreement – guarding MoH against any hasty action and advising that all aspects and material facts are carefully looked in to. It has made it abundantly clear that that “government will not issue a CL notification which will not stand judicial scrutiny”
DIPP has sought details from health ministry on number of people affected by chronic myeloid leukaemia, how the CL for the drug could fall in the category of ‘public non-commercial use’, how it intends to ensure that generic version of the drug can help save lives, whether there are already generic versions of the drug in the market and also an explanation as to why MoH wants to invoke the emergency/urgency clause.
The very nature and scope of aforementioned questions and present government’s insistence on their detailed examination clearly suggests that its decision will be guided purely by material facts on the ground. This will also help restore India’s credibility as a country that takes enforcement of patents seriously and is ready to take every possible step to prevent mis-use of the flexibility available under TRIPs agreement.
The erstwhile UPA dispensation indulged mostly in rhetoric claiming that India is in compliance with its commitments under WTO but did little to address the concerns of innovator companies regarding effective implementation of patent laws. It was this indifferent approach that led to substantial deterioration in our IP regime even as the USTR in its Special 301 report on trade and industry practices released early this year, stopped short of putting India on its Priority Foreign Country (PFC) list.
Modi government has moved away from that exercise in self-adulation to concrete action on ground. The setting up of a high level IP Working Group (IPWG) under aegis of Indo-US Trade Policy Forum, a ‘think tank’ and commitment to formulate an IPR policy are all steps in that direction. However, to undo the damage done in the past it is imperative that formulation of the policy is put on fast track.
While, laying down the contours of the policy, the government should strike a fine balance between interest of innovator on the one hand and patients on the other. While, it has a huge responsibility to ensure availability of medicines at ‘affordable’ prices that objective must not be pushed to a point whereby, this poses a threat to patents.
In other words, affordability question has to be addressed primarily outside the domain of patents whose sanctity must be preserved – come what may – or else R&D companies whether of Indian origin or MNCs will loose interest in discovering, developing and commercializing new medicines for the benefit of mankind.
In line with the above over arching goal, government should restrict the use of Compulsory License – under Patents Act – to the rarest circumstance where the country faces a medical emergency/extreme urgency and patented drug is the only stuff available to mitigate its serious and widespread consequences.