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Pharma in the Crosshairs
Big Pharma was dealt a heavy blow in the battle over compulsory licensing when India's patent appeals board ruled in March that a domestic generic drug maker could continue to make and sell a low-priced copy of a cancer medication patented by Bayer AG. It was the first time that the Indian patent authority confirmed that the use of compulsory licensing in India was legal.
Bayer immediately issued a statement saying that it would appeal the ruling that affected its cancer drug, Nexavar. "We strongly disagree with the conclusions of the Intellectual Property Appellate Board," the company said. "Bayer is committed to protecting its patent for Nexavar and will rigorously continue to defend our intellectual property rights within the Indian legal system."
Under an international trade agreement known as Trade-Related Aspects of Intellectual Property Rights (TRIPS), countries can issue compulsory licenses on certain drugs that are deemed unaffordable to a large sector of their populations. Such licenses have in recent years been issued in Ecuador, Indonesia, Brazil, and Thailand. Last year the government of India issued a compulsory license for the first time, giving Natco Pharma Ltd. permission to produce and sell copies of Nexavar for a fraction of the cost Bayer charged for the medication.
Bayer challenged the decision to grant a compulsory license to Natco, but the board ruled that the drug, which fights kidney and liver cancer, should be available at an affordable price to everybody. The patent board did concede one thing to Bayer: It ordered Natco to pay Bayer a royalty of 7 percent on sales of generic Nexavaran increase from the 6 percent royalty that had been set earlier.
The Germany-based company was not assuaged. Nor will Bayer be the only company affected by the ruling. It will also have an impact on other brand-name drug manufacturers, who see great market potential in India and other parts of the developing world but are concerned that protection of their intellectual property there is limited.
The order "weakens the international patent system and endangers pharmaceutical research," Bayer said, noting that patents give it a limited period of marketing exclusivity that helps it recover costs associated with the research and development needed to discover new medicines.
Others welcomed the ruling. "It sets an important precedent," says Judit Rius, access campaign manager in the U.S for Doctors Without Borders/Médecins Sans Frontières (MSF). "It confirms that the Indian government has tools available to legally grant compulsory licenses."
MSF is hoping that the decision will lead to more compulsory licenses for other drugs that are now patented in India but are too expensive for most patients. "We hope to see licenses for new and important drugs that treat HIV-AIDS, tuberculosis, hepatitis, and malaria," she adds.
Ruit says that India's generic drug makers are known for their ability to produce and market effective generics for a fraction of the cost of the Big Pharma companies that developed the drugs, and notes that the country provides more than 80 percent of all medicines sold in developing nations. "India is the pharmacy of the developing world," she says.