Justice Prabha Sridevan’s judgment permitting the production and sale of a generic version of a cancer drug is a victory for patients. It posits the public interest, especially in matters of health care, right at the heart of intellectual property rights in India

Monday was a remarkable day for cancer patients in India. To them, the country said — “we care.” I am talking about the astounding decision by Justice Sridevan of the Intellectual Property Appellate Board (IPAB) permitting Natco Pharma Ltd. to continue making and selling a generic version of Bayer’s kidney cancer drug Nexavar.

Legal jargon apart, this saga involves a drug called Sorafenib, used to treat advanced liver and kidney cancer to extend the life of a patient. The patent — both in India and in the United States — for the drug is held by the multinational company, Bayer Corporation. Yes, there is no doubt that the drug is a blessing for such patients to extend their life expectancy. But, the availability of the drug from Bayer at a selling price of Rs.2,80,428 per month left the impression of “water, water everywhere, but not a drop to drink!”

In reality, an Indian employee who earns Rs. 2,80,428 per month would consider himself very well-employed. In fact, an employee who earns that much a year would consider himself well-employed. But this drug would have made a have-not of even the haves. And, this is something that innovative pharmaceutical companies never seem to appreciate.

Multinational’s assertion

In any event, the petition that finally landed at the IPAB began when the then Patent Controller General, P.H. Kurien, found himself with Natco’s petition to compulsorily licence the drug after both the Delhi and the Mumbai High Courts denied a writ on the basis that the administrative authority was the appropriate forum. When the Controller-General examined the petition, he found that although there were approximately 20,000 patients with liver cancer and about 9,000 patients with kidney cancer in India, in the years 2008 to 2010, a negligible amount of Sorafenib was imported into India for sale by Bayer. In fact, no importation ensued in 2008, a year when Bayer recorded a worldwide profit of over $678 million in the rest of the world. To the Controller, this showed that the patent holder was not fulfilling its duty of catering to the demands of the market in India. (Notably, Bayer asserted that it was unable to sell its product in India because Cipla was selling the drug in the market for a price of Rs.30,000 per month at the time of the application and for Rs.5,400 at the time of the IPAB’s opinion. Bayer’s infringement suit against Cipla is still pending in the Delhi High Court.)

Considering the facts, the Controller concluded that Bayer’s (in)action amounted to a showing that the reasonable expectations of the public were not met. Further, that Bayer imported Sorafenib showed that the patent holder was not manufacturing it locally as required under the statute. Given these factors, the Controller concluded that the drug was in fact not reasonably priced (anyone surprised at Rs.2,00,000 per month)! He made a reasoned order showing that the patent holder was unable to establish that it met the demands of the Indian market for the drug.

In India, a patent holder can be compelled by the controller of patents to licence his invention to a third party under Section 84 of the statute on the grounds that either the patent has not been worked to satisfy the reasonable requirement of the public, or that the patented invention is not reasonably priced. The controller takes several factors including the nature of the invention and the applicant’s ability to work the invention to the advantage of the public. Such compulsory licences are issued when it is determined that the need for the public overweighs the rights of the patent holder, like in the case of the Bayer patent.

Price point

For Natco, the company that forced Bayer to compulsorily license its drug, this represents a huge strategic success. In fact, Natco was pushing for a compulsory licence first against, Roche’s anti-cancer drug, Tarceva (Erlotinib) for supply to Nepal way back in 2008 and later, for the manufacture and export of Sunitnib [Sutent], also an anti-cancer drug. That it is strategic was not lost on Justice Sridevan and is reflected in her judgment. The opinion discusses Natco’s request for compulsory licence, given Cipla’s presence already in the market. Ultimately, the opinion weighs the balance of hardships. That is, whether the grant of stay for the patent holder is balanced alongside the sufferance to public interest. The high point of the judgment is the interpretation of the term “reasonable” in the context of the purchasing power of the public. In all, the decision is bold — it posits public interest right at the heart of patent issues in India. If there is a problem, it is for the government to find an able replacement to fill Justice Sridevan’s able shoes when and if she retires.

The opinion could not be more timely — it came seven days after newspapers reported that the Department of Pharmaceuticals had suggested doing away with compulsory licensing. I still remember the report when Murasoli Maran took the lead to negotiate the Agreement on Trade Related Aspects of Intellectual Property Rights (Trips) on Public Health in the Doha Declaration, that is widely considered as a great win for developing countries. What a shame it would be, if India took the first step to abolish what we carefully negotiated.

It was intriguing that pending the application, Bayer had agreed to sell the drug at Rs.30,000 per month. It is sad but this strategy of the Pharmaceutical Research and Manufacturers of America (PhRMA) to act like they are still in the pre-Trips days is becoming a little slate. To recollect, in Brazil too, members of PhRMA refused to licence patented AIDS medication until similar steps were put in effect. Surely, strategists for innovative pharmaceutical companies in India recognise that it is prices like Rs.2,00,000 per month for one drug, rather than the Department of Pharmaceuticals, that is preventing them from establishing in Indian market.

(Srividhya Ragavan is a Professor of Law at the University of Oklahoma College of Law.)

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