Regulatory Focus™ > News Articles > Landmark Ruling Clears Way for Use of Compulsory License in India

Landmark Ruling Clears Way for Use of Compulsory License in India

Posted 18 September 2012 | By Alexander Gaffney, RAC 

In a decision upholding a landmark ruling, India's Intellectual Property Appellate Board (IPAB) has upheld a compulsory license granted by the controller of patents earlier in 2012, clearing the way for generics manufacturers to introduce low-cost versions of German pharmaceutical manufacturer Bayer's cancer drug Nexavar (sorafenib).

At issue for Bayer was the country's use of the compulsory license-a concept first established under the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement, which is binding to all World Trade Organization (WTO) members.

The agreement allows governments to grant special permission in the form of compulsory licenses to generic manufacturers of medicines to circumvent the patent and intellectual protections of a particular medicine if there is a national health crisis.

Despite initial fears, the agreements have not been used as often as some pharmaceutical groups had feared, largely due to pressure on countries to maintain access to other medicines.

That is what makes India's decision so remarkable to both critics and proponents of the ruling: Its logic applies largely to cost, and not to the public health impact of lack of access. Particularly compared to the causes of some public health crises, such as AIDS or other infectious diseases, kidney cancer affects relatively few patients and is non-transmissible.

Bayer has been lambasted in the Indian media for the high cost of the drug, which can exceed $5,500 per month in a country where the Gross Domestic Product Per Capita (PPP) is only $3,700 per year. In its original decision, the Indian patent office cited the high cost of the drug, which it said factored heavily in its decision to grant a competitor to Bayer, Natco, a license to sell the drug for just $175 per month. Officials have said that 6% of sales of the generic version of the drug must be paid to Bayer in the form of royalties.

In a statement, Bayer said it was, "disappointed with the decision," and will continue to fight for its intellectual properties. "The order of the patent controller of India damages the international patent system and endangers pharmaceutical research," the company said.

Read more:

The Economic Times of India - IPAB dismisses Bayer's stay plea in Nexavar case 

Med City News - Indian patents board rejects Bayer's plea for stay on Nexavar generic

Pharma Times - Bayer fails to suspend sales of generic Nexavar in India

BioCentury - India upholds compulsory license for Nexavar

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