COMMENTARY
Compulsory Licensing of
Pharmaceutical Patents in India
A Policy Shift
continuous rejection of CL applications
for patented medicines. In this article, we
analyse this contentious issue and its implications for the compulsory licensing regime
in India after the Natco–Bayer dispute.
Recent Milestones
Prabhat Kuamr Saha, Aditi Mukherjee
The trend of continued rejection
of compulsory licence applications
in India goes against the local
generic drug manufacturers and
public health safeguards
incorporated in the Indian patent
law. It raises serious questions
about the intervening role of the
state in patent monopoly to
equalise the competing interests
between patent holders and
consumers of “public good.” This
trend indicates a policy shift of
the government regarding
compulsory licensing.
Prabhat Kumar Saha (pkumarsaha@gmail.
com) teaches at the Law School, Banaras
Hindu University, Varanasi. Aditi Mukherjee
(m1990aditi@yahoo.in) is a PhD scholar at
the Law School, Banaras Hindu University,
Varanasi.
12
T
he compulsory licensing of patented essential medicines has
been a contentious issue after the
introduction of the World Trade Organization (WTO) Agreement on Trade-related
Aspects of Intellectual Property Rights
(TRIPS) in 1995.1 TRIPS made profound
structural changes in patent laws of WTO
member countries by dramatically expanding the rights of patent owners requiring
high levels of patent protection. The harmonisation of patent laws through TRIPS
shows increasing power of pharmaceutical multinational corporations (MNCs) in
international politics to influence government decision-making and actively shape
the patent legislation of a foreign sovereign government to protect their markets
(Sell 2003: 1). However, TRIPS guarantees
and the Doha Declaration on TRIPS and
public health affirm that the WTO member
countries retain essential policy options,
flexibilities, and safeguards, including the
liberty to determine the grounds for issuing compulsory licences (CLs) to protect
human health (WTO 2001).
Nevertheless, in recent years, many
developing countries are facing escalating extralegal pressure from the developed countries backed by pharmaceutical
MNCs to change their patent policy primarily to serve the interests of pharmaceutical MNCs. Against this backdrop, the
recent grant of a CL by the Government of
Malaysia for hepatitis C virus (HCV) drug
and the grant of a temporary CL by
Germany’s Federal Court of Justice (FCJ)
for the antiretroviral medicine can be
viewed as a balance of rights and obligations to protect public health in compliance with TRIPS flexibilities. However,
these two recent decisions lead to a crucial question as to why in India there is a
Malaysia has recently issued a CL for
Gilead’s highly effective but exorbitantly
priced patented HCV Sofosbuvir (marketed as Sovaldi) under Section 84 of the
Malaysian Patents Act, 1983 and consistent
with TRIPS (Sathasivam 2017). Before
granting the CL, Gilead was unwilling to
negotiate with the Malaysian government
for a proposed price below $12,000 for a
complete course of the 12-week treatment.
The proposed price was an unacceptable
price for the government because average
Malaysian household incomes are a little
over $1,200 per month (Rahman 2017).
Thus, the CL would enable the Malaysian
government to provide generic versions
of Sofosbuvir at the price of 0.33% of the
current rate of Sofosbuvir in Malaysia
(Khor 2017). This decision will significantly
reduce the financial burden of the government to provide the cure to an estimated
4,54,000 people, about 2.5% of the adult
population living with HCV infection in
Malaysia (McDonald et al 2014). However, despite the extensive power of the
central government to issue CLs, India is
yet to witness such compulsory licensing.
In another instance, the FCJ affirmed
the decision of German Federal Patent
Court (FPC) granting a CL to Merck against
the Japanese patent owner Shionogi, for
HIV drug Raltegravir (marketed as Isentress) in the preliminary proceedings. In
opposition appeal, the European Patent
Office Board of Appeal revoked the patent
with the consequence that the judgment
of the FCJ became final. Section 24(1) of
the German Patent Act, 1980 requires the
existence of public interest for the grant of
a CL. Interpreting the word public interest,
the FCJ said that public interest is subject
to constant change and cannot be circumscribed in the restricted exclusivity
position of the patentee, where the requirement of the public needs the exploitation of the patented invention by the
licence-seeker. The court further said that
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the requirement of public interest depends
on the circumstances of the individual
case and is decided by weighing the patentee’s protectable interest with the public
interest. The public interest can also be
present if only relatively small groups
of patients are affected (Teschemacher
2017). The term public interest also assumes significance in the light of general
principles applicable while considering a
CL application under the Indian Patents
Act, 1970. Section 83(d) explicitly states
“that patents granted do not impede protection of public health and nutrition and
should act as instrument to promote
public interest.” The patent office of India
may give a widest possible interpretation
of the term public interest. However, it
has never adopted such an approach
while considering a CL application.
In June 2018, an arbitration court of
Russia granted its first CL for Lenalidomide (marketed as Revlemid), on “socially
significant” grounds under Article 1362(2)
of the Civil Code of the Russian Federation.
The CL was allowed by the court after finding that there is a second dependent patent
(lenalidomide-nativ) held by the Russian
pharma manufacturer Nativa, which it
cannot use without infringing the first
patent (lenalidomide) owned by US pharmaceutical MNC Celgene (Sobolev 2018).
On 28 August 2018, Chile’s Ministry of
Health, with Resolution 1165/2018 reaffirmed the earlier resolution 399/2018,
declaring public health justifications for
the issuance of a CL for Sofosbuvir to
treat HCV. It rejected an attempt of the
Gilead and an international pharmarelated association of drug-makers to
withdraw the earlier resolution that
was issued by the previous left-oriented
government. This decision particularly
reflects the country’s unanimity not only
from the left-oriented establishment but
also from the right-oriented establishment
in Chile to put first the life and health
of Chilean people despite the lobbying
strategies and escalating pressures to prevent the use of flexibilities to issue a CL
(Villarroel 2018).
Tortuous Path in India
India issued its first-ever CL in 2012 to
Natco Pharma for manufacturing an affordable generic version of the anti-cancer
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drug, sorafenib tosylate (marketed as
Nexavar) against Bayer (Natco Pharma v
Bayer Corporation 2012). In this dispute,
the Bombay High Court upheld the decision of the controller on two underlying
issues: the reasonable requirement of the
public is not being satisfied, and it is not
available to the public at a reasonably
affordable price. However, the high court
adopted different interpretations of the
core issue in the dispute—the local working requirement. It held that it is not
acceptable that “worked in India” must
in all cases mean manufactured only in
India (Bayer Corporation v Union of India
and Others 2014: 48). The interpretation
adopted by the high court adversely affects
the transfer and dissemination of technology to India because MNCs could
only export finished products and use
India as a market without any obligation.
Consequently, on many occasions, it will
result in defeating the objectives and
general principles of the patent system
acknowledged in Article 7 of TRIPS and
Section 83(c) of the Patents Act respectively. It seems that interpreting the import of patented inventions as working
in Natco–Bayer has done more harm
than good for future.
Moreover, after the CL was granted to
Natco, there was a series of CL applications
that were rejected by the patent office.
In October 2013, the CL application filed
by BDR Pharma for BMS’s patented anticancer drug “Dasatinib” was rejected. The
patent office gave reason that applicant
refrained from entering into any dialogue
with the patentee for the grant of a voluntary licence and exercised a deliberate
choice to only invoke the provisions relating to compulsory licensing which is
not in compliance with the scheme and
procedure mandated by the law (BDR
Pharmaceuticals International v Bristol
Myers Squibb 2013). Later in 2014, the
health ministry planned to procure a CL
for Dasatinib under Section 92, but the
Department of Industrial Policy and Promotion (DIPP) turned it down stating that
the use of Section 92 is impressible as no
national emergency situation is prevailing
in India. However, it is pertinent to note
that there is no definition of a national
health emergency. A definition that will
fit for all countries is also not possible.
vol lIV no 5
Further, a small percentage of the population in India suffering from a disease may
be more regarding numbers of patients
from a country with a comparatively less
population. The CL was issued in the
Natco–Bayer case where only 8,842 patients in India required patented drugs.
Therefore, denial by the DIPP to grant a CL
on the basis that the number of patients
constitutes 0.001% of the total population
of India does not seem logical because
their numbers were 12,101, as of 2011,
which was larger than the number of patients under consideration in the Natco–
Bayer case. Further, Bombay High Court
has held that reasonable requirement of
medicine has to be judged in the light of
adequate extent. The adequate extent
test has to be 100%, that is, to the fullest
extent. Medicine has to be made available to every patient, and they cannot
be deprived to safeguard the rights of
the patent holder (Bayer Corporation v
Union of India and Others 2014: 38–39).
In another case, Lee Pharma, a domestic
pharmaceutical company’s CL application on June 2015 for the diabetes drug
Saxagliptin was rejected as the Controller
of Patents found that the patentee had not
taken adequate steps to manufacture the
patented drug in India and import the
medicine into the country (Lee Pharma v
AstraZeneca AB 2016). A recent addition
to this rejected list is Onbrez which is
used to treat bronchitis. Cipla filed a
petition with DIPP to issue a CL, stating
that bronchitis has reached epidemic
proportions in India (Cipla 2014). Initially, the health ministry supported DIPP in
its effort to find out a way to grant the CL
and later said that there was no case for
extreme urgency or national emergency.
The response of the health ministry is
erroneous because in India, as of 2005,
there were 30 million bronchitis patients
(Koul 2013). Finally, in June 2016, the DIPP
in a right to information reply disclosed
that Cipla had withdrawn its representation and thus the matter was treated
as closed (DIPP 2016). It seems strange
that India hesitates to issue CLs even
in an alarming situation. However, the
United States (US) “considered using a
CL to respond to anthrax scares in 2001,
and more recently in 2017 in Louisiana,
where patients were unable to access
13
COMMENTARY
HCV direct-acting antivirals due to the
high price” (Rahman 2017).
Policy Changes
In February 2016, the US–India Business
Council (USIBC) reported in its submissions to the United States Trade Representative for the 2016 Special 301 Review that
“the Government of India has privately
reassured that it would not use compulsory
licences for commercial purposes” (USIBC
2016: 5). The assurance is an indication
of India’s policy shift on patents. Such a
commitment strikes at the very heart of
the legislative intent, undermining access
to critical and life-saving products. It also
strikes at the fundamental right to life
and liberty embodied in the Indian Constitution which casts a duty on the state
to protect the health of its citizens.
Furthermore, considering that the USIBC
receives funding from pharmaceutical
MNCs, its training to patent examiners in
India may influence patent office decisions, tilting it towards the interests of
patent holders. Fundamentally, any such
training must provide the use of TRIPS
flexibilities about compulsory licensing
which requires technical expertise and
institutional capacity to understand the
complexity of the TRIPS provisions and to
put those flexibilities into practice locally.
It is also essential to train the officers in the
patent offices and the judiciary as to how
a public health-oriented jurisprudence
should be used to interpret the compulsory
licensing provisions. Further, the training
should ensure that both the judiciary and
the officers in the patent offices should
reflect the legislative intent, while interpreting compulsory licensing provisions.
The National Intellectual Property Rights
Policy of India released on 12 May 2016 falls
short of meaningful improvements regarding enforcement of compulsory licensing
provisions. The policy reveals nothing specific regarding compulsory licensing except that India shall remain committed to
the Doha Declaration on TRIPS and Public
Health. The policy also remains silent on
whether India will improve the compulsory licensing regime to broaden permissible grounds for such licences or not.
India has been the principal voice of the
developing countries against the business
interests of pharmaceutical MNCs and has
14
played a leading role in developing a more
public health-oriented pharmaceutical patents law of general global relevance. As
stated, compulsory licensing is one of the
ways in which TRIPS attempts to strike a
balance between rights and obligations of
the patent holders. The Doha Declaration,
2001 too affirmed that the TRIPS could and
“should be interpreted and implemented
in a manner supportive of WTO members’
rights to protect public health and, in particular, to promote access to medicines for all”
(WTO 2001). However, pressure from the
US, European Union, and Japan to implement TRIPS-plus bilateral and regional trade
negotiations has changed the policy landscape surrounding compulsory licensing.
At the same time, domestic factors are
also changing. Many Indian generic
pharmaceutical firms are now engaged in
partnerships with MNCs and do not make
applications for CLs. It also has enormous
implications for the supply of affordable
medicines not just in India but in African
countries and other parts of the developing world that rely on drugs exported
from India.
There is the threat of diluting the policy
concerns on compulsory licensing through
judicial interpretation or the practices of
the patents offices. In seeking to clarify
compulsory licensing provisions of the
Patents Act, it is necessary to find out what
the mischief was and what remedy did
Parliament provide to cure that mischief.
Evidently, Parliament intended to rectify
the drastic effects of monopolisation of
patents by carving out compulsory licensing provisions in the Patents Act. The exorbitant prices being charged by the MNCs
for some of the products, less number of
patients requiring patented drugs, imports
of high-priced finished formulations without establishing manufacturing units in
India are some of the policy concerns that
need immediate attention. Moreover, procedures for granting CLs are incredibly
complex which lead to endless litigation
and delays. The compulsory licensing provision remains impractical for accommodating the needs of people who rely on
low-cost medicines on an urgent basis.
In Conclusion
Pharmaceutical CL application rejections demonstrate a deviation from a
long-established tradition of India playing a leading role in contesting developed countries’ agenda on patents laws.
Further, it indicates that India will not
continue to stand by the public interest
safeguards which are currently part of
its patents law and which it is entitled
to as part of TRIPS flexibilities, both in
policy and practice. Continuation of the
policy of discouraging Indian generic
companies from not issuing CLs will eventually reduce competition and severely
curtail the supply of affordable medicines worldwide and move towards alliances with MNCs. It must be reminded
that a country must not compromise
with public health to secure monopolisation of private interests.
Note
1
Compulsory licensing is when a government
allows someone else to produce the patented
product or process without the consent of the
patent owner, https://www.wto.org/english/
tratop_e/trips_e/public_health_faq_e.htm.
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