DIPP prescribes a dose of caution on compulsory licences

The US has vehemently opposed India’s CL initiatives, saying the rewards for innovators need to be safeguarded and the affordability question has primarily to be addressed outside the domain of patents

In a new twist to the fuss over India’s alleged plan to grant a clutch of patent-disabling compulsory licences (CL) to generic drug firms to bring down the cost of some much-in-demand new drugs to patients, the Department of Industrial Policy and Promotion (DIPP) has told the health ministry that this facility can be invoked only in cases where such licensing will doubtless stand judicial scrutiny.

The US has vehemently opposed India’s CL initiatives, saying the rewards for innovators need to be safeguarded and the affordability question has primarily to be addressed outside the domain of patents.

The DIPP’s move to add stringency to the grounds for invoking CLs by the government could scupper the health ministry’s immediate plan to grant these licences to generic companies that wish to make and sell US-based multinational Bristol-Myers Squibb’s celebrated chronic myeloid leukaemia drug dasatinib (branded Sprycel). The health ministry also wants to pursue the “government route” under Section 92 of the Patents Act to grant CLs for some other turnover-spinning drugs of patent holders, including Swiss drugmaker Roche’s blockbuster for breast cancer trastuzumab (Herceptin).

The patented version of dasatinib costs a whopping R1.57 lakh for a month’s dosage (60 tablets each of 20 mg), but local companies are hoping to offer generic version of the drug at just R8,100 for a month’s dosage.

Official sources said the DIPP has sought clarifications from the health ministry on how the aforementioned drug is a right candidate for issuance of CLs to generic companies under government initiative. “If the CLs get revoked by a court of law finally, it will amount to a loss of face for the government. Such an embarrassment is best avoided,” said a source aware of the DIPP’s views that were conveyed to the health ministry recently.

Compulsory licences are compatible with the multilateral Trade-related Aspects of Intellectual Property Rights (TRIPS) agreement, to which India is a signatory.

Although CL can be issued under more than one provision in the Patents Act, there is little demand from generic firms for using the “private commercial use” route under Section 84 because of the huge risk of litigation and associated costs involved. Under Section 84, the patents controller can directly grant CLs on a plea from a generic company after notifying the patent holder and being satisfied that specified conditions are met.

However, under Section 92, which allows the government route for CL, the controller can issue the licence only based on a central government notification citing circumstances of “national emergency or circumstances of extreme urgency or in case of public non-commercial use”. It is this route that the health ministry and leading generic companies are keen on using, and the DIPP has now developed cold feet on.

The DIPP is a quasi-judicial body and, therefore, before a decision on the CL notification is taken, we are going to ensure that all aspects and material facts are carefully looked into even if it leads to a delay in issuing the CL notification. We (the government) will not issue a CL notification which can be questioned and we should not fail even if someone decides to take such issues to a court of law later,” the source said.

The DIPP has asked the health ministry for details including the number of people afflicted by chronic myeloid leukaemia, how the CL for the drug could fall under the category of ‘public non-commercial use’, and how it intends to ensure that the generic version of the drug can help save lives. It sought to know whether there are already generic versions of the drug in the market and also an explanation on why the health ministry wants to invoke the emergency/urgency clause. It also pointed out that since many Indian pharma companies have already been acquired by foreign MNCs or have tie-ups with them, it will be difficult to convince them to apply for a CL.

Industry sources, however, told FE that Section 92 CLs would be in great demand as the business potential is huge in not only the Indian market but also in foreign countries with insufficient manufacturing bases. Once the CL is issued by the government under this route, it could take a few months for the generic companies to develop the technology to make these drugs.

So far, India has allowed CL for only one patented drug. In 2012, Hyderabad-based Natco Pharma was permitted to make and sell a generic (low-cost) version of kidney and liver cancer drug sorafenib (branded Nexavar) patented by German major Bayer under Section 84.

As regards private commercial use (Section 84), the experience of Natco is a deterrent. Bayer through a series of litigations initiated against Natco has succeeded in pre-empting others from considering this as a viable option. Moreover, CL for India alone may not be commercially viable. Natco was expecting that a few other countries will use TRIPS provision to allow imports from India. This has not happened,” said DG Shah, secretary general, Indian Pharmaceutical Alliance, a body that includes top-notch homegrown drug MNCs.

Arun SNew Delhi

Department of Industrial Policy and PromotionIndian Pharmaceutical AllianceNatco PharmaTRIPS
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