Germany's pharmaceutical giant loses a heart
drug monopoly in groundbreaking case
India’s
Patent Office has issued the first-ever compulsory license to a generic drug
manufacturer, effectively ending the German pharmaceutical company Bayer’s monopoly
in India on the drug sorafenib tosylate, used to treat kidney and liver cancer.
In a
groundbreaking case, India’s Patent Office acted on the basis that not only had
Bayer failed to price the drug at a level that made it accessible and
affordable, it also was unable to ensure that the medicine was available in
sufficient and sustainable quantities within India.
It is
uncertain what implications this might have for other multinational drug
manufacturers. But presumably they are scrambling to review their Indian
patents and pricing. The move marks the first time India’s patent law has been
used to allow generic production when a drug is unaffordable.
Bayer
said in a prepared statement that it is reviewing its legal options.
“We
have been following this case closely because newer drugs to treat HIV are
patented in India, and as a result are priced out of reach,” said Tido von
Schoen-Angerer, director of the Médecins Sans Frontières Access Campaign. “But
this decision marks a precedent that offers hope: it shows that new drugs under
patent can also be produced by generic makers at a fraction of the price, while
royalties are paid to the patent holder. This compensates patent holders while
at the same time ensuring that competition can bring down prices.”
Competition
from the generic version is expected to bring the price of the drug in India
down dramatically, from more than US$5,500 per month to close to $175 per month
– a price reduction of nearly 97 percent.
“This
decision serves as a warning that when drug companies are price gouging and
limiting availability, there is a consequence: the Patent Office can and will
end monopoly powers to ensure access to important medicines,” said Michelle
Childs, Director of Policy/Advocacy at the MSF Access Campaign. “If this
precedent is applied to other drugs and expanded to include exports, it would
have a direct impact on affordability of medicines used by MSF and give a real
boost to accessing the drugs that are critically needed in countries where we
work.”
Under
the World Trade Organization’s TRIPS Agreement, which governs trade and
intellectual property rules, compulsory licenses are a legally recognized means
to overcome barriers in accessing affordable medicines. The Indian decision in
fact mirrors similar moves made in other countries, including the United
States. In February 2011, the US Patent Office decided not to prevent a
“generic” medical device used for skin grafts from being sold, but rather
insisted that its manufacturer pay royalties to the patent holder.
“Behind
this action is the idea that the public has a right to access innovative health
products and they should not be blocked from benefiting from new products by
excessive prices,” said Michelle Childs. “If more compulsory licenses are
granted in this vein, the answer to the question of how to ensure affordable
access to new medicines could radically shift.”
Today’s
system is one where new medicines are patented and drug companies aggressively
defend their monopolies at the expense of patients who can’t afford the high
prices charged. Instead, we could move to a more equitable system where new
medicines have multiple producers, who each pay royalties to the patent holder,
helping them not only to recoup their development costs but ensuring that
people in developing countries have access.
“More
generic companies should now come forward to apply for compulsory licences,
including on HIV medicines, if they can’t get appropriate voluntary licenses,”
said von Schoen-Angerer.
The
compulsory license has been granted by India’s Controller of Patents, the
highest authority of the Indian Patent Office, to the generic company Natco for
the eight years sorafenib tosylate will remain patented in India -- until 2020
-- and against the payment of a royalty rate fixed at 6 percent.
Bobby
Ramakant
Asia
Sentinel
Business & Investment Opportunities
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