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Compulsory License issued to Natco Pharma for Nexavar

Issued: April 01 2012

Recently, the Controller General Of Patents, Designs & Trademarks in India granted a compulsory license for manufacturing and marketing the patented drug sorafenib, used for the treatment of advanced stages of kidney and liver cancer to Natco PharmaSorafenib is a patented drug of Bayer Corporation marketed under the brand name Nexavar.

Section 84(1) of the Indian Patents Act, 1970 provides various grounds on which an application can be made for a compulsory license. The grounds are:

a. the reasonable requirements of the public with respect to the patented invention are not met, or

b. the patented invention is not available to the public at a reasonably affordable price, or

c. the patented invention is not worked in the territory of India

The Controller found that all the above three grounds have been met with and consequently issued the license to Natco.

The term “reasonable requirement of the public” has been explained by the Controller in terms of demand and supply of the drug to the patients in need in India. The data relied upon by the Controller were of a WHO study according to which the total number of patients in India suffering from liver cancer is about 20,000 and patients suffering from kidney cancer is about 8,900. The Patentee argued that the total number of patients suffering from advanced stages of kidney and liver cancer in India is 8,842. The order does not state clear reasoning of the data that was considered in deciding the actual number of patients suffering from advanced stages of these diseases. Sorafenib is used in the advanced stages of kidney and liver cancer; therefore it was important to determine the number of patients in advanced stages of the cancer. The Controller rejected the Patentee’s number of 8,842 patients by merely stating that the number of patients requiring treatment by this drug is much higher than the figure derived by the Patentee. This aspect of the decision required an indepth analysis of the data ascertaining the total number of patients that are in advanced stages, which unfortunately has not been discussed in detail. The Controller could have called in for more evidences to verify the information that was available before him. The question of whether alternative medicines are available to the patients does not seem to have been given due consideration.

The second ground dealt with in the order is of pricing of the drug. Bayer sold the drug at a price of Rs280,000 (US$5,500) for a month’s therapy. This pricing was found to be on a higher side and was considered as being unaffordable to the public at a reasonable price. Natco proposed a price of Rs8,880 (US$175) for a month’s therapy, which was accepted by the Controller. The question of affordable pricing still remains as the drug price of Natco is still unaffordable to many patients in India, even when priced at Rs8,880. It is important that drugs, especially life saving drugs are made available at such prices which are reasonable for both the buyer and the innovator.

The third ground of working in the territory of India has been construed by the Controller as manufacturing the patented drug to a reasonable extent in India. The order states that importation of the patented drug did not amount to being worked in India. As Bayer imported sorafenib and did not manufacture it in India, it was held by the Controller that the patented invention was not being worked in the territory of India. This part of the order is a concern for many companies as most of the drugs appear to have been imported and not manufactured in India.

The document relied on in the proceedings to determine the sales figure of the drug and the workability aspect of the patented drug was Form 27, which is a requirement of the Patent Office and the Patentee has to compulsorily submit the same every year.

As a part of the order, it has been decided that Natco will pay a royalty of 6% of the net sales of the drug to Bayer.

The order will likely have an impact on the pharma industry, both generics as well as innovators, as it can be expected that more generic companies will file similar applications for compulsory licenses. Most of the patents covering healthcare drugs are owned by foreign companies. The issuance of a compulsory license can be seen as a harsh decision especially for the innovator companies, which have large investments in the pharma sector. It can act as a deterrent to the investments by these companies as there is a question mark on the monopoly of a patent holder.

Krishna & Saurastri
New Excelsior Building, 7th Floor
Wallace Street, A. K. Nayak Marg
Fort, Mumbai 400 001 India
T: +91 22 2200 6322
F: +91 22 2200 6326

About the Author

 Saima Ansari is a senior patent associate with the chemical department of Krishna & Saurastri Associates. She holds a Masters degree in organic chemistry from the Mumbai University. Her practice areas include patent drafting, search, opposition and prosecution. She is registered to practice before the Indian Patent Offices.


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