India's first compulsory licence granted to Natco for Bayer's cancer drug

Hyderabad firm to sell the drug at Rs 8,880/month; to pay Bayer 6% of net sales as royalty

·         The country's first compulsory licence has been granted by the Indian Patent Office to Hyderabad-based drug-maker Natco.

·         A landmark decision, under the amended Indian Patents Act (2005), allows Natco to make and sell in India, a similar version of Bayer's Nexavar, an advanced kidney cancer drug.

·         Natco will have to pay Bayer royalty pegged at six per cent of net sales, every quarter. Buoyed by the development, Natco shares closed up 6 per cent on the BSE, on Monday.

LANDMARK JUDGMENT

The 62-page judgment is Mr P. H. Kurian's last as the Patent Controller. The judgment reasoned that the patent-holder, Bayer, had not met the reasonable requirement of the public. It had not “worked the patent” or manufactured it to a reasonable extent in India. Besides, the drug was not available at an affordable price.

COMPULSORY LICENCE

A compulsory licence (CL) is granted by a country on health grounds, where patients are unable to access a life-saving medicine.

Bayer imported the product, and while its global sales of Nexavar was $934 million in 2010, in India it clocked sales of Rs 16 crore in 2009, the judgment said. The figures demonstrate “neglectful conduct” of the patentee (Bayer) in India, the judgment added.

Only 2 per cent of the 8,842 patients needing the drug got the medicine, it observed. The patients needing the drug “far exceed” the supply of the product, he added.

BAYER REACTION

A Bayer spokesperson, however, said: “We are disappointed by the decision of the Patent Controller in India to grant a compulsory licence for Nexavar. We will evaluate our options to further defend our intellectual property rights in India.”

Cipla too sells its version of generic Nexavar in India, from April 2010.But Bayer had subsequently taken them to the Delhi High Court over patent-infringement.

Mr Kurian also handed over charge at the Patent office to Mr Chaitanya Prasad.

OUR HYDERABAD BUREAU ADDS: Dr P. Bhaskara Narayana, Chief Financial Officer, Natco, said the market for the product was around Rs 30 crore a year. The company will begin selling the drug after a stay granted by the Delhi High Court is vacated.

“The stay will be vacated once we submit the order of the Controller General of Patents Designs and Trademarks to the High Court,” he said.

“We welcome this order as it opens up a new avenue of availability of life-saving drugs at an affordable price to the suffering masses in India,” he said. Natco also expects the market for the drug to expand now, though it might come down in value terms.

‘Bullet Kurian’ paves the way for India’s First Compulsory Licensing decision on Patents

Bar & Bench News Network

Mar 13, 2012

The Controller General of Patents, P. H. Kurian has granted the first compulsory licence in India in relation to Bayer’s patented drug, Naxevar. Kurian passed the landmark order prior to vacating his office and handing over the charge to Chaitanya Prasad. P. H. Kurian was described by Spicy IP as ‘Bullet Kurian” owing to his bold moves to bring major reforms in Indian Patent Office (IPO).

Natco had filed an application before the Controller General of Patents for issue of compulsory license to manufacture and sell a low cost version of Bayer’s patented medicine, Nexavar. The compulsory licence application was filed under Section 84(1) of the Patents Act and rule 96 of the Patent Rules of 2003 after Bayer had rejected Natco’s request for a commercial licence.

Natco was represented by Advocate & Patent Agent, Rajeshwari H. while Bayer Corporation was represented by Senior Advocate, Sudhir Chandra Aggarwal; Advocates Sanjay Kumar, Arpita Sawhney and Rahul  Kumar from Prefexio Legal. Sanjay Kumar, former partner at Lakshmi Kumaran & Sridharan had set up Prefexio Legal last year.

Natco in its application had claimed that the Bayer’s drug was unaffordable for the average Indian and it was not available to the public at a reasonably affordable price.

The drug, which is used to treat liver and kidney cancer, costs about 2.85 lakh for a month's course. Natco had claimed that it can sell its generic version, sorafenibtosylate, for just 8,900 for the same course.

Spicy IP which first reported about the order said, “Natco is now free to manufacture and sell a generic version of Nexavar (a kidney/liver cancer drug that goes by the generic name of Sorafenib Tosylate), but will have to pay a 6% royalty on the net sales (every quarter) to Bayer. Further, it can only charge Rs 8800 for a monthly dose (120 tablets) of the drug (in its compulsory licensing application, Natco committed to sell at this price).”

Speaking to Bar & Bench, Prof. Shamnad Basheer, Ministry of HRD Chair Professor for Intellectual Property at NUJS, Kolkatta, said, “This is an extremely well reasoned order and will ensure more affordable access to new drugs in future. It will significantly change the landscape of the global pharmaceutical industry by forcing multinational pharmaceutical companies to adopt more significant differential pricing strategies, such that drugs are available at much cheaper prices in poorer developing countries. The price in India was abysmally high and the drug unaffordable to more than 95% of the country. Little wonder that the compulsory license is issued. India has one of the widest compulsory licensing provisions in the world, and it is comforting to see that what was on paper is finally translating to reality. This is a great victory for patient groups and NGOs that have been fighting against oppressive drug pricing for the last several years!”

In the order, Controller P. H. Kurian acknowledges that Professor Basheer’s articles were referred to, as part of his research for the order.

With large number of people suffering with cancer, this order will be a big relief to all those who earlier couldn’t afford Nexavar.

This compulsory licence order in favour of Natco will now encourage other local drug companies to apply for compulsory licence for expensive patented drugs.

However, Bayer is sure to explore other legal options and would in all probabilities prefer an appeal against the order.