COMPULSORY LICENCES
In a landmark ruling in one of the world’s fastest growing pharmaceutical markets, the Intellectual Property Appellate Board (IPAB) of India upheld the compulsory licence granted to Natco Pharma Limited, an Indian drug manufacturer, for Bayer AG’s Nexavar (sorafenib tosylate), an oncology palliative drug.
Pharmaceutical giant Bayer filed an appeal against the granting of a compulsory licence for Nexavar to Indian generic manufacturer Natco, but in March the IPAB dismissed the appeal, as
R. Muralidharan and Ashima Katara report.
Natco approached Bayer for a voluntary licence which was refused. Natco then went ahead to file a compulsory licence application before the Controller of Patents on the grounds that the patentee had not worked the patent in India and the drug in question was being imported by the patentee even three years aſter the grant of patent; that
drug was Rs280,000 ($5,000) per month and because of the high cost, only about 2 percent of
the patients needing the medicines were actually buying it. Natco contended that
the
requirements of the Indian public were not met in a reasonable way, and that the patented invention was not available to the public at a reasonable cost.
Bayer resisted the grant of the compulsory licence, arguing that an import from other territories is very much ‘working of the patent’ in India. Bayer argued that it could only sell limited quantities, essentially because the generic competitor had a cheaper substitute which made it difficult for the patentee to get a market for the higher priced product.
Rejecting all Bayer’s contentions, the controller granted a compulsory licence to Natco on March 9, 2012. Te controller held that Bayer had made the drug available to a small percentage of eligible patients, which did not meet the requirements of the public, that the price of Rs280,000 per month was not “reasonably affordable”, and that Bayer’s patent was not being “worked” in India as Nexavar was not being manufactured in India. Importation from manufacturing facilities outside India did not satisfy the mandatory requirement of working the patent in India.
Te first compulsory licence was granted to Natco on terms that price of the product sold by
“THE IPAB FURTHER EMPHASISED THAT THESE PROCEEDINGS ARE NEITHER AGAINST THE INVENTOR, NOR AGAINST THE COMPULSORY LICENCE APPLICANT, BUT PURELY BASED ON PUBLIC INTEREST.”
the cost of Bayer’s patented
Natco shall not exceed Rs8,880 ($160) for 120 tablets (one month’s requirement). Instead of margin-based royalty as suggested by Natco, the controller fixed a sales-based royalty. Instead of a 2 to 4 percent royalty as provided under the UN procurement norms, the controller ordered 6 percent royalty on net sales, which was based on an ex-factory price minus taxes.
Bayer filed an appeal against the order before the IPAB. On March 4, 2013, the IPAB dismissed the appeal and upheld the compulsory licence granted to Natco.
Te IPAB was of the view that the controller was right in holding that the sales of the drug by the appellant at the price of about Rs280,000 was alone relevant for the determination of public requirement and he was also right in considering the purchasing capacity of
the
public and the evidence available to conclude that the invention was not reasonably affordable to the public.
Te IPAB however revised the compulsory licence order to increase the royalty payment to Bayer from 6 percent to 7 percent .
A pertinent aspect in the IPAB decision is the interpretation of
the word ‘working’
under Section 84(1)(c). The controller, while granting the compulsory licence, had
www.worldipreview.com
World Intellectual Property Review Annual 2013 109
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100 |
Page 101 |
Page 102 |
Page 103 |
Page 104 |
Page 105 |
Page 106 |
Page 107 |
Page 108 |
Page 109 |
Page 110 |
Page 111 |
Page 112 |
Page 113 |
Page 114 |
Page 115 |
Page 116 |
Page 117 |
Page 118 |
Page 119 |
Page 120 |
Page 121 |
Page 122 |
Page 123 |
Page 124 |
Page 125 |
Page 126 |
Page 127 |
Page 128 |
Page 129 |
Page 130 |
Page 131 |
Page 132 |
Page 133 |
Page 134 |
Page 135 |
Page 136 |
Page 137 |
Page 138 |
Page 139 |
Page 140 |
Page 141 |
Page 142 |
Page 143 |
Page 144 |
Page 145 |
Page 146 |
Page 147 |
Page 148 |
Page 149 |
Page 150 |
Page 151 |
Page 152 |
Page 153 |
Page 154 |
Page 155 |
Page 156 |
Page 157 |
Page 158 |
Page 159 |
Page 160 |
Page 161 |
Page 162 |
Page 163 |
Page 164 |
Page 165 |
Page 166 |
Page 167 |
Page 168