KEI Statement on India's granting of compulsory license to patents on cancer drug sorafenib (NATCO Vs. BAYER)

The India Controller General Controller General of Patents, Designs & Trade Marks has just (March 12, 2012) issued an order granting a compulsory license to patents on the cancer drug sorafenib/Nexavar, in the matter of NATCO Vs. BAYER. A copy of the decision is attached below, and is also available from the government's web site here: http://ipindia.nic.in/

KEI filed an affidavit in the case, which is available here. http://keionline.org/node/1359. The Bayer price in India for sorafenib was 69 thousand USD per year. A survey of prices on sorafenib is available here: http://keionline.org/prices/nexavar. Bayer's main defense of the pricing was its program of discounts to lower income patients, and the fact that CIPLA was selling an infringing product at a lower price (Bayer is suing CIPLA, and asking for damages and injunctions).

NATCO, an Indian generic firm, had sought a compulsory license under the following three grounds of Section 84 of the Patent Act:

  • (a) that the reasonable requirements of the public with respect to the patented invention have not been satisfied, or
  • (b) that the patented invention is not available to the public at a reasonably affordable price, or
  • (c) that the patented invention is not worked in the territory of India.

All three grounds were upheld in the decision signed by P.H. Kurian.

The 62 page decision grants the CL for the life of the patent, and grants a 6 percent royalty, which was at the high end of the UNDP 2001 royalty guidelines. The KEI statement on the decision follows:


Statement of James Love, Knowledge Ecology International

Today India granted a compulsory license on patents held by Bayer on the cancer drug sorafenib. The Bayer price of INR 3,411,898 per year (69 thousand USD) is more than 41 times the projected average per capita income for India in 2012, shattering any measure of affordability. Bayer tried to justify its high price by making claims of high R&D Costs, but refused to provide any details of its actual outlays on the research for sorafenib, a cancer drug that was partly subsidized by the US Orphan Drug tax credit, and jointly developed with Onyx Pharmaceuticals. Onyx told the SEC that the cost of R&D, pre-Orphan Drug tax credit, was $275 million through the 2005 FDA approval of sorafenib, including outlays on other compounds, indications that were not approved for marketing, and for expanded access trials in the United States that had limited value as scientific experiments. Bayer has made billions from sorafenib, and made little effort to sell the product in India, where its price is far beyond the means of all but a few persons.

The Controller rightly rejected the several Bayer's defenses, and granted the compulsory license, in an early test of the India requirement that patent monopolies will be limited when products are not "reasonably affordable." Because the facts in the Bayer case were extreme, the Controller was faced with a stark choice, and had the compulsory license been denied, the India statute on "reasonably affordable" pricing would have seemed like an empty protection for the public.

The decision granting the license was limited in important ways. Only NATCO can manufacture under the compulsory license. CIPLA still faces infringement charges, and would have to seek a separate license. NATCO cannot import the drug to satisfy the Indian market -- a restriction that is not that important in India, but which would be very difficult if imposed outside of India, where the capacity to manufacture with efficient economies of scale and scope are limited. We were disappointed that the Controller did not make explicit reference to the 2001 Doha Declaration on TRIPS and Public Health, that obligates WTO members to take measures to promote access to medicine for all. It would have been nice for the decision to acknowledge the several compulsory licenses on drugs and medical devices that were issued in Italy and the United States in recent years. [For the US, see: http://keionline.org/node/862, http://keionline.org/node/1219. For the four Italian CL cases on drugs, see: http://keionline.org/content/view/41/1]

We were pleased that the Controller cited the plain evidence of inadequate access as a test of the affordability of the product.

Bayer is expected to appeal the decision, and the case may reach the India Supreme Court. Today the India government took a first step toward protecting its public from high prices on patented drugs. We hope this will lead to more standardized policies for the grant of compulsory licenses when products are so expensive that access is limited to only the most wealthy patients.


News coverage and blogs

March 12, 2012. Natco granted compulsory licence for Nexavar, Livemint.com & The Wall Street Journal.

March 12, 2012. C.H. Unnikrishnan, Natco gets India’s first compulsory licence, Live Mint.

March 12, 2012. Geeta Anand and Rumman Ahmed. Bayer Loses Drug Ruling in India. Patent Agency Forces Drug Maker to Grant License to Local Generics Firm for Cancer Drug. Wall Street Journal.

March 12, 2012. First Compulsory License granted in India to generic company for anti-cancer drug, Donttradeourlivesaway.com

March 12, 2012. Compulsory Licence Granted to NATCO for Bayer’s Nexavar, thedemandingmistress.blogspot.in.

March 12, 2012. India Issues First Compulsory Licence. Groundbreaking Move Sets Precedent for Overcoming Drug Price Barriers. MSF press release.

March 12, 2012. Shamnad Basheer. India's First Compulsory License Granted!. Spicy IP

March 12, 2012. Ed Silverman, Game Changer: India Issues 1st Compulsory License, Pharmalot.com.

March 12, 2012. Natco granted India's first compulsory license for the Patented Drug Nexavar. All about Patents.

March 12, 2012. NATCO granted compulsory licence for Nexavar. NATCO press release.

March 12, 2012. John Hodgson. India grants first ever compulsory license - for Bayer's Nexavar. Scrip.

March 12, 2012. Emma Barraclough, Bayer loses patent in Indian compulsory licence, Managing Intellectual Property.

March 12, 2012. Joff Wild. Bayer loses out as India issues its first compulsory licence. IAM Magazine.

March 12, 2012. Katy Daigle of AP, India Licenses Generic Copy of Patented Bayer Drug, ABC News.

March 12, 2012. Andrew Jack in London and James Fontanella-Khan in New Delhi. India approves generic cancer drug. Financial Times.

March 12, 2012. India's first compulsory licence granted to Natco for Bayer's cancer drug, the Hindu.

March 12, 2012. Ana Gabriela Rojas. La 'farmacia de los pobres' desafía al gigante Bayer. EL PAÍS.

March 12, 2012. Vikas Bajaj and Andrew Pollack, India Overrules Bayer, Allowing Generic Drug, New York Times.

March 12, 2012. Maricel Estavillo, India Grants First Compulsory Licence, For Bayer Cancer Drug. IP-Watch.

March 12, 2012. Michael Palmedo, India Issues Compulsory License for Anticancer Medicine, Info Justice.

March 12, 2012. jyothi@thehindu.co.in, Health groups hail verdict, pharma body disappointed, the Hindu.

March 12, 2003, Savita Verma. Licence to produce cheap generic drug for cancer is granted, Daily Mail

March 12, 2012. India uses arm-twist rule for cancer drug, the Telegraph, Calcutta India

March 12, 2012. Mike Masnick. Putting Lives Before Patents: India Says Pricey Patented Cancer Drug Can Be Copied, Tech Dirt.

March 12, 2012. Trushna Udgirka in Hyderabad, Natco can sell Bayer drug 30 times cheaper, Financial Chronicle

March 12, 2012. Tracy Staton. Indian government forces Bayer to accept generic Nexavar competition, Fierce Pharma

March 12, 2012. Priyanka Boghani. India allows generic version of Bayer drug. Global Post

March 12, 2012. Natco granted compulsory licence for Bayer's Nexavar news. Domain-b

March 12, 2012. Pratap Chatterjee, India Ends Bayer Monopoly, Helps Slash Prices for Life-Saving Drugs, CorpWatch Blog.

March 12, 2012. Suja Nair Shirodkar, Mumbai. Patent office issues first compulsory license to Natco to make Nexavar drug. Pharmabiz.Com

March 12, 2012. Bruce Lehr. Has India Opened the Compulsory License Floodgates? The Big Red Biotech Blog

March 13, 2012, Rs.2.84-lakh cancer drug will soon cost just Rs. 8,880, the Hindu

March 13, 2012. India allows copy of cancer drug. BBC

March 13, 2012. Indian Gov't Uses Special Powers To Slash Cancer Drug Price By 97%, from the opening-a-can-of-worms dept. Slashdot.Com

March 13, 2012. Bayer loses patent war as India backs copy, Shanghai Daily.

March 13, 2012. Rupali Mukherjee, TNN, Govt uses special powers to slash cancer drug price by 97%, Times of India

March 14 2012, Darren Smyth, The First, but of how many? India grants compulsory licence for Bayer drug Sorafenib, The IP Kat.

March 14, 2012. India Grants First Compulsory License to Generic Drug Producer, Bridges. Volume 16, Number 10

March 15, 2012. Kevin E. Noonan, The Anatomy of a Compulsory License: Natco Pharma Ltd. v. Bayer Corp. (Indian Patent Office), Patent Docs

March 17, 2012. Inside Story, India: Human lives vs pharma profits. How will India's decision to end the monopoly of a giant firm producing an expensive drug impact the patients? Al Jazeera.

March 17, 2012. Zwangslizenz: Bayer muss Patent für Krebs-Medikament an indische Firma weitergeben. In Indien sorgt eine Zwangsmaßnahme gegen den deutschen Pharmakonzern Bayer für Aufsehen. Ein Patentgericht entschied, dass Bayer sein Patent für das Krebsmedikament "Nexavar" an das indische Unternehmen Natco Pharma abgeben muss. Deutsche Mittelstands Nachrichten.

March 17, 2012. Von Helga Einecke, Zwangslizenzen für Arzneimittel, Streit um teure Medikamente. Die einen nennen es Enteignung, die anderen sehen darin den wünschenswerten Zugang vieler Kranker zu erschwinglicher Arznei.

March 18 2012. Avinash Celestin, Natco victory could encourage other generic companies also to apply for compulsory licence. Economic Times (of India).

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India's example

The U.S. can -- and should -- learn from India's example in this case. Too often, the patent system gives the appearance of favoring private profit over the public interest. Certainly, innovators have a right to benefit financially from their intellectual property; but in some life-and-death cases it seems to me that basic human rights should trump considerations of revenue maximization.