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NEW DELHI | MUMBAI | HYDERABAD: The government has allowed a local drugmaker to make and sell a patented cancer

drug at a fraction of the price charged by Germany's Bayer AG, setting a precedent for more such efforts by Indian firms and heightening the global pharmaceutical industry's anxiety over the use of the controversial compulsory licensing provision. The outgoing patent controller of India, PH Kurian, on Monday granted the country's first compulsory licence to Hyderabad-based Natco Pharma, permitting it to manufacture and market a generic version of Nexavar, a medicine used for treating liver and kidney cancer, in India for just 3% of the patented drug's price in return for paying 6% royalty on sales to Bayer. While healthcare activists were quick to welcome the order and said it would discourage innovator companies from selling medicines at exorbitant prices, Bayer and OPPI, the body that represents foreign drug companies in India, expressed their disappointment at the development. "The solution to helping patients with innovative medicines does not lie in breaking patents," said OPPI DirectorGeneral Tapan Ray. Bayer is expected to legally challenge the decision. "We will evaluate our options to further defend our intellectual property rights in India," a company spokesman said. The order may encourage other Indian drugmakers to file for compulsory licences, setting the stage for a spate of regulatory disputes between Indian and foreign drug companies over pricing and patent issues. "The patent controller has ruled that if a product is not manufactured in India after three years of receiving a patent, it will be a candidate for compulsory licensing. This can have huge consequences as most patented products sold in India are imported," said DG Shah, secretary general of the Indian Pharmaceutical Alliance. Since 2007, at least 18 patented HIV and cancer drugs have been launched in the country. The compulsory licensing provision arms the government with the power to ensure that medicines are available to patients at affordable rates and has so far been used in Brazil, Thailand and South Africa. It gives the government the right to allow a generic drugmaker to sell copycat versions of patented drugs under certain conditions, without the consent of the patent owner. Multinational drug companies had demanded strong safeguards against the liberal use of the provision when India's patent law was being framed, but the final legislation had kept the grounds for invoking this provision open-ended. There are at least two potential compulsory licensing applications on the anvil in the country in the near term. Cipla has sought a voluntary licence from US-based Merck & Co for its HIV drug Isentress.

MNCs May Adopt Multiple Pricing Natco has sought a similar licence from Viiv Healthcare, a joint venture between GSK and Pfizer, for their HIV drug Maraviroc. If the foreign companies refuse to give these licences, both these firms may ask the government to grant them compulsory licences. In his order, the patent controller said Natco's application met three key conditions for granting compulsory licences. First, the German firm was able to supply its drugs to only 2% of the country's patient population and did not meet the 'reasonable public criteria' requirement. Second, its price was not "reasonably affordable", and third, it was imported and not manufactured in the country. Most experts believe a longdrawn legal battle is in the offing. "This judgement sets a precedent for the pricing of patented anti-cancer drugs in the country. There will be a big fight over this. But this decision should be preserved all the way till the Supreme Court," said Anand Grover, an advocate with socio-legal group Lawyers Collective. Health experts and NGOs have welcomed the order saying it would deter innovator companies from selling their drugs at exorbitant prices. "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 global NGO MSF's Access Campaign. The decision to grant compulsory licence may also force multinational companies to adopt multiple or dual pricing for drugs where medicines are sold in developing countries at a fraction of the cost charged by them in developed markets. As reported by ET earlier, Natco had sought voluntary licence in December 2010 for Nexavar from Bayer. The German company rejected Natco's proposal, saying it needed to reinvest its earnings from such patented products for future R&D. Subsequently, in August last year, the Hyderabad based drugmaker applied for a compulsory licence. The Hyderabad-based firm will have to make the kidney and liver cancer drug at its own manufacturing plant and send quarterly updates about sales to Bayer and the patent office. Natco has also committed to donate free supplies of the medicines to 600 needy patients each year. "Natco welcomes this order and opines that this opens up a new avenue of availability of lifesaving drugs at an affordable price," said a company statement. Natco's share price rose to a 52week high of Rs 328.90 after news of the order, before closing at Rs 314,95, up 6.17% at the Bombay Stock Exchange on Monday.

Pharma industry split over nod to Natco to sell Bayer's cancer drug
PTI Mar 13, 2012, 04.48PM IST

NEW DELHI: The decision to allow Natco Pharma to sell Bayer's patented cancer drug Nexavar has divided the pharmaceutical industry with domestic firms welcoming it while multinationals said 'arbitrarily' using of compulsory licenses will undermine innovation in the sector. Disappointed with the development, Bayer said it is evaluating options for its next step. "We are disappointed by the decision of the Patent Controller in India to grant a compulsory license for Nexavar. We will evaluate our options to further defend our intellectual property rights in India," a Bayer Spokesperson said. While the body of domestic pharma firms, Indian Drug Manufacturers Association (IDMA) said the move will benefit both patients and industry, the group for MNCs, Organisation of Pharmaceutical Producers of India (OPPI) said it would be detrimental in the long run. "It is beneficial for patients, industry as well as the whole country. Everyone will be benefited by this order," IDMA Secretary General Daara Patel told PTI. Yesterday, the India Patents Office invoked compulsory licence for the first time in the country, paving way for Natco Pharma to sell its version of Bayer's Nexavar at Rs 8,880 for a month's dose as compared to Rs 2.8 lakh by Bayer. The multinationals' body decried the step. "OPPI is disappointed with the decision to issue a compulsory license. We believe compulsory licenses should be used only in exceptional circumstances, such as in times of a national health crisis," OPPI President Ranjit Shahani said. He further said: "If used arbitrarily, compulsory licenses will serve to undermine the innovative pharmaceutical industry and will be to the long term detriment of the patient." As per WTO TRIPS agreement, a compulsory license can be invoked by a national government allowing someone else to produce a patented product or process without the consent of the patent owner. It is done for the cause of public health. As per the order of the India Patents Office, Natco will have to pay a royalty of 6 per cent of the net sales on a quarterly basis to Bayer. It will have to manufacture the drug only at its own plant since it is not allowed to outsource production. The Hyderabad-based firm is allowed to sell the drug for treatment of only kidney cancer and liver cancer in India. The order also makes it obligatory for Natco to supply the drug free of cost to at least 600 needy and deserving patients per year.

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