Patent grants a monopoly power to work an invention. But state reserves the right of intervention to restrict some of the ill effects of patent. Thus patent represents an interventionist instrument ultimately for the sake of community welfare. When community welfare is no longer served patent gives a right to intervene to bargain for disclosing the invention. The ultimate beneficiary is the public and the invention should be available to the public. The proprietor of monopoly may try to abuse the right and it is necessary that a protection is available to the public. Patents, an intellectual properties right are the creation of the government policy. Nations have the right to compulsory licensing on patents. Compulsory license is to strike a balance. Compulsory licensing for a patented invention is a part of Paris Convention and the TRIPS.
Paris Convention authorized each country of the union shall have the right to take legislative measures providing for the grant of compulsory licensing. This is to prevent the abuse which might result from the exercise of the exclusive right conferred by the patent.
WTO Member countries may provide for different forms of compulsory licensing that are authorized by TRIPS Agreement. But TRIPS provide number of restrictions for different form of compulsory licensing. Compulsory license is to be granted case by case.
TRIPS provide for the right to establish compulsory licensing other than the ground explicitly mentioned. The consideration is that it must be commercially viable to manufacture the product locally and the party has manufacturing technology. Both must be satisfied for a compulsory licensing. Government can grant compulsory license on the ground that products are widely needed. It is also expected that a competitive source is essential to meet the reasonable requirement of the public.
The compulsory license seeker under TRIPS agreement has to approach the patent holder. He should satisfy the owner to obtain compulsory license on a reasonable commercial terms and conditions. He should satisfy that his efforts were not successful within a reasonable time.
Patent holder must be given an opportunity to speak by the authority. Doha declaration confirms the right of the countries to issue compulsory licensing. The agreement authorizes the member countries to take steps to protect public health in general and access to medicine for all. Public interest is established in many laws as a ground for compulsory license. Compulsory license may be granted on diverse grounds to be determined by national laws.
German patent law authorizes compulsory license to be granted when it is indispensable for the public interest. If the applicant is a patentee, refuses to permit exploitation of the invention by another person offering to pay reasonable compensation that person shall be given authority to exploit the invention and the permission must be indispensable in public interest.
Federal Patent Court held that a compulsory license cannot be granted for a pharmaceutical company if the public interest can be satisfied with other more or less equivalent alternative preparation.
Again it is to be remembered that public interest cannot be characterized in the same generally applicable manner. It means the meaning changes over time depending on each case.
In India granting of compulsory license is to see that the patent inventions are worked on a commercial scale in the territory of India and that the interest of any person working in developing an invention is not prejudicial.
In India under Patent Act compulsory license can be granted on the ground that a reasonable request of public has not been satisfied. When the patented invention is not available to public at a reasonable affordable price compulsory license can be granted.
The controller can secure the article manufactured under patent shall be made available to the public at the lowest price. Today even a middle class consumer, with an average income feels that the cost of medicine is enormous. The increase in price is felt more in the case of life saving medicines. Many times the price is beyond the capacity and ability to pay for. The defendants argue that the cost of the medicines have gone up like any other product. But the present scenario does not support this argument.
Pharmaceutical distributors offer discounts ranging from 8 to 15 percent from MRP at the retail level. Elderly people remember that they were paying the MRP for a very long time. This explains the attitude of these pharmaceutical companies to exploit if there is no competitor. The governments of developing countries are expected to act to prevent such exploitation. These days the policy of the state is to liberalize more and more items to be manufactured by local applicants even when there is a patent already registered. The related provisions may be matter of interest in the context of compulsory license issued to Natco of Hyderabad by the Indian Patent Officer. The patent holder is Bayer of Germany. Natco is to produce and sell a patented cancer drug at a fraction of the price charged by Bayer of Germany.
The global pharmaceutical companies are disappointed over the use controversial compulsory licensing. The compulsory license was issued to manufacture and market a generic version of Nexaver, a drug used for treating liver and kidney cancer. In return Natco will be paying 6% royalty on sales to Bayer. Natco is to sell the drug at Rs.8880 (Eight thousand eight hundred and eighty) for a month’s supply of 120 tablets. Bayer is selling at Rs.2.8 Lakhs for a month’s supply. Cipla sells the same version of the product at Rs.28, 000 (Twenty eight thousand) a month.
The judgment revealed that the patent was not used to make available the drug to benefit the Indian patients. One reason quoted for the compulsory license is that even though there was demand for the medicine Bayer imported the product and did not manufacture the same in India. While the global sale of Nexavar was 934 million US$ in 2010 the sale in India was only 16 crores. It demonstrates the neglectful conduct of the patentee in India. Further it is stated that only 2 per cent of the 8842 patients needing the drug got the medicine.
The judgment observed that the patients needing the drug far exceeded the supply. It appears that the reaction of Bayer was not to contest the details of the price but to protect their Intellectual Property Right in India. Cipla has been dragged to Delhi High Court for infringement for selling its own version of Nexavar.
There is one serious danger lurking. Developing countries like India should be aware of the lobbying power of the pharma companies of the developed countries like US to keep the price of this drug Nexavar closer to $5000/- per month’s supply. How long the developing countries can resist the lobbying power of the multinational pharmaceutical companies? India has already started to react.
A Committee has been set up to work out a pricing mechanism applicable to pharmaceutical products. Mechanisms like reference pricing and fixed pricing are under consideration. It may also be noted that patented drugs are free of price controls. At the same time one must be aware of the fact that the price controls are applicable to 348 drugs classified as essential drugs.
All these developments will result in opening up of new avenues of availability of life saving drugs at an affordable price to the suffering masses in India. Definitely the patients will welcome more and more medicines be made available at the affordable prices. There is likelihood of more Indian firms applying for similar applications. Innovator companies may lower their prices of their patented drugs. One can expect long drawn legal battles in the courts of law also.
One question lingering in the mind is why the patent authority passed this order at the far end of his term prior to his retirement? Why not early?
Article By
Dr. Reena Louis
Faculty, MIB
PSGCAS
PSGCAS
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