Pharma battle: Indian Patent office and MNCs should resist from the confrontational policy

The recent grant of 20 year patent by the Indian Patent office to the US drug company Gilead for its Hepatatis drug Sovaldi so soon after rejection in January 2015 raises many interesting issues. The Indian patent office has relented apparently because the US company agreed to give voluntary licenses to as many as 11 Indian generic drug companies which can sell the drug at $900 per annum per patient as opposed to a whopping $84,000 a US patient has to pay. Royalty payable by the generic Indian manufacturers as indeed manufacturers in 100 other countries would be 10%.  Drug MNCs especially from the US have had a problematic relationship with the Indian Patent office so much so that the US government has placed India in the list of patently unfriendly patent countries in the world. There are two niggling issues. First is section 3(d) of the Indian Patent Law that puts its foot down on ever greening. Did you say ever greening is a banking jargon? Well yes, bank managers and wily borrowers ever green the loan accounts through a simple trickery– - pay off an earlier loan that runs the risk of attracting the NPA label with a fresh loan. The game goes on. Something similar, though less sinister, happens in the world of patents. The patent holder seeks patent or monopoly rights over his invention in perpetuity. So what he does after the initial patent period of 20 years is to make a marginal improvement in the drug say by improving its delivery - may be one dose per day as against three doses earlier - and seek a fresh patent for another twenty years. That is why the Indian law says patents would not be registered if it is of the ever greening variety. This is in tune with the World Trade Organization norms but then the US doesn’t care much for the WTO except when its norms are favorable to it. The second niggling issue is compulsory licensing which once again is WTO compliant. A patent holder can be compelled to grant compulsory license to a generic manufacturer in India if he doesn’t make available the patented drug in large enough quantities at reasonable prices to meet Indian needs. This condition has been successfully imposed in India once, and the Supreme Court upheld it. In a momentous decision that would have wide-ranging implication for access to medicines, the Supreme Court of India refused to entertain Bayer’s appeal to set aside the compulsory license (CL) on Sorafenib (Nexavar). The grant of Compulsory license (CL) to Natco, a Hyderabad based generic drug manufacturer, for the anti-cancer drug – sorafenib tosylate was hotly resented and contested by Bayer. It is a crucial drug for patients living with kidney and liver cancer. Bayer was selling the product under the brand name Nexavar for Rs 2,84,000 per patient per month which is unaffordable to most patients in India. On 9 March 2012, the Patent Controller granted a CL to Natco Pharma to market a more affordable generic version of Nexavar at around Rs 8, 800 per person per year. The Bayer case has instilled fear in the drug MNCs. It is good that the Indian government has stood its ground on both the issues that are the bugbear of the drug MNCs - no ever greening and grant of compulsory license when warranted and not as a matter of routine. Gilead’s lead shows the best way to break resistance from the Patent office of third world countries is not to follow a confrontational policy but to tone down ambition. Many term the Indian patent office’s capitulation as opportunistic climb-down and inconsistent but then it is a win-win deal - the US Company was seeking a maximalist position but has had to settle for a compromise and likewise the Indian patients would get the drug at a reasonable price. The Indian Patent office perhaps was nudged into doing so by the Indian government which has been keen on mending fences with the US establishment on a range of issues. Gilead must have realized it is better to give voluntary licenses to manufacturer than to be coerced into doing so which is what compulsory licensing amounts to assuming the patent is granted after a few bouts of resistance. Both the parties must be complimented for being pragmatic.